A recent decision of the Ontario Court of Appeal represents the latest development in a long-standing issue regarding how to maintain pay equity in predominantly female workplaces. In Participating Nursing Homes v. Ontario (March, 2021) Ontario’s top court held that maintaining pay equity in female job classes with no direct male comparators requires ongoing comparisons to “proxy” male job classes. This decision is very significant as it represents a departure from the concept that proxy comparators were necessary to establish pay equity, but not to maintain it.
As many readers of Focus will know, the Ontario Pay Equity Act (the “Act”) is designed to redress systemic gender discrimination in job compensation. In order to do this, the Act provides mechanisms to compare female and male job classes. In predominantly female workplaces, where there are no male job classes available for direct comparison, the Act sets out a “proxy” method. The proxy method permits a comparison between the female job class seeking pay equity, and an analogous female job class from another establishment where pay equity has been achieved through the use of a direct male comparator.
This proxy method was used in 1995 when the Ontario Nurses’ Association and the Service Employees International Union (collectively, the “Unions”) negotiated with the operators of nursing homes (the “Participating Nursing Homes – PNH”) to develop a pay equity plan that would apply to health professionals working across Ontario’s nursing home sector. The proxy employer was the Unionized Municipal Homes for the Aged Across Ontario (the “Municipal Homes”). The health care aides working at Municipal Homes were designated as the analogous female job class. These workers had already established pay equity by direct comparison to a male job class.
Through the proxy method the health care professionals represented by the Unions were compared to the health care aides at the Municipal Homes. The result was an agreement between the Unions and the PNH to pay increases and an implementation schedule that ultimately achieved pay equity in 2005. The issue then became how to maintain pay equity.
The Unions claimed that the PNH failed to maintain pay equity in the years following 2005. This position was based on wage gaps that re-emerged between employees of the PNH and those of the Municipal Homes that did comparable work. The Unions believed that the compensation of the employees at the Municipal Homes was higher because of their ongoing access to direct male comparators. The Unions brought an application to the Pay Equity Hearings Tribunal (the “Tribunal”) claiming that the Act requires pay equity to be maintained using the proxy method on an ongoing basis.
The Tribunal agreed with the Unions that the Act requires employers to maintain pay equity and that maintenance requires on-going monitoring of changes in compensation and the value of the job class. However, the Tribunal rejected the Unions’ position relating to the ongoing use of the proxy method. Instead, the Tribunal held that in the case of proxy plans, maintenance does not require the monitoring of changes in compensation or value in the proxy establishment. In the Tribunal’s view, to do otherwise would be inconsistent with the principle that each employer is responsible for ensuring that its own compensation practices are free from gender discrimination. The Tribunal proceeded to direct the parties to negotiate a gender neutral comparator system (“GNCS”) which would operate to take into account increases in the value of the employees’ work, and adjust the compensation accordingly.
The PNH applied to the Divisional Court for judicial review of the Tribunal’s decision. While the Divisional Court upheld most of the Tribunal’s decision, including the order requiring the parties to negotiate a GNCS, it disagreed with the Tribunal’s treatment of maintenance in proxy plans. On this point the Divisional Court stated that the methodology for maintaining pay equity must include measures to ensure “claimants who achieved pay equity through the proxy methodology continue to have access to a male comparator…”
The PNH and the Attorney General of Ontario appealed this decision to the Ontario Court of Appeal. They argued that the Tribunal’s formula for maintaining pay equity was unreasonable, as it will “forever require the PNHs to base their pay equity compensation” on another employer.
The Court of Appeal however disagreed. It held that the object of the Act requires ongoing comparisons to men in order to maintain pay equity. If there are insufficient men in the establishment to permit direct comparisons, the proxy method is utilized. Ontario’s top court proceeded to direct the parties to comply with the procedures specified by the Tribunal that would ensure “respondents who have established pay equity through the proxy method will continue to have access to male comparators to maintain pay equity.”
In Our View
While the Court of Appeal’s decision may not be the final word on this issue, as there may be an appeal to the Supreme Court of Canada, it does provide recognition of the fact that gender-discrimination in compensation is systemic. As a result, inequities in pay can and do re-emerge from time to time. Regardless of the mechanism used to maintain pay equity, the Court of Appeal’s decision makes it clear that employers must be cognisant of this risk.