i. How does the Pay Equity Act define “establishment”?
“Establishment” means all of the employees of an employer employed in a geographic division or in such geographic divisions as are agreed upon under section 14 or decided upon under section 15 [1. (1)].
“Geographic division” means a geographic area prescribed under the Territorial Division Act, 2002 [1. (1)].
- Why must an employer define the establishment?
The Act states that pay equity must be established and maintained in every establishment of the employer [7. (1)].
Decisions concerning the definition of establishment will determine which female and male job classes will be compared for pay equity purposes.
ii. How does an employer go about defining the establishment?
There may be more than one way to define the establishment. At minimum, employers must define their establishment according to a county, territorial district or regional municipality.
All employees of an employer in a given geographic division must be included in the same establishment.
If an employer has more than one location in different geographic locations, the employer can choose to combine establishments from more than one geographic division. In addition, it is possible to combine establishments in the same geographic division in cases where “centralized bargaining” occurs. That is, two or more employers and the union representing the employees agree that for pay equity purposes, there will be one establishment [2. (1)]. Where this occurs, each employer is still responsible for implementing and maintaining pay equity with respect to its own employees.
By allowing employers to define their establishment according to geographic divisions and requiring pay equity to be implemented in the establishment, the Act does not interfere with an employer’s ability to set wages and pay practices in different regions in response to local economic conditions.
Example of the Establishment:
If a company has a warehouse and offices that are all located in Ottawa, there is only one establishment. However, if the company also has a warehouse in Toronto, the employer could decide to have two establishments. This means that the employer would prepare two separate pay equity processes or plans, one for Ottawa employees and the other for Toronto employees. The employer could also decide to have only one establishment, in which case both Ottawa and Toronto employees would be included under the same pay equity process or plan.