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15 August 2018
On 10 May 2018 the Supreme Court of Canada upheld the decisions of the Quebec Court of Appeal and the Quebec Superior Court declaring Sections 76.3, 76.5 and 103.1, Paragraph 2 of the Pay Equity Act invalid on the grounds that they are discriminatory and thus contrary to Section 15(1) of the Canadian Charter of Rights and Freedoms.(1) According to the Supreme Court, rather than ending systemic wage discrimination, the impugned provisions "place barriers along the path to equal pay for women".
How did the Supreme Court arrive at this conclusion and how will the decision affect employers with a business in Quebec?
In 1996 the Quebec government adopted the Pay Equity Act to address systemic wage discrimination against women. The act imposed ongoing obligations on employers to measure and correct pay inequities in predominantly female jobs.
More specifically, under Sections 40 to 43 of the act, now repealed, employers had a continuous obligation to maintain pay equity and adjust compensation accordingly.
In 2009, faced with employers' widespread non-compliance with the act, the Quebec government amended employer obligations by, among other things:
Following these changes, a group of unions challenged the new Sections 76.3, 76.5 and 103.1, Paragraph 2 of the Pay Equity Act.
Under Section 76.3 of the act, the employer audit posting is not required to include the date on which any pay inequity emerged.
Under Section 76.5 of the act, adjustments in compensation apply from the date on which the audit results are posted. Incidentally, the Commission des normes, de l'équité, de la santé et de la sécurité du travail cannot assess compensation adjustments before the posting date (Section 103.1, Paragraph 2). Redress can be applied before the posting only where there is evidence that the employer acted in bad faith or in a discriminatory or arbitrary manner.
In 2014 the Quebec Superior Court concluded that Sections 76.5 and 76.3 of the act were discriminatory and violated Section 15(1) of the Canadian Charter of Rights and Freedoms. The declaration of invalidity was suspended for one year.
In 2016 the Quebec Court of Appeal upheld the Superior Court's decision invalidating Sections 76.3 and 76.5 of the act. Further, the Court of Appeal found that Section 103.1, Paragraph 2 also violated Section 15(1) of the charter.
A majority of the Supreme Court of Canada concluded that the provisions under review violate Section 15(1) of the Canadian Charter of Rights and Freedoms and perpetuate the historical disadvantage of women with respect to compensation. The Supreme Court explained that the sections under review have a discriminatory effect since the pay inequities that emerge during the five-year periods between audits go uncorrected until the next audit. Therefore, only adjustment payments going forward are payable. This makes the employer's pay equity obligation an "episodic, partial obligation".
According to the Supreme Court, under the current scheme, employers must post the results of the audit, but not the date on which the iniquity occurred, which prevents employees from knowing when adjustment payments should have been made. Therefore, employees are deprived of the evidence required to prove the employer's bad faith, which is the only way of obtaining retroactive adjustment payments.
Thus, any inequities that emerge before the next audit will not be redressed, except where the claimants can prove the employer's intentional discrimination.
Ultimately, according to the Supreme Court, employers have been and continue to be granted a certain amnesty for any possible discrimination between audit periods.
The Quebec government has one year to amend the Pay Equity Act based on the Supreme Court's decision. It will be interesting to see the amendments that will be made to the act, which will clearly result in heavier pay equity obligations for employers.
Employers with businesses in Quebec should closely monitor any changes in their compensation structure in order to identify the moment that the inequity re-emerges within their business.
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