Giselle Blackman is among the many HR leaders at small and medium businesses in Canada navigating changing pay transparency laws across the country.Jennifer Gauthier
Giselle Blackman discovered a problem when she was preparing to bring her business in line with B.C.’s Pay Transparency Act.
The salaries of some long-time administrative staff at her company in Port Coquitlam, B.C., had not kept pace with the industry average. “When we had to do market alignment, there were some big jumps,” says Ms. Blackman, vice-president of people and culture at Fit Foods Ltd.
If the nearly 200-person supplement manufacturer had to replace an employee or expand the team, it would be advertising salaries – a requirement of the new legislation – that were much higher than people in those roles were currently earning.
In the past four years, governments across Canada have introduced laws designed to address persistent wage inequities. The federal government’s 2021 Pay Equity Act requires federally regulated workplaces to create a pay equity plan and to file annual reports with salary ranges, though it does not include specific pay transparency provisions.
PEI and B.C. passed pay transparency legislation in June 2022 and May 2023, respectively. Ontario’s laws come into effect Jan. 1. (Newfoundland and Nova Scotia have introduced legislation but there are no active laws yet.)
While details vary by province, most pay transparency legislation requires employers to list salary ranges in job postings, bars employers from asking applicants about pay history, and prohibits reprisals against employees who talk about their pay with other employees.
Small and medium-sized businesses across Canada have been implementing pay transparency in response to these new regulations.
Some owners, including Paul Taylor of Evenings & Weekends Consulting in Toronto, are opting for transparency even if they’re exempt from the laws based on their location or company size. For example, Ontario’s laws exempt companies with fewer than 25 employees, while B.C.’s laws exempt companies under 300 employees from reporting requirements (which will be lowered to companies employing fewer than 50 people as of Jan. 1).
“We’re trying to model that, as an employer, we can create a sustainable business while also ensuring that our colleagues can sustain themselves,” says Mr. Taylor, whose seven-person organization advises charities and non-profits. He and his co-founder, Laëtitia Eyssartel, instituted pay transparency as soon as they opened their business in 2022.
Whatever their reasons for implementing pay transparency, employers are finding that doing so is like any other aspect of running a business – it comes with its challenges.
Louisa Benedicto, senior vice-president of human resources recruitment at Hays Canada, says the first issue many smaller companies face is what Ms. Blackman encountered: Salaries that are out of line with industry standards, and people being paid significantly different rates compared with others in the same internal roles.
“This is where most companies struggle,” Ms. Benedicto says. They have to establish a consistent pay structure across the organization.
Once consistent pay bands are established, the next question is what to do with the people who are under- or over-paid. Ms. Benedicto says the solution for high-earners could be a job title change or fast-tracked training to move them up to the next level.
Workers who are under-paid should get a bump in salary, but experts acknowledge it can be cost-prohibitive for some small and medium-sized companies. “It could be that we need almost $1-million or more in order to get that whole salary structure to where it needs to be, just as a baseline,” says Kristi Searle, founder and CEO of Peoplebiz, in Langley, B.C. “Organizations might not have the money to do that.”
For Ms. Searle’s clients, which include businesses in B.C. and those under federal jurisdiction, such as Indigenous organizations, she first looks at increasing salaries for anyone below the poverty line. Then she addresses other positions by priority. “You have to pick and choose and phase it in over time where the budget can support it.”
At Fit Foods, Ms. Blackman prioritized specialized roles in quality assurance and research and development – areas integral to the company’s competitive advantage. “Whatever we need to do to make sure that this person stays, we will do that,” she says.
Another dilemma with pay transparency is that applicants and employees don’t always have accurate salary information.
“A person may look at a job based on title, and Salary.com or Monster or whatever may give them a certain wage range without giving them the parameters,” Ms. Blackman says. Missing could be information on the size of the company, the scope of the role, or additional compensation package details such as benefits. “Employees are often comparing apples to oranges.”
To counter misperceptions, education and communication are crucial. “You have to train your leaders to handle compensation conversations,” Ms. Benedicto says. “They need to be able to explain clearly why they pay that range.”
Ms. Blackman is now grappling with how to handle the next phase of B.C.’s Pay Transparency Act, which will extend salary reporting obligations to companies with as few as 50 people. She doesn’t currently have a comprehensive HR information system (HRIS) to keep track of the data from both hourly staff and salaried employees.
“Most systems do one well, and the other kind of sloppily,” she says. Until she can get a good HRIS in place, Ms. Blackman will need to compile her reports manually from several systems – using spare time she doesn’t have. “The drain on resources is definitely going to be something that will be a challenge.”
Mr. Taylor’s biggest hurdle as a consultant has been pushing back against people who ask: ‘Why bother if I don’t have to?’
“A lot of businesses are stuck in this idea that, ‘I’m providing income, I’m providing a couple of weeks of vacation, that’s my obligation,’” he says. “But we’re in a different time, and many of us want to find meaning in our work.
“The smart businesses right now are recognizing that it’s about more than compliance, it’s about more than providing a job, it’s about more than not being [a bad person]. People are drawn to meaning and being respected as a whole person. You have to have systems and policies and procedures that demonstrate that you truly respect someone as a whole person.”