“Job rate” means the highest rate of compensation for a job class [1. (1)].
“Compensation” means all payments and benefits paid or provided to or for the benefit of a person who performs functions that entitle the person to be paid a fixed or ascertainable amount [1. (1)].
This definition must be applied exactly in order to meet a fundamental requirement of the Act. According to the Tribunal in Ontario Nurses’ Association v. Lady Dunn General Hospital, 1991 CanLII 4451 (ON PEHT): “In order to achieve pay equity, the sum of all salaries or wages and benefits, if any, received by a female job class must be equal to the sum of all salaries or wages and benefits, if any, provided to its male comparator job class. The adjustment may be made to wages or salaries, to benefits, or to a combination of the two.”
Are there guidelines for determining the job rate?
The Act defines the job rate as the total of wages or salaries and benefits, but it does not specify a particular way to calculate the job rate or a time measurement (annual, weekly, hourly) for wages, or any particular method for calculating benefits. However, to compare compensation of job classes, it is necessary to express the job rates with one common measurement standard: York Region Board of Education v. York Region Women Teachers’ Association, 1995 CanLII 7030 (ON PEHT). The more common measurement standard used is dollars per hour. The Tribunal has also set out three principles for determining the job rate Ontario Northland Transportation Commission v. Transportation Communications International Union, 1992 CanLII 4696 (ON PEHT):
- The calculations must be as accurate as possible, based on realistic and fair compensation calculations.
- The job rate should be calculated in a manner which is the least disruptive to the collective agreement and compensation practices of the parties.
- All calculations must conform to the purpose and scheme of the Act.
i. How is the job rate set?
Determining the job rate for a job class depends on the compensation system the employer uses. If an employer does not have a formal system in place for determining pay, the job rate is usually the maximum rate paid to any incumbent in the job class. If there is only one rate of pay for the job class, that rate is the job rate. If the employer maintains a definite salary or wage range with a minimum and a maximum rate for some or all of their job classes, the maximum of the range is the job rate, provided that the rate is actually attainable (however, employees need not be at the maximum rate). Typically, the maximum is achieved based on length of service and/or merit.
ii. How do payments such as commissions, bonuses, incentive pay or tips affect the job rate?
Payments based on work performance or output must be included as part of the job rate, even where the calculation is difficult Group of Employees v. Windsor Casino Limited, 2007 CanLII 62083 (ON PEHT). Payments can include sales commissions, bonuses, tips and other kinds of incentive pay and may be paid in addition to a base wage or salary, or they may be the only pay received. These types of compensation should be included in the job rate unless it can be clearly established that an amount is attributable to merit. In such cases, the existing merit system must be one that meets the criteria set out
in [8. (1) (c)]. (See Permissible Wage Differences). Payments that are salary supplements with no confirmed link to performance are considered compensation and should be included in the job rate.
When pay is based on work performance or output, employers should determine the job rate based on how much an employee can realistically earn.
Examples of Calculating Job Rates with Commissions and Tips
- Sales forecasts and past sales performance will provide information on what level of sales can be expected of employees. Applying the commission structure to these numbers can reveal what level of payment contributes to the job rate for these positions.
- An employer may pay a minimum regular salary to servers in a restaurant with the expectation that tips will provide most of the servers’ incomes. In this case, since all of the servers can expect a significant part of their pay to come from tips, at least some portion of the tips will have to be counted into the job rate because that portion of the tips is a part of their normal pay. This is especially applicable where tips are pooled for distribution.
iii. How are benefits defined?
The Act does not define “benefits”. For purposes of the Act, benefits are part of compensation provided they are quantifiable. The value of a benefit must be included in the job rate if it contributes to the total compensation of a job class, or it provides an advantage to that job class over others that do not have the same benefit. The value of that benefit must be included in the job rate even if employees in the job class individually choose not to use it. It is the availability of benefits – not their use by individuals – that should be considered when including them into the job rate Regional Municipality of Peel v. Canadian Union of Public Employees, Local 966, 1992 CanLII 4698 (ON PEHT).
In situations where an item is something that is required to do the job, that item would not be considered a benefit and thus, not included in the job rate. For example, the value of a uniform or protective clothing would not be considered a benefit if these items are required to do the job.
If identical benefits are available to job classes, it is unlikely that costing will be necessary. To be identical, the benefits must be equally accessible to all employees. If employees have to meet a qualification to access a benefit, for example, having to work for a certain length of time to get more vacation days, those employees are still considered to have access to the benefit.
If one job class has benefits and another does not, or the job classes have the same benefit but at different levels of payment or advantage, it is critical that the value of the benefit be determined and included in the job rate.
