The Legislative Push for Pay Transparency in Canada Mirrors Global Trend
Law & Legal

The Legislative Push for Pay Transparency in Canada Mirrors Global Trend

Special thanks to our summer associate Daniel Dai for contributing to this update.

British Columbia’s Pay Transparency Act, which received royal assent on May 11, 2023, imposes pay disclosure and reporting obligations on both public and private sector employers to address systemic discrimination in the workplace. It is the latest in a series of new pay transparency laws across Canada.

This push for more transparency to bridge the pay gap for historically disadvantaged groups is a global trend. In the United States, 8 states, including California, Colorado and Washington, along with cities like New York City, have recently adopted salary disclosure laws. There is also pending legislation at the federal level—the Salary Transparency Act—that would require all job postings to include the wage or wage range for a position. Similarly, the European Parliament approved the Pay Transparency Directive in March 2023, which is set to enter into force in 2024. Among other things, this Directive establishes a right to certain pay information and imposes pre-employment pay disclosure obligations on both public and private sector EU employers.

Recent Canadian Developments

In Canada, the following provinces have recently adopted pay transparency legislation:

  • British Columbia: The Pay Transparency Act prohibits employers from seeking a job applicant’s pay history information, and requires that, as of November 1, 2023, all publicly advertised job postings include the expected salary or wage of the position. This new law also prohibits reprisals against employees for discussing or inquiring about their pay or for asking the employer to comply with its pay transparency obligations. Finally, employers are required to prepare annual pay transparency reports, to be published on their website or made available for their employees at the workplace. This requirement will be rolled out in different phases, with all public and private employers in British Columbia with over 50 employees being subject to the reporting obligations by 2026.
  • Newfoundland and Labrador: The provincial government passed the Pay Equity and Pay Transparency Act in October 2022, which includes pay equity obligations for public sector employers and pay transparency obligations for both public and private sector employers. Similar to British Columbia’s, this legislation prohibits employers from seeking pay history information about an applicant, and requires that publicly advertised job postings include the pay or pay range for the position. It also prohibits reprisals and sets out pay transparency reporting obligations. However, these requirements have yet to come into force as regulations is still currently being developed in consultation with different stakeholders.
  • Prince Edward Island: Amendments to the PEI Employment Standards Act introduced new pay transparency provisions effective June 1, 2022. These provisions prohibit employers from seeking pay history information about an applicant, prohibit reprisals, and require employers to disclose information about a job’s expected pay in any publicly advertised job postings.

Other Canadian provinces do not currently have specific pay transparency legislation, although some have implemented pay equity laws applicable to both public and private sector employers. For example, the Quebec Pay Equity Act requires, among other things, that Quebec employers with 10 or more employees engage in a pay equity exercise to identify gender-based pay differences for similar positions, adjust for these differences, and share the exercise’s results with their employees.

The Ontario Pay Equity Act similarly requires employers with over 10 employees to establish and maintain pay equity. The Ontario government also enacted the Pay Transparency Act in 2018, with similar requirements as other recent provincial pay transparency laws. However, the government delayed the Act‘s implementation indefinitely following a leadership change in 2018, and it is unclear whether these requirements will eventually come into force.

At the federal level, pay transparency requirements were incorporated into the Employment Equity Regulations effective June 1, 2022. Federally-regulated private sector employers with over 100 employees are now required to disclose aggregate pay gap information in their annual employment equity reports.

Key Takeaways for Employers

The growing pay transparency trend is likely to continue, and we expect more provinces to enact pay transparency and/or pay equity laws in the coming years. Employers across Canada should confirm compliance with existing provincial and federal legislation, including any applicable pay disclosure or reporting obligations, and keep an eye out for future developments. More broadly, employers should review their compensation practices to ensure consistency and equity in pay across different groups of employees.

To get a handle on pay equity compliance globally—reporting requirements, compensation disclosure requirements, salary history bans, etc.—contact a team member to learn more about our Global Pay Transparency Matrix. This tool monitors the legal pay equity requirements and forthcoming developments across over 70 jurisdictions (of which over 40 currently have transparency or reporting requirements) to help clients manage their global workforces).

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