While the Act requires that female job classes be paid at least the same as male job classes of equal or comparable value, it does not necessarily mean that each incumbent in a female job class must be paid exactly the same as the incumbents in a male job class. The Act sets out circumstances whereby differences in pay between females and their male comparators are allowed:

[8. (1)] This Act does not apply so as to prevent differences in compensation between a female job class and a male job class if the employer is able to show that the difference is the result of,

• a formal seniority system that does not discriminate on the basis of gender;
• a temporary employee training or development assignment that is equally available to male and female employees and that leads to career advancement for those involved in the program;
• a merit compensation plan that is based on formal performance ratings and that has been brought to the attention of the employees and that does not discriminate on the basis of gender;
• the personnel practice known as red-circling, where, based on a gender-neutral re-evaluation process, the value of a position has been down-graded and the compensation of the incumbent employee has been frozen or his or her increases in compensation have been curtailed until the compensation for the down-graded position is equivalent to or greater than the compensation payable to the incumbent; or
• a skills shortage that is causing a temporary inflation in compensation because the employer is encountering difficulties in recruiting employees with the requisite skills for positions in the job class.

The Act is not intended to disrupt common compensation practices. When an employer claims an exception to pay equity, it is the employer’s responsibility to show that the wage difference is a result of a circumstance or pay practice as it is described in the Act. Furthermore, these exceptions will be narrowly defined.

Permissible differences can also arise as a result of differences in bargaining strength [8. (2)]. (See Pay Equity in Unionized Workplaces).

How are permissible wage differences treated in pay equity job comparisons?

The effect of these exceptions is not to alter the job rate of the male job class, but to justify not adjusting the entire pay equity gap between the female job rate and the job rate of an equal or comparably valued male job class. A male job class that is affected by these circumstances can still be used in pay equity job comparisons. In all situations, the normal job rate is determined for the job class. The portion of the wage that can be attributed to the exception is excluded from the pay equity comparison process.

Wages cannot be reduced to achieve pay equity. It is against the law for an employer to reduce employees’ wages in order to achieve pay equity [9. (1)]. If employees in a female job class have been underpaid, their wages must be increased. The wages of workers in male job classes cannot be reduced to make the job rates of comparable male and female jobs equal.

i. Details of permissible wage differences

Formal Seniority System

Seniority systems provide increases in pay to employees based on length of service. Generally, employees who have worked for the company longer earn more than newer employees in the same job class.

Where an employer has a seniority system in place, differences in pay resulting from the system’s application between incumbents in job classes of equal or comparable value is allowed provided that:

• the system is formalized and made known to employees when implemented; and,
• the system operates and is applied the same way, based on the same principles, for both female and male employees.

For pay equity job comparisons, the maximum rate for the job class is used as the job rate. There may be differences between pay of individual employees within the job class due to seniority. However, all incumbents must be able to achieve the maximum rate, which is the job rate for the job class, after the required length of service.