PAY EQUITY: What it means and how to get there

What does Pay Equity mean?

A good way of defining something is often to start with what it is not. Pay Equity is not equal access to jobs offered by an employer. This is called employment equity, which means that women and men and the visible minorities have equal opportunity when applying for jobs. Nor is it the fact that a person working in company X is being paid $2,000 less than the person of the same gender sitting nearby for the exact same job. This is called internal equity and is unrelated to employment equity.

So what does Pay Equity mean? At first, it meant equal pay for equal work. However, as organizations tried to achieve Pay Equity, they quickly realized that is was very difficult to compare the same two jobs and their compensation since each one comprised a different set of tasks. The difficulties experienced by organizations with this approach prompted the government to adopt the following definition:

"Equal pay for different but equivalent work ".

This change ensures that there is no sexist bias in the comparison of compensation, so that predominantly female jobs are paid equally to predominantly male jobs of equivalent value. Job value will be addressed later.

The change also enabled comparisons between jobs of different types but equivalent in terms of tasks. An example of this would be to compare trades and services jobs with clerical jobs of equivalent value.

Every organization of ten (10) employees or more must comply with the Pay Equity legislation before November 21, 2001 and must maintain Pay Equity not only for jobs covered in the Pay Equity analysis but also for new jobs to be created in the future. The following diagram summarizes the goal of Pay Equity:

Pay Equity Equation

How is Pay Equity achieved?

The Pay Equity Commission has elaborated a "map" to help guide the parties accomplish this mandate. Here are the four basic steps:

1. the identification of predominantly female and male job classes;

2. the selection of the job class evaluation method and tools and the evaluation procedure based on the following four dimensions:

a. Qualifications required b. Responsibilities assumed c. Effort required d. Working conditions 3. the evaluation and comparison of job classes, an estimate of differences in compensation and the calculation of adjustments in compensation;

4. the terms and conditions of payment of compensation adjustments.

Step 1

The first thing an organization must do is to determine whether a job category is 60% predominantly male or female. Anything less is discarded because of the Pay Equity Act. This is because a job class that is not predominant is by default neutral and neutral jobs are not included in the Pay Equity exercise. Obviously, this first step assumes that an organization already has job classes. If this is not the case, the classes must be defined in order to proceed with the Pay Equity analysis. A job class includes jobs of a similar nature. Job similarity is defined in the Pay Equity Act as:

"jobs having similar duties, similar responsibilities, similar qualifications and same compensation."

An example is an administrative secretary position and a secretary-typist position that are part of the secretarial job class.

Step 2

Once job predominance has been identified, the organization must be able to compare apples with apples, that is, able to compare the compensation of a predominantly female job class to one that is predominantly male which has been similarly rated on the four dimensions listed above. The evaluation method and appraisal tool are essential aspects of the analysis. All Pay Equity appraisal tools are based on the four Pay Equity dimensions but may divide them into any number of sub-factors..

Without getting into the detail of evaluation methods, suffice it to say that an 18 sub-factor tool is not necessarily better than an 8 sub-factor tool and vice-versa. The quality of an appraisal tool is based on the factors chosen and the fact that they must be mutually exclusive from one another in order to eliminate any chance of contamination or "overlapping" when rating jobs. Otherwise, two different jobs could end up with equivalent ratings. What is essential is that once the choice of an appraisal tool has been made, it must be kept for the entire job class evaluation. The Pay Equity process will not accomplish its goal, if within a group of similar job classes, some jobs are evaluated by one appraisal tool and the rest with a different one. For example, if a tool is used to rate clerical jobs it must be kept for the job analysis of this entire group. It does not mean that this same tool must be used for the rating of technical jobs.

Step 3

The job evaluation and comparisons completed, compensation gaps can then be analyzed. If the analysis reveals that predominantly male jobs are being paid more than predominantly female jobs of equivalent rating, the compensation gap must be rectified in favour of the predominantly female jobs. The Pay Equity Act prevents lowering the compensation of predominantly male jobs to eliminate any compensation gap found after comparison. However, if the analysis reveals that predominantly female jobs are paid more than predominantly male jobs of equivalent value, the compensation is not adjusted. This means that the compensation of women is not lowered nor male compensation increased. Furthermore, the compensation of neutral jobs is not affected by Pay Equity.

Step 4

Finally, when the compensation gaps in favor of predominantly female jobs have been identified and added together, payment must begin effective November 21, 2001. From this moment forward, action must be taken to correct compensation inequities. To facilitate payment, the government has opened a window of four years maximum (November 21, 2005) to close the compensation gap resulting from the Pay Equity exercise. Technically speaking, it is only when the compensation gap has disappeared that Pay Equity is accomplished. Still, Pay Equity has to be maintained not only for jobs covered in the analysis but also for new jobs created in the future. So if someone asks you if Pay Equity "is finished", your response is that it has only just begun…

Footnotes:

1. For the purpose of this example, it is assumed that trades and services jobs are predominantly male jobs and that clerical jobs are predominantly female.

2. The compensation comparison must be made according to the same standard e.g. the same number of hours worked in a week.