Federal Post
Pay Equity Impacts from the New Canada Labour Code Equal Treatment Rules Effective October 20
Date: October 14, 2026
Federally regulated employers have spent the last several years navigating the proactive pay equity requirements of the Pay Equity Act. Beginning October 20, 2026, a new wage equality obligation under the Canada Labour Code (Code) will add another layer of complexity.
Although these two regimes create separate legal issues, and a pay equity exercise does not automatically involve equal treatment issues under the Code. There is potential for some overlap if, under a pay equity plan, there are distinct job classes based on employment status (i.e., if certain employees are paid differently than those classified as having full time status).
Accordingly, pay equity implementation can no longer be viewed in isolation. Decisions about compensation, job classifications, employment status, and pay equity maintenance may now have consequences under two separate statutory regimes.
As set out below, the Pay Equity Act and the new Code provisions are likely to become an area of increasing scrutiny, making proactive review essential before the new rules come into force. Federally regulated employers should be preparing now for these new requirements.
How the Two Regimes Differ
While both statutory regimes are aimed at addressing workplace pay inequities, they are fundamentally different:
- Pay equity focuses on correcting systemic gender-based compensation gaps between job classes.
- The new Code provisions focus on individual employees and prohibit wage-rate differences tied to employment status, such as full-time, part-time, permanent, and temporary employment.
This distinction matters where a pay equity adjustment increases wages in one job class, but employees with a different employment status who perform the same or similar work in another job class do not receive the same increase. The resulting differential may require analysis under both statutes, although the pay equity adjustment is a statutory remedy rather than compensation provided because of employment status.
Which Federally Regulated Employers is the Interaction Most Relevant To?
The interaction is most relevant to federally regulated employers that:
- have completed, are implementing or are maintaining a pay equity plan;
- use separate job classes for employees who perform similar work but have different employment status;
- apply different wage rates to full-time, part-time, permanent or temporary employees; or
- are planning compensation, classification or status changes that may coincide with pay equity adjustments.
Do Pay Equity Adjustments Trigger Equal Treatment Obligations Under the Code?
The dual obligations create an important question for federally regulated employers: what happens when a pay equity adjustment increases wages for employees within one job class occupied by employees with the same status (eg. full-time), but employees with a different employment status performing the same work in a different job class do not receive the same increase?
At first glance, employers may worry that every pay equity adjustment could trigger broader wage-rate increases under the new equal treatment provisions of the Code. Unfortunately, the answer is unlikely to be that simple.
A pay equity adjustment is not necessarily compensation provided because of employment status. Rather, it is a statutory remedy designed to address a specific pay equity gap. Whether a resulting wage differential creates a Code issue will depend on a careful examination of the work being performed, the reason for the differential, and the availability of appropriate employee comparators.
Questions to Ask Before the New Rules Take Effect
Several questions become increasingly important in testing the reason for each potentially relevant wage-rate difference:
- Are the employees actually performing substantially the same work?
- Is the wage difference truly linked to employment status, or does it arise from compliance with pay equity legislation where “job classes” are distinctly defined?
- Is there a valid comparator employee?
- Does the issue concern wage rates specifically, rather than broader compensation?
These questions will be highly fact-specific and may not lend themselves to simple answers.
What Should Federally Regulated Employers Do Now?
With the new equal treatment provisions under the Code set to take effect in October 2026, now is the time for federally regulated employers to:
- Identify potential overlap between pay equity adjustments and employment-status distinctions.
- Ensure that there is a sound rationale for any wage differentials that is well documented.
If you have questions about how these obligations may affect your workplace, please reach out to a member of Hicks Morley’s Pay Equity Group.
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©