Proportional value indirectly compares female and male job classes by looking at the relationship between the value of the work performed and the compensation received by male job classes and applying the same principles and practices to compensating female job classes. The Act specifies that pay equity is achieved by proportional value when the relationship between the value of the work performed and the compensation received is the same for both female and male job classes [21.3 (1)].
The proportional value method is applied in establishments where male job classes are not available in large enough numbers, or else their job values are such that they cannot be used for direct comparisons. For example, in two-tiered pay systems, the male management job classes may be valued much higher than the female job classes, and thus, they may not be appropriate comparators.
To achieve pay equity using proportional value comparisons, employers must:
- select a representative group of male job classes;
- establish the relationship between job values and job rates;
- calculate pay equity adjustments; and,
- increase wages for underpaid female job classes
How are representative male job classes selected?
Female job classes must be compared with a representative male job class or representative group of male job classes [21.3 (1) (a)] for proportional value. Regarding proportional value comparisons and what is “representative”, the Tribunal stated in Hudson v. Hamilton Police Association, 2010 CanLII 61163 (ON PEHT):
“The Act is clear that the value/compensation ratio of male job classes is to be determined having regard to one or more “representative male job classes”. The term “representative” is not defined in the Act, however its plain English meaning suggests a part standing in for a whole: clearly “representative” implies that it is not necessary to include “every” male job class in the Proportional Value analysis.”
“Representative male job classes are those that will best reflect the value/compensation ratio at which male job classes in the “group” are compensated. They should therefore be job classes within the same employee “group” where that is possible, and should not include a job class that is paid an anomalous rate (like the inflated rate of the male job class with skills that are in short supply).”
This case suggests that male job classes are not “representative” if their rate of compensation is either much higher or much lower for their job value relative to other jobs in the organization, or their compensation is set in an anomalous way and not reflective of the overall compensation pattern or practices. These ‘outlier’ jobs should be excluded or they will distort the value/compensation ratio that is the basis for pay equity comparisons.
i. Which comparisons are required?
For unionized female job classes, comparisons are made to representative male job classes in the bargaining unit. For non-unionized female job classes, comparisons are made to non-union male job classes [21.3 (2)].
If no representative male job classes can be found, the female job classes must be compared to representative male job class throughout the establishment [21.3 (3)].
ii. Establishing the relationship between job values and job rates
There are different ways to establish the relationship between job value and job rate for pay equity by using proportional value.
The wage line approach to proportional value is widely used. While wage lines are not specifically required by the Act, this approach is considered the most effective way to summarize the overall relationship between the job rate and job value where there is more than one representative male job class.
For the wage line approach, the employer develops a job rate line by plotting the representative male job classes on a graph with the job rate along the y-axis and the job value along the x-axis. Then a line is drawn and projected over the range of job values that cover the female job classes. The employer can also use a computer program to draw a “best-fit” job rate line using a statistical technique called regression analysis. The female job classes are plotted. Employers are required to increase the wages of all female job classes that fall below the job rate line. The amount of the pay equity adjustment is the difference between the female job rate and the rate predicted by the job rate line for the job value of that female job class.
Using a “proportional to female job classes” approach, pay equity adjustments are given to unmatched female job classes in proportion to adjustments of female job classes that had comparators under job-to-job (modified group of jobs approach).
The formula or pay-per-points approach requires the job value to pay relationship for male job classes to be expressed as a ratio that is applied to the female job classes. However, where there is more than one male job class, the formula or pay-per-points method is less effective than the wage line method at describing the job value to pay relationship in cases.
The Act requires employers to undertake job comparisons with representative male job classes for proportional value; however, it does not prescribe exactly how to do the comparisons. Employers, or employers and unions in unionized settings, may select the method that best suits their circumstances but in the case of a dispute their choices will be acceptable if they are considered reasonable and if they demonstrate the relationship between value and job rate.