If your Ontario business grows to 10 or more employees, you are legally required to comply with the Pay Equity Act. This means you must proactively evaluate jobs, compare female-dominated roles to male-dominated roles, and post a Pay Equity Plan to eliminate any gender wage gaps.
Growing a business is a major milestone, but hitting the 10-employee mark in Ontario triggers significant new legal responsibilities. The Ontario Pay Equity Act is a proactive law designed to ensure women and men receive equal pay for work of equal value. Unlike other human rights laws that only activate when an employee files a complaint, pay equity requires the employer to independently hunt for and fix wage gaps within their own company.
As of May 2026, businesses in Toronto, Ottawa, Waterloo, and across the province are heavily monitored by the Pay Equity Commission. 📈 The law applies to all private sector employers with 10 or more employees. Failing to establish a formal plan can result in surprise audits, retroactive wage payouts, and hefty fines. If you are a growing employer, you may want to search our directory for an employment lawyer to ensure your payroll practices are legally compliant.
Step-by-Step Process in Ontario
Complying with the Pay Equity Act is a highly structured, analytical process. It involves scoring the value of every role in your company, regardless of the individual person sitting in the chair.
Step 1: Determine Employer Status and Employee Count
First, you must accurately count your workforce. 👥 The Act applies as soon as your company reaches 10 employees, including part-time, seasonal, and casual workers. Even if your workforce later drops below 10, once you hit the threshold, the legal requirement for pay equity remains permanently attached to your business.
Step 2: Identify Job Classes and Gender Dominance
You must group your employees into “job classes” (e.g., Receptionists, Warehouse Workers, Sales Managers). Next, you determine the gender dominance of each class. A job class is considered “female-dominated” if 60% or more of the workers in that role are women, and “male-dominated” if 70% or more are men.
Step 3: Evaluate the Value of the Work
This is the core of pay equity. You must evaluate every job class objectively based on four mandatory criteria: skill, effort, responsibility, and working conditions. 📝 You are evaluating the requirements of the job itself, not the performance of the specific employee. Employers usually use a point-scoring system to assign a numerical value to each role.
Step 4: Compare Compensation and Adjust
Once you have scored the jobs, you must compare female-dominated job classes with male-dominated job classes that have a similar point score. If a female-dominated role (like a Customer Service Rep) scores identically to a male-dominated role (like a Forklift Operator), but the female role pays less, you have identified a pay equity gap. You must legally raise the wages of the female-dominated class to match.
Step 5: Post the Pay Equity Plan
For businesses with 100 or more employees (or smaller businesses that choose to), a formal Pay Equity Plan must be posted in a visible area of the workplace. 📌 You must continuously maintain this plan every year, ensuring that new jobs or changing roles do not recreate gender wage gaps.
How Much Does it Cost in Ontario?
Achieving pay equity involves administrative costs as well as the actual cost of increasing employee wages.
- Government Fees: There are no fees paid to the government to file or create a pay equity plan.
- Consulting and Legal Fees: Hiring an HR consultant or an employment lawyer to conduct the complex point-scoring analysis typically costs between $3,000 and $10,000+ CAD for small to medium businesses.
- Wage Adjustments: Employers are legally required to dedicate at least 1% of their previous year’s payroll annually to close any identified wage gaps until parity is reached.
- Penalties: Failing to comply after an audit by the Pay Equity Review Officer can result in administrative fines of up to $50,000 CAD.
How Long Does the Process Take?
Developing a Pay Equity Plan is not an overnight task. ⏱ For a small business with 10 to 50 employees, gathering the job descriptions, scoring the roles, and comparing the data usually takes 2 to 4 months. For larger corporations with hundreds of employees and union involvement, drafting the plan can easily take 6 to 12 months. Once the plan is established, maintaining it requires an annual review, typically taking 1 to 2 weeks each year during the payroll budgeting phase.
| Job Class Factor | Description of Evaluation | Example Considerations |
|---|---|---|
| Skill | Education, experience, and training required. | College diploma, forklift license, bilingualism. |
| Effort | Mental and physical exertion needed. | Lifting heavy boxes, sustained concentration. |
| Responsibility | Accountability for people, equipment, or budgets. | Managing a team, handling company cash. |
| Working Conditions | Environment and hazards of the job. | Outdoor weather, loud noise, dealing with angry clients. |
Frequently Asked Questions (FAQ)
What is the difference between Equal Pay and Pay Equity?
Equal Pay means paying a man and a woman the same wage for doing the exact same job. Pay Equity is broader; it means paying a female-dominated role the same as a completely different male-dominated role if both jobs provide the exact same value to the company.
What if all my employees are women?
If an employer has no male-dominated job classes to compare against, they must use a proxy method. This involves comparing their female job classes to similar roles in an outside public-sector organization to ensure fair wages.
Can I lower men’s wages to achieve pay equity?
No. Under the Ontario Pay Equity Act, it is strictly illegal to lower the compensation of any employee to achieve pay equity. You must raise the wages of the underpaid female-dominated classes.
Does this apply to federal businesses like banks?
No, federally regulated businesses in Ontario (like banks, airlines, and telecommunications) are governed by the federal Pay Equity Act, which is overseen by the Canadian Human Rights Commission, not the provincial Ontario act.
Do part-time and seasonal workers count towards the 10-employee threshold?
Yes. Every individual on your payroll, including part-time, casual, and seasonal workers, counts towards the 10-employee minimum that triggers the mandatory compliance with the Act.
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