TLDR: Ontario’s Pay Equity Act requires all private sector employers with more than 10 employees to eliminate gender-based wage gaps between comparable male-dominated and female-dominated job classes. It is not a one-time exercise — pay equity must be maintained as your organization changes. Separately, a new Pay Transparency Act took effect January 1, 2026, requiring employers with 25 or more employees to disclose salary ranges in job postings. This guide covers both obligations, how they work in practice, and the mistakes Ontario employers most commonly make.
Pay Equity vs. Pay Transparency: Two Different Laws
These terms are often used interchangeably, but they describe two separate legal obligations in Ontario.
| Concept | Governing Law | What It Requires | Threshold |
|---|---|---|---|
| Pay Equity | Pay Equity Act (1987) | Eliminate gender-based wage gaps between job classes of equal value | Private employers with 10+ employees; all public sector |
| Pay Transparency | Pay Transparency Act (effective Jan 1, 2026) | Disclose salary ranges in publicly advertised job postings | Employers with 25+ employees |
| Equal Pay for Equal Work | Employment Standards Act, s.42 | Same pay for the same work regardless of gender or employment status | All Ontario employers |
Both the Pay Equity Act and the Pay Transparency Act are currently in force and apply simultaneously. If your organization has 25 or more employees, you are subject to both.
Who Must Comply with the Pay Equity Act
The Pay Equity Act applies to:
- All public sector employers in Ontario, regardless of size
- Private sector employers with more than 10 employees — the obligation triggers the day you hire your tenth employee
There is no grace period. Once you exceed the threshold, you are legally required to achieve and maintain pay equity. This catches many growing businesses off guard — they hit the threshold during a hiring push and acquire a compliance obligation they were unaware of.
How Pay Equity Works: The Four Steps
Pay equity is not about paying everyone the same wage. It is about ensuring that work done primarily by women is paid at least as well as work of equal value done primarily by men. The Act uses a four-step process:
- Identify and define job classes — group positions that are similar in duties, responsibilities, and qualifications
- Determine the gender of each job class — is it predominantly female, predominantly male, or gender-neutral?
- Assess the value of each job class — evaluate using skill, effort, responsibility, and working conditions
- Compare and adjust wages — ensure female-dominated job classes are paid at least as much as male-dominated job classes of equal value
Determining Job Classes and Gender Predominance
The Pay Equity Act defines how gender predominance is established:
| Category | Definition | Typical Example |
|---|---|---|
| Predominantly female | 60% or more of the members are women | Administrative support, reception, many healthcare roles |
| Predominantly male | 70% or more of the members are men | Skilled trades, heavy equipment operation, many engineering roles |
| Gender-neutral | Neither threshold is met | Many professional and management roles |
Only female-dominated job classes need to be compared against male-dominated classes — gender-neutral classes are not part of the comparison.
The Four Value Factors
Value is assessed using four factors defined in the Act:
- Skill: knowledge, education, training, and experience required
- Effort: physical and mental demands of the work
- Responsibility: accountability for people, resources, or decisions
- Working conditions: environment, hazards, and physical discomfort
A common error is using evaluation criteria that systematically undervalue work traditionally done by women — for example, weighting physical strength heavily while underweighting precision, emotional demands, or interpersonal complexity. The Pay Equity Commission has found this pattern in many employer-designed systems.
The Pay Equity Plan
Employers with 100 or more employees are required to prepare and post a written pay equity plan. Employers under 100 employees must still achieve pay equity but are not required to post a formal plan. That said, documenting your process is strongly advisable — if you are ever audited, you need to demonstrate that a structured review took place.
A pay equity plan typically includes:
- A complete list of all job classes and their gender predominance
- The job evaluation methodology used and how each factor was weighted
- Current compensation rates for all job classes
- Results of comparisons between female-dominated and male-dominated job classes
- A schedule for any required wage adjustments
The plan must be posted in a visible location where all employees can access it. Employees have the right to review it and raise objections through the Pay Equity Hearings Tribunal.
Pay Equity Maintenance: The Ongoing Obligation
Many Ontario employers complete a pay equity review and consider the matter closed. The Act does not work that way. Once pay equity is achieved, it must be actively maintained as the organization changes.
Events that trigger a pay equity review include:
- Creating new job classes or significantly changing existing ones
- Organizational restructuring or changes in reporting structure
- Mergers or acquisitions
- Changes to compensation structures — new bonus programs, grade changes, market adjustments
- Significant changes in the gender composition of any job class
Where wage adjustments are still required, employers must contribute an amount equal to at least 1% of their annual payroll per year toward closing outstanding gaps. Adjustments can be phased, but must be actively progressing — pausing is not compliant.
An employer that restructures without reviewing pay equity implications can unknowingly create new gender-based wage gaps — and become liable for retroactive adjustments from the date those gaps first appeared.
Ontario’s New Pay Transparency Act (2026)
Ontario’s Pay Transparency Act came into force on January 1, 2026. This is a newer and separate obligation from the Pay Equity Act, and many employers are still adjusting to it.
Who It Applies To
Employers with 25 or more employees that publicly advertise positions — on their own website, job boards like Indeed or LinkedIn, or through external recruiters — must include compensation information in every job posting.
What Must Be Disclosed
- A salary or hourly wage, or a salary/wage range
- If a range is posted, the spread cannot exceed $50,000 (e.g., $80,000–$120,000 is acceptable; $70,000–$140,000 is not)
- A statement disclosing whether the posting is for a currently open vacancy
What Is Prohibited
- Requiring Canadian work experience as a criterion in job postings or on application forms
- Retaliating against any employee who asks about, discusses, or discloses their own compensation
Practical Steps to Comply
- Audit all job posting templates — ensure every template includes a compensation field before it can be submitted for posting
- Establish internal salary bands for each role before posting begins
- Train HR, recruiters, and hiring managers on the new rules and what cannot be asked during interviews
- Remove any references to Canadian work experience requirements from templates and forms
Common Employer Mistakes
| Mistake | Why It Happens | The Risk |
|---|---|---|
| Treating pay equity as a one-time exercise | Feels done after wages are adjusted | Restructuring and hiring create new gaps that go undetected for years |
| Using US-developed job evaluation systems | Convenient templates from global HR platforms | US frameworks may systematically undervalue female-dominated roles |
| Missing the 25-employee transparency threshold | Companies grow past it without realizing | Non-compliant job postings starting January 2026 |
| Assuming blanket raises satisfy the Act | Misunderstanding that it is about job class comparisons, not individual pay | Does not close relative gaps between job classes |
| Not documenting the pay equity process | Seems like unnecessary paperwork | No audit trail if the Pay Equity Commission investigates |
| Forgetting to review after a reorganization | Pay equity is not on the restructuring checklist | New gaps created by org changes accumulate retroactive liability |
Penalties for Non-Compliance
The Pay Equity Commission has broad enforcement authority. Consequences for non-compliance include:
- Retroactive wage adjustments — ordered from the date the gap should have been corrected, with no statutory limitation period
- Orders to prepare, post, or update pay equity plans
- Pay Equity Hearings Tribunal proceedings — initiated by employee complaints or Commission audits
- Public enforcement orders — which typically carry reputational consequences
Under the Pay Transparency Act, the Ministry of Labour can issue compliance orders and escalate to formal enforcement for persistent non-compliance.
External resources: Ontario Pay Equity Office | Equal Pay Coalition Guide | ADP Canada: Pay Equity Laws
How an HR Consultant Can Help
Pay equity compliance is one of the areas where Ontario small and mid-sized businesses most commonly fall behind — not from bad intent, but because the rules are technical and the obligation feels abstract until enforcement arrives. An HR consultant can help by:
- Auditing your current job classes and compensation structures against the Pay Equity Act framework
- Building or updating your job evaluation methodology and pay equity plan
- Reviewing job posting templates for Pay Transparency Act compliance
- Establishing internal salary bands that support ongoing compliance and defensible compensation decisions
- Training HR staff and managers on what can and cannot be discussed around compensation
Pay equity reviews are typically structured as project engagements — see our HR consulting pricing guide for typical cost ranges. For organizations that want ongoing support as they grow and hire, fractional HR provides senior HR expertise that includes compensation compliance as a standing responsibility.
If you are unsure whether your current pay practices are compliant, a compensation-focused HR audit is the fastest way to find out where the gaps are and what needs to be fixed.
Talk to an HR consultant about pay equity compliance in Ontario
Frequently Asked Questions
Who must comply with Ontario’s Pay Equity Act?
All public sector employers and all private sector employers with more than 10 employees must comply. The obligation triggers on the day you hire your tenth employee — there is no grace period.
What is the difference between pay equity and pay transparency in Ontario?
Pay equity requires eliminating gender-based wage gaps between job classes of equal value (Pay Equity Act, 1987). Pay transparency requires disclosing salary ranges in publicly advertised job postings (Pay Transparency Act, effective January 2026). Both apply simultaneously if you have 25 or more employees.
What happens if an employer fails to maintain pay equity?
The Pay Equity Commission can order retroactive wage adjustments from the date the gap first occurred. There is no limitation period — liability can accumulate over many years before being discovered.
Does pay equity apply to part-time employees?
Yes. The Pay Equity Act applies to all employees regardless of employment status — full-time, part-time, temporary, and seasonal — as long as the total employee count exceeds 10.
How often must employers review pay equity?
Pay equity is ongoing. Reviews are required whenever there are organizational changes, new job classes created, significant restructuring, or changes to compensation structures. Annual reviews are recommended as a baseline.