Pay transparency in Canada
- Ontario is proposing new requirements for pay transparency with the introduction of Bill 149, the Working for Workers Four Act, 2023. This aligns with a broader nationwide shift towards greater openness about compensation.
- Employers should take a proactive approach and address their internal pay practices to prepare for pay transparency.
- Pay transparency contributes to increased employee satisfaction and productivity, fosters trust and honesty in the workplace, and can help attract and retain top talent.
Pay transparency legislation in Canada
Pay transparency is steadily gaining momentum in Canada, as indicated by a recent study that found 84% of Canadians surveyed would support a law mandating employers to disclose salary ranges in job postings. Workers want to know more about the decisions behind their compensation and how their compensation compares to others in similar roles. With the growing demand for pay transparency from the workforce and new compliance requirements being introduced throughout Canada, employers are having to think proactively about pay transparency.
What is pay transparency?
What is pay transparency and what does it mean for an organization? Pay transparency refers to the practice of openly sharing information about compensation with employees and job candidates, and it can benefit an organization in a number of ways by fostering a fair and equitable workplace. Organizations benefit from a culture of trust and honesty, increased employee satisfaction and productivity, and the ability to attract and retain top talent.
Where is pay transparency legislation in effect?
While British Columbia is the most recent jurisdiction in Canada to pass pay transparency legislation, several other jurisdictions have also passed various forms of pay transparency laws, including Prince Edward Island and Newfoundland and Labrador. Ontario is also taking steps towards increased pay transparency with the recent introduction of Bill 149, the Working for Workers Four Act, 2023, which aims to close the gender pay gap and better equip workers with compensation information while searching for jobs. If passed as drafted, Bill 149 will require Ontario employers to disclose expected compensation or the range of expected compensation for a position in their public job postings, which will also create a broader movement towards internal pay transparency.
As pay transparency legislation passes in more Canadian jurisdictions, it will become mandatory for employers to increase their transparency about pay to some degree. However, even in locations without legal requirements, an increasing number of organizations are seeing the value in pay transparency and are voluntarily shifting towards greater openness about compensation. Read on to learn more about seven proactive steps your organization can take to address your internal pay practices to prepare for pay transparency.
What does pay transparency mean?
There is no universal approach to pay transparency. You must consider your organization’s culture, industry norms, and any applicable legislative requirements for your jurisdiction. For one organization, pay transparency may involve providing insight into how pay is determined and what factors are considered. For others, it may involve disclosing the organization’s salary structure and where positions fall relative to others.
Leadership alignment and commitment are crucial during this phase. Remember that members of your leadership team might be resistant to pay transparency as it may be a significant departure from how compensation is discussed in your organization. Our training catalogue contains dozens of leadership and organizational change courses. These courses discuss how leaders can become change agents and implement practices that promote positive change in their organization. To see our immersive and traditional training courses in person, book a free demo with our HR experts today.
How to create a pay transparency policy
Creating a Pay Transparency Policy demonstrates that you are committed to a fair and equitable workplace by addressing and eliminating any pay discrepancies in your organization. Ensure that the policy is clear and easy to understand, without complicated jargon. Ideally, the policy should align with your organization’s core values, and always consider any compliance or legislative requirements.
This is also a good time to review your current pay practices and data to ensure they are current, fair, and equitable. For example, is the market data you are working from current? Ensuring that decision-makers have access to up-to-date wage information is critical for benchmarking and ensuring your compensation is fair and competitive. If it isn’t, your pay structure may require some updating. Also consider whether your process for promotions and merit increases are fair and equitable.
If you’re concerned that your market data isn’t the most up-to-date, or if you’re not sure about the legislative requirements for pay transparency in your jurisdiction, a live HR Advice call with Citation Canada, formerly HRdownloads, can help.
How to conduct an internal pay audit
Be sure to complete a comprehensive internal pay audit before rolling out pay transparency practices across your organization. By doing so, leaders can proceed with confidence knowing that there is internal pay equity and that the publicly shared salaries in job postings align with compensation for existing employees. It may feel like a daunting task, but it is a crucial step in moving towards pay transparency.
During your audit, you may discover compensation gaps or discrepancies across different groups of employees that require an adjustment. Be truthful if inconsistencies are uncovered, and view your pay audit as an opportunity to build trust with your employees. If pay discrepancies are found, consider using a Pay Increase Form to communicate a pay equity increase to the employee.
How to communicate pay transparency
Communication is key when implementing pay transparency. Before, during, and after the implementation, you need a communication plan with a clear explanation for implementing a pay transparency policy. Also include the numerous benefits you hope to achieve with pay transparency, which may include internal pay equity, a positive workplace culture built on honesty and trust, increased employee satisfaction and retention, and recruitment of top talent. Consider using a Change Communication Form when preparing to roll out your pay transparency policy. This form is best used by leaders and HR when preparing notifications about an organizational change, and it can be used to organize key ideas and develop a plan for communicating the change effectively. Our content library contains hundreds of customizable policy templates and communication forms. If you’re unsure where to start, connect with one of our HR experts about tailoring our policy templates for your organization. Request a free demo of our content at a time that fits your schedule.
Remember to be open and receptive to questions and feedback from employees and address any concerns they may have. It may be beneficial to host office hours or a Q&A session with HR for further employee support.
Review your recruitment and hiring practices
The employee experience begins during the recruitment process, and many top candidates seek organizations that align with their personal values, like fairness, transparency, and honesty. Disclosing the compensation or the range of expected compensation for a position in public job postings can instill trust in candidates, and when used correctly, pay transparency practices can help your organization attract highly qualified candidates. Consider creating a Hiring Policy or updating your current policy to ensure compliance with any pay transparency legislation in your jurisdiction; if required, also update your job posting templates to include the necessary compensation information.
If your organization can’t offer the highest pay or match the pay offered by competitors, you may be concerned that posting compensation publicly could limit your access to top talent. Remember that competitive compensation is more than just salary. Advertise the other benefits that your organization offers employees, such as healthcare benefits, pension and retirement plans, paid vacation and wellness days, flexible work schedules, and mental health supports.
Provide training and support to key roles
Training and support must be provided to frontline managers and HR so that these key people can confidently navigate conversations and questions from employees and candidates. Managers and HR should fully understand your organization’s pay transparency policy, as well as the purpose and benefits of pay transparency. Aim to anticipate questions and concerns that your employees may have and prepare your leaders with education and talking points to help them handle one-on-one conversations with employees.
Our Pay Equity Training: Best Practices for Savvy Workplaces (Immersive) is a great resource to complement pay transparency conversations. This training course explains why pay equity is important in the workplace and in society, how to ensure you have an equitable compensation system, and how pay equity plays a key role in recruitment, culture, and engagement. To see this course and others, book a live demo with one of our HR experts.
Commit to growth and change
Committing to pay transparency may be a significant departure from how compensation is discussed in your organization; however, it is essential for a people-first workplace culture and pay philosophy. For pay transparency to be effective, you must make a long-term commitment to ongoing communication and transparency about pay in your organization, as well as regular pay audits to identify any pay inconsistencies.
Pay transparency is an ongoing process that requires regular monitoring and adjustment. Gathering employee feedback is also vital for determining the efficacy of your pay transparency practices. Consider distributing a Change Management Satisfaction Survey to your employees to receive valuable feedback on the implementation of your pay transparency policy and practices. Commit to regularly reviewing the effect of your pay transparency policy on employee morale, retention, and recruitment efforts, and adjusting as needed to ensure that your policy and practices continue to align with the values and goals of your organization and legislative requirements.
Pay transparency in Canada: a growing HR trend
Pay transparency is steadily gaining momentum in Canada, with an increasing number of jurisdictions passing various forms of pay transparency laws. Ontario’s Bill 149, the Working for Workers Four Act, 2023, is the latest piece of legislation to be introduced in an effort to increase pay transparency. As legislation passes in more Canadian jurisdictions, employers will be required to increase their transparency about pay. However, even in locations without legal requirements, employers should take a proactive approach. Once implemented, organizations will benefit from a culture of equity, trust and honesty, increased employee satisfaction and productivity, and the ability to attract and retain quality talent.
To make things even easier, check out our Policy Manual Wizard, an interactive software which compiles all the policies you need based on your answers to our questions. Streamline your HR processes with our human resources information system (HRIS). We also offer tailored solutions that include HR software, HR content, and HR support, with thousands of accessible HR documents, templates, compliance resources, and more!
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