Pay Equity in the Context of COVID-19
Now that most companies have established new work routines, set up employees with telecommuting, and adapted workstations to adhere to public health instructions, where do they go from here? For many, back to work has not translated into back to normal. After undergoing significant challenges during the lockdown period, the reduced financial capacity of businesses will continue to impact operations in the coming months. There are important strategic decisions to be made and companies will need to pay attention to their greatest expenditure: total payroll. Is the answer to eliminate positions in order to reduce costs? What about compensation for the remaining employees? If employers take drastic measures to ensure the company’s survival, will employees be left in the dark? These are some of the questions our clients have brought forward over the last few months; questions that have required businesses to make difficult decisions without having the time to analyze the long-term impacts.
According to Normandin Beaudry, between 20% – 40% of companies will implement wage freezes throughout 2020 in response to the current crisis. Similar impacts may be felt well into 2021. Clearly, decisions made about salary increases will require a more in-depth analysis than what was done in previous years. This reflection offers an opportunity for employers to review their total compensation packages in the context of a salary freeze. The benefit of a having a total compensation package is that it is not limited to just base salary. Employers should also need to consider variable compensation, like bonuses, employee benefits, as well as the professional development and work environment. Have compensation components been optimized? Is there a company-wide communication plan?
As organizations embark on new initiatives, they will need to pay special attention to their pay equity processes. While completing an Initial Pay Equity Exercise or Maintenance Evaluation, employers will need to account for employees’ total compensation, not just their base salary. If they increased or decreased the benefits for specific job categories this can impact pay equity results.
Employers with more than 10 employees have an obligation to ensure that pay equity is achieved and maintained in their company at all times, even if results must only be published every five years. More than 75,000 Quebec companies must conform to the Pay Equity Act and many of these companies are subject to a Maintenance Evaluation between December 31, 2020 and March 31, 2021. Before beginning the work, it is important to confirm pay equity obligation deadlines. To comply with the amendments made to the Act on April 10, 2019, employers must identify all events that could have affected pay equity in their company since their previous exercise. In the context of the current pandemic, such events may have emerged due to wage changes, the creation or elimination of job categories, or the restructuring of roles and responsibilities. To avoid any unpleasant surprises, it will be important to anticipate the repercussions of these events prior to the pay equity obligation deadline.