Q1: Can the red-circling of a job exclude it from a pay equity process?

A1: No. The newly established pay rate for the red circled job will be used in pay equity comparisons.

Q2: Can an employer red circle a female job class?

A2: Yes, the Act does not prohibit the practice of red circling. If a female job class receives a lower rating as a result of a gender neutral job re-evaluation, nothing prevents an employer from red circling that female job class.

Q3: Can red-circling be used to compensate for pay increases for female job classes?

A3: No. Red circling should be used where it is appropriate; it cannot be used to avoid the spirit and intent of the Act.

Skills Shortage

The Act permits wage differences between employees in equal or comparable female and male job classes as a result of a skills shortage only if the employer can demonstrate:

• a skills shortage is causing a temporary inflation in compensation;
• difficulties in recruiting employees with the requisite skills for positions in the job class; and
• the job rate for the job class is identifiable.

An employer should consider how broadly the positions were advertised, the length of time the search has gone on and whether internal candidates have been trained and are now available. Employers can refer to outside data, such as labour market indicators, to help demonstrate a skills shortage, but would also need to show difficulty in recruiting (Anonymous Group of Employees v. Melitta Canada Inc., 1995 CanLII 7204 (ON PEHT)).

To claim that wage differences are due to a skills shortage, employers are required to demonstrate that the shortage is temporary in nature. For example, there may be insufficient graduates in an occupation or specialty at a given time, but there is evidence that more qualified people will be graduating or moving into the relevant market at an identifiable future date. This permissible difference, however, should not be used to justify all market stresses. Job rates reflecting long standing inflation due to past skills shortages may qualify for exemption. (Welland County General Hospital (No.2) (1994), 5 P.E.R. 12).