The Corporation of the Township of Emo v. Pay Equity Office, 2023 CanLII 96980

Pay Equity Hearings Tribunal

PEHT Case No: 1132-23-PE

The Corporation of the Township of Emo, Applicant v Pay Equity Office, Respondent

BEFORE: M. David Ross, Chair, Lori Bolton and Stephen Roth, Members

DECISION OF THE TRIBUNAL: September 26, 2023

1. This is an application under the Pay Equity Act, R.S.O. 1990, c.P.7 as amended (“the Act”).

2. This application involves the May 29, 2023 Order that arose from a “monitoring file” that was initiated by the Pay Equity Office.

3. The application was delivered to the respondent on August 14, 2023. The Tribunal delivered the Confirmation of Filing to the respondent on August 16, 2023. The respondent has not filed a response in accordance with the timelines set out in the Tribunal’s Rules of Practice, the Tribunal’s Information Bulletin #2 and the Confirmation of Filing. Accordingly, the material filed by the applicant is uncontested.

Background Facts

4. On February 15, 2022, the Pay Equity Office contacted the applicant as part of its monitoring program. The monitoring program falls under the Pay Equity Office’s broad statutory mandate to enforce the Act pursuant to section 33(1):

The Pay Equity Office is responsible for the enforcement of this Act.

5. The applicant filed its pay equity plan from December 31, 1989. There was no challenge or objection to this plan within the period set out in the Act. The applicant submitted that the plan complied with the Act and considered the gender predominance of the job classes. Accordingly, it constitutes a deemed approved pay equity plan pursuant to section 15 of the Act.

6. As part of the monitoring process, the applicant conducted a pay equity maintenance review, and created an amended pay equity plan which was posted on August 2, 2022. The applicant provided pay equity adjustments and payments to newly created and changed job classes because of that review. These adjustments were provided to 14 of the applicant’s 19 employees retroactively to 2016. The Review Officer found that this amended plan was compliant with the Act.

7. On May 29, 2023, the Review Officer issued an Order which found that “there was no evidence to suggest that a pay equity plan was posted or that pay equity was achieved prior to the period covered by the Employer’s August 2022 Plan”. The Review Officer then made directions to the applicant to determine whether any further retroactive adjustments are owed prior to 2016.

Summary of the Applicant’s Position

8. The applicant submitted that the Review Officer erred when she found that the 1989 Pay Equity Plan did not comply with the Act and that the 1989 Pay Equity Plan did not constitute a deemed approved plan as defined by the Act. The applicant also alleges that the three decades that have passed from when the plan was posted to when the Review Officer challenged the plan constitutes an abuse of process caused by delay, and that the delay has caused prejudice to the applicant in assessing historical records that no longer exist.

9. Since the Pay Equity Office did not respond to the application, the Tribunal will proceed with this decision based on the uncontested materials filed by the applicant.

Deemed Approved Plan

10. The Tribunal finds that the Review Officer’s finding that pay equity had never been achieved by the applicant, and the statement that the Commission does not approve pay equity plans are incorrect and unreasonable. While the Commission does not actively approve pay equity plans, the Act is explicit that pay equity plans that have received no objections within the time limits set out in the Act are deemed approved by the Commission.

11. The Act is clear about how a pay equity plan becomes deemed approved. In establishments without bargaining agents, such as in the instant case, section 15 sets out the statutory framework for how a plan becomes deemed approved by the Commission. Section 15 of the Act states:

Establishments without bargaining units

15 (1) In an establishment where no employee is represented by a bargaining agent, the employer shall prepare a pay equity plan for the employer’s establishment and the employer, on or before the mandatory posting date, shall post a copy of the plan in the workplace.

Idem

(2) For the purposes of a pay equity plan required by this section or subsection 14 (8), the employer may decide,

(a) that the establishment of the employer includes two or more geographic divisions; and

(b) that a job class is a female job class or a male job class.

Idem

(3) An agreement under section 14 between an employer and a bargaining agent shall not affect any pay equity plan required by this section or subsection 14 (8). R.S.O. 1990, c. P.7, s. 15 (1-3).

Employee review

(4) The employees to whom a pay equity plan required by this section or subsection 14 (8) applies shall have until the ninetieth day after the date on which the copy of the plan is posted to review and submit comments to the employer on the plan. R.S.O. 1990, c. P.7, s. 15 (4); 1993, c. 4, s. 10.

Changes

(5) If as a result of comments received during the review period referred to in subsection (4), the employer is of the opinion that a pay equity plan should be changed, the employer may change the plan.

Posting of notice

(6) Not later than seven days after the end of the review period referred to in subsection (4), the employer shall post in the workplace a notice stating whether the pay equity plan has been amended under this section and, if the plan has been amended, the employer shall also post a copy of the amended plan with the amendments clearly indicated.

Objections

(7) Any employee or group of employees to whom a pay equity plan applies, within thirty days following a posting in respect of the plan under subsection (6), may file a notice of objection with the Commission whether or not the employee or group of employees has submitted comments to the employer under subsection (4).

Deemed approval and first adjustments

(8) If no objection in respect of a pay equity plan is filed with the Commission under subsection (7), the plan shall be deemed to have been approved by the Commission and, on the day provided for in the plan, the employer shall make the first adjustments in compensation required to achieve pay equity. R.S.O. 1990, c. P.7, s. 15 (5-8).

(emphasis added)

12. As such, subsection 15(4) of the Act provides employees with a ninety-day period to review and submit comments to the employer about the pay equity plan. Section 15(6) of the Act requires the employer to post a notice about whether the plan has been amended or not, and to post a copy of the amended plan, if amendments were made. Then Section 15(7) of the Act provides a thirty-day window for employees to file a notice of objection with the Commission.

13. If no objections are received within the timeframes set out in section 15 of the Act, it is statutorily deemed to be approved by the Commission.

14. In this case, the applicant has provided the 1989 plan and submitted that it was posted on or around December 31, 1989. Accordingly, the 1989 pay equity plan was deemed approved as of the spring of 1990, or to put it otherwise, over 32 years before the Pay Equity Officer contacted the employer as part of its monitoring program.

15. Once a pay equity plan is deemed approved, the maintenance phase commences, and the employer bears the obligation to ensure that pay equity is maintained. In Kapuskasing Indian Friendship Centre, 2022 CanLII 113148 (ON PEHT), the Tribunal explained the important difference in approach between when an employer has a deemed approved plan as opposed to when it does not. At paragraph 45, the Tribunal held:

On review of the Tribunal’s jurisprudence, the Tribunal has only invoked this abuse of process doctrine to dismiss applications in cases where the respondent’s pay equity plan had been “deemed approved”. I am unaware of any instance where the Tribunal invoked this doctrine in a case where the pay equity plan was not deemed approved, such as in the instant case. This again makes complete sense. Where a deemed approved plan exists, the Tribunal relies on the fact that an employer completed a pay equity plan, any pay equity adjustments and payments were made at that time, and no one exercised their right under the Act to object to the pay equity plan when it was posted. The employees (whether represented by a union or not) then, by not challenging the plan, or appealing an order in a timely manner, led the employer to believe that there were no concerns with the plan, and then a considerable period passed before issues are later raised. The resulting delay causes an inherent prejudice to the employer who had no reason to understand that there were concerns with the plan, and relevant documents get destroyed and memories fade. The Tribunal conducts a contextual analysis when it considers whether an application should be dismissed because of an abuse of process due to delay or lack of records, and I heard nothing during the course of this proceeding that would cause me to consider extending the application of this doctrine to applications that involve pay equity plans that were challenged within the timeframes set out in the Act.

(emphasis added)

16. At paragraph 51, the Tribunal held:

The context that the Tribunal considers the fact of whether there is a deemed approved pay equity plan. Where a deemed approved plan exists, as discussed above, the Tribunal has the comfort that a pay equity plan was completed, the required payments were made, and the collective group of employees (whether represented by a union or not) did not object to the pay equity plan. The lack of a challenge permits the inference that there were no apparent errors in the plan, or alternatively, that the employees’ collective silence led the employer to believe that it did not need to keep payroll and other relevant documents past the required time periods.

(emphasis added)

17. As such, the nature of pay equity plans being statutorily “deemed approved by the Commission” means that there is no formal approval process. The Act does not, and did not in 1989, require employers to submit their pay equity plans to the Pay Equity Commission to be reviewed and approved. This model was the decision of the legislature who drafted and implemented the Act and it has not been changed since.

18. A result of a self-regulatory, deemed approved model can be that a deemed approved plan is revealed to be flawed or otherwise does not comply with the Act in some way. An example of this is found in the Participating Nursing Homes, 2021 ONCA 148 line of cases, which started from the fact that the Tribunal found that the “$1.50 Plan” which was deemed approved in the early 1990s was not compliant with the Act as it did not use a gender-neutral comparison system (“GNCS”). However, the remedy was not for the Tribunal to declare that pay equity was never achieved because the deemed approved plan contained errors, as that would have been inappropriate because the plan was deemed approved by the Commission by operation of the Act. Instead, the Tribunal’s, and Court’s, direction was to create an amended plan that was compliant with the Act. This is the appropriate direction during the maintenance phase if the Commission or the Tribunal is not satisfied that pay equity has been maintained because an employer was unable to demonstrate how a deemed approved plan remains currently applicable.

19. Again, this is a very different situation than one where an employer does not have a deemed approved pay equity plan at all. In those cases, the Tribunal has been clear that an employer does not get the benefit of having a deemed approved pay equity plan that had not been challenged and does not gain the benefit from the inference that there were no concerns that pay equity had not been achieved because no objections to the plan had been raised to the Commission. At paragraph 52 of Kapuskasing Indian Friendship Centre, supra the Tribunal held:

52. The context is different in a case where there is no evidence that pay equity was ever achieved, and there is no deemed approved plan, such as in the instant case. Pay equity is not a suggestion but a statutory requirement that has existed for more than three decades. It has been three decades since the Act came into force, and any employer that has not completed a pay equity plan and has not made any payments that may be owing, has benefitted from discriminatory pay practices over the past thirty years. To be straightforward on this issue, the Tribunal has little sympathy for the position that it will be hard to gather the information needed to ameliorate the historical pay disadvantage that employees in female job classes have experienced, or that making payments that go back several years, or decades, will be very expensive. The cost of a pay equity plan is not a factor that the Tribunal can consider as it is not a statutory one. There is no other way to put it than an employer who has not complied with the Act which came into force in 1990 is the primary architect of any misfortune associated with the delay in complying with the Act. If the employer’s pay practices were not discriminatory, and female job classes were paid relatively equal to their male comparators, then after completing the plan, there would not be payments owing and no additional costs. However, if payments are owing, those payments are required to ameliorate a historical discriminatory pay practice and to satisfy the stated purpose of the Act.

20. In this case, the Tribunal finds that the Review Officer ignored, or did not appreciate the fact that the applicant’s 1989 pay equity plan was deemed approved by the Commission. The fact that the Review Officer found it appropriate to declare that pay equity had never been achieved when the pay equity plan had been deemed approved by the Commission for 32 years is both concerning, causes issues of procedural fairness and prejudice because of an extreme delay, and constitutes a fundamental error in her May 29, 2023 Order.

The August 2022 Plan

21. The applicant has completed an amended plan that has been found compliant with the Act by the Review Officer in her May 29, 2023 Order. The applicant submitted that it was impossible to go back more than six years, past 2016, because it no longer retained the records necessary to complete the analysis.

22. In Kapuskasing Indian Friendship Centre, supra, the Tribunal confirmed that the analysis for when it becomes permissible to “cut off pay equity obligations because of a lack of records is a contextual one”. At paragraphs 50 and 51 of that decision, the Tribunal held:

50. This issue gets further complicated by the fact that there is no limitation period in the Act, but there is also not a corresponding obligation to keep records, or any guidance in the Act about how long records must be kept. This appears to be an issue unique to the Act, and admittedly is a significant challenge that the Tribunal is having to address and considers with increasing frequency. However, again, given the purpose of the Act, the analysis of when it would be permissible to “cut off” pay equity obligations because of a lack of records is a contextual one. The factual context of each case will determine whether a respondent can rely on a lack of records to claim that reviewing whether pay equity can be achieved has been made impossible.

51. The context that the Tribunal considers the fact of whether there is a deemed approved pay equity plan. Where a deemed approved plan exists, as discussed above, the Tribunal has the comfort that a pay equity plan was completed, the required payments were made, and the collective group of employees (whether represented by a union or not) did not object to the pay equity plan. The lack of a challenge permits the inference that there were no apparent errors in the plan, or alternatively, that the employees’ collective silence led the employer to believe that it did not need to keep payroll and other relevant documents past the required time periods.

23. At paragraph 49 of that decision, the Tribunal cited that the only statutory requirement to retain pay records is for 6 years, and suggested that six years would be the minimum period for which the Tribunal could consider an employer’s argument that it cannot comply with an order because of a lack of records:

Objectively, as of the date Ms. Piché filed her application, the respondent ought to have had, at an absolute minimum, six years of payroll records because the Canada Revenue Agency requires all payroll records to be retained for no less than 6 years. The Employment Standards Act, 2000, S.O. 2000, c.41, also requires all records pertaining to vacation pay (which requires wages to be recorded) to be retained for no less than five years. As such, the earliest conceivable date that could possibly have been considered where the lack of records could start being relied on as causing prejudice would be sometime in 2011. To find otherwise would only serve to permit the notion that in the face of a pay equity complaint, employers could shred their payroll documents and relevant pay equity information and then simply claim that it is impossible to achieve pay equity because the records no longer exist. This would be absurd, inconsistent with the purpose of the Act, and only serve to exacerbate the historical pay disadvantage that employees in female job classes have experienced at an employer that has not completed a pay equity plan contrary to the statutory requirement to do so.

24. In the instant case, the applicant has submitted that it does not have records prior to 2016 that it can rely upon to complete a pay equity analysis. Based on the applicant’s uncontested submissions, the Tribunal finds that the 2022 Amended Plan is compliant with the Act. To be clear, this decision does not confirm that six years is the period for which pay equity obligations must be limited due to a lack of records; but is based on the context of this case, and specifically considers that no response was filed to challenge the applicant’s materials.

Conclusions

25. The Tribunal finds that the applicant’s 1989 pay equity plan was deemed approved by the Commission in 1990.

26. The Tribunal finds that the applicant’s August 2022 amended pay equity plan is compliant with the Act.

27. For the reasons set out above, the Tribunal finds that the May 29, 2023 Order contains fundamental errors in the analysis and cannot stand. Pursuant to the Tribunal’s authority granted by subsection 25(2)(d) the Tribunal revokes the May 29, 2023 Order.

"M. David Ross” M. David Ross, Chair

“I agree” Lori Bolton, Member

"I agree" Stephen Roth, Member