Once pay equity job comparisons have been made, the Act requires employers to increase the job rates of female job classes to be at least as much as the job rate of the comparable male job classes. These increases are referred to as pay equity adjustments.

Compliance deadlines for making pay equity adjustments

Part II employers who were required or chose to post a pay equity plan were allowed to phase in pay equity adjustments by set deadlines. Part II employers who did not meet their original deadline for posting a pay equity plan or achieving pay equity must pay any adjustments that are owed immediately: these employers are not allowed to phase in adjustments as they are now overdue. If an employer did not implement and achieve pay equity when it was required, that employer must determine the adjustment amounts based on the pay equity gaps that existed at the time their plans should have been posted. Retroactive payments should be calculated as if the adjustments were paid on time.

See What are the Compliance Deadlines? for dates for posting pay equity plans, making adjustments and achieving pay equity.

i. Minimum amount for pay equity adjustments

Employers who were required, or opted to post pay equity plans, were allowed to phase in pay equity adjustments, in an amount that is not less than the lesser of either 1% of the employer’s total Ontario payroll costs of the previous year, or the amount required to achieve pay equity [13. (4) – (6)].

“Payroll” means the total of all wages and salaries payable to the employees in Ontario of the employer [13. (8)].

The minimum amount is applied to all of the employer’s pay equity plans. The entire amount must be spent on pay equity adjustments. Payments must be made on the anniversary of the legislated first adjustment date [13. (5)] until pay equity is achieved.

Depending on the employer’s circumstances, the size of its payroll may have fluctuated from year to year, and thus, the money that was available for pay equity adjustments may have also varied. Regardless of any yearly fluctuations, a minimum of 1% of payroll was required to be spent for adjustments.

ii. Compounding effect of retroactive payments

Pay equity adjustments form a regular part of wages. That is, a pay equity adjustment added to the base pay rate, increases incrementally with each yearly adjustment until the pay equity rate has been achieved. There is a compounding effect when calculating retroactive payments.

iii. Rules for distributing the adjustments

The Act sets out rules for distributing adjustments among the female job classes. Employers were required to make payments such that:

• All female job classes due adjustments within a pay equity plan must receive an adjustment until pay equity is achieved for the job class [13. (2), 13. (5)].
• All incumbents of a female job class due adjustments must receive the same adjustment in dollar terms [9. (3)].
• Within a pay equity plan, the lowest paid female job class must receive a larger adjustment than the other job classes, or the complete adjustment [13. (3)].

As long as the above rules are met, employers were allowed to decide how they wanted to distribute the adjustments.

iv. Reduction in Compensation to Achieve Pay Equity is NOT allowed

The Act specifies that employers cannot reduce compensation for any position in order to achieve pay equity or to offset pay equity adjustments to female job classes [9. (1)].