Implementing pay transparency requires thoughtful planning and assessment of current compensation programs, plans and policies
This article was produced in partnership with Normandin Beaudry.
On March 21, 2024, Ontario’s Working for Workers Four Act, 2024 (Bill 149) was passed into law by parliament. Under Bill 149, amendments to the Ontario Employment Standards Act, 2000 (the ESA) introduced new provisions requiring job postings to include expected pay or pay ranges, marking a significant milestone in workplace equity.
Pay transparency is the practice of sharing compensation with candidates and employees in an effort to mitigate gender pay discrepancies and disparity. Currently, four jurisdictions in Canada (federal, British Columbia, Nova Scotia, and Prince Edward Island) have enacted pay transparency legislation. Ontario and Newfoundland and Labrador are poised to enact similar legislation signifying growing momentum across the country.
The legislation follows increasing demand from employees to have open and honest conversations in the context of base salary (pay) transparency in recent years. Organizations must therefore ensure they are prepared to handle any challenges or concerns that may arise.
Implementing pay transparency
Implementing pay transparency requires thoughtful planning and assessment of current compensation programs, plans and policies. Employers should take into account potential biases and perceived unfairness, including proactively managing risks related to pay gaps.
Appropriate change management and effective communication are crucial factors in preparing employees and managers for rollout of pay transparency requirements, but employers should first consider the desired degree of transparency, ensuring it aligns with their organization’s values and goals.
It is important for employers to reflect upon what employees really want to know—most often, it is not who is being paid what, but rather what criteria are considered to determine and justify salary levels. Employers must also recognize that increased transparency may expose inequities with their pay policies and structures and may increase perceptions of inequity, leading to dissatisfaction, turnover and decreased performance.
They should therefore invest in effective communications and prepare, educate, engage and equip leaders for discussions with their direct reports. Organizations can also proactively encourage a more amenable workplace by providing a holistic overview of their total rewards, so employees better understand and appreciate all aspects of monetary and non-monetary rewards.
We recommend that employers review their pay programs, practices and policies and ask themselves the following questions:
- Are our salary structures current? Do we have market data to support this?
- Are our pay practices and policies (i.e., merit, promotions) unconsciously gender biased?
- Are our job levels, job evaluation practices and job descriptions up to date? When did we last conduct a pay equity analysis?
- Do our managers and employees understand our total rewards philosophy?
- To what degree do our leaders and employees understand the value of their total rewards?
- How will we explain the inclusion of pay in our job postings to our employees?
- How will we manage inquiries pertaining to the inclusion of pay information in competitors’ job postings?
Next steps
Pay transparency holds promise in the journey towards fair and equitable compensation and program design, but its implementation demands thoughtful consideration and strategic planning. Companies must carefully manoeuvre between candidness and discretion, providing pertinent information to employees while managing the potential associated risks.
By enhancing total rewards programs prior to introducing new pay transparency policies, organizations can help their employees recognize the spectrum of monetary and non-monetary rewards.
Adapting to and embracing pay transparency are critical elements in ensuring that all employees are fairly compensated and help foster a work environment built on trust, mutual respect and inclusivity.
Darcy Clark
Senior Principal, Compensation
Normandin Beaudry
Before joining Normandin Beaudry, Darcy Clark served as a rewards consulting advisor at a global HR consulting firm for almost 20 years. He advises clients across a broad range of industries on the market competitiveness and design of director, executive, and broad-based employee compensation programs. He assists in the development of compensation philosophies and pay strategies/programs that link pay with performance and assesses compensation interests that support organization’s desired risk profile.
Darcy is a passionate and driven consultant with experience in advising clients across a broad range of industries. He has deep technical expertise in establishing strategies and developing compensation solutions, with specialization in benchmarking, salary structure development, job evaluation, job architecture and career frameworks and incentive plan design.
Diane White
Senior Principal, Compensation
Normandin Beaudry
Diane has 30 years’ experience in human resources providing consulting services and leading total rewards teams in a variety of industries. She has deep technical expertise in establishing strategies and developing compensation solutions, specializing in salary structure development, job evaluation and is Normandin Beaudry’s Federal and Ontario pay equity expert.
Her experience spans a wide range of companies from start-ups to global Fortune 500 organizations, including NCR, Deloitte, XM Satellite Radio, Aviva, Cadillac Fairview and Walmart. She also worked for Hewitt Associates, where she led the data management team and provided Ontario pay equity consulting to clients upon the implementation.
