Pay equity in Quebec: your obligations by company size

Quebec's Pay Equity Act applies to every provincially regulated business in Quebec with an average of 10 or more employees. The obligations, however, are not the same for everyone: an SME with 25 employees and an organization with 300 employees do not carry out their pay equity work the same way.

Correctly determining the size of your business is therefore the first step, and a frequent source of mistakes. This guide explains how to calculate it, what the Act requires at each level and which obligations apply to every business covered by the Act.

How do you calculate the size of your business?

Under the Act, the size of a business is not the number of employees on a given date. It is the average number of employees entered in the employer's register, per pay period, over a 12-month reference period.

In practice, the employer:

• adds up the number of employees entered in the register for each pay period over the 12 months of the reference period;
• divides that total by the number of pay periods.

For example, a business with a biweekly payroll that reaches a total of 390 over its 26 pay periods has an average of 15 employees. It therefore has the obligations of a business with 10 to 49 employees.

The reference period depends on when the business started operating. A seasonal business, or one that starts operating during the year, still calculates its size over 12 months.

Size is determined once and for all

As long as the business has an average of fewer than 10 employees, the employer must redo this calculation every year. As soon as the average reaches 10 or more, the business is covered by the Act and no longer needs to calculate its size: its obligations remain the same, even if its workforce later grows or shrinks.

A business that had 15 employees during its reference period therefore keeps the obligations of a business with 10 to 49 employees, even if it has 120 today. Conversely, a business determined to have 100 or more employees keeps those obligations even if its workforce has dropped significantly.

Obligations by company size

Businesses with fewer than 10 employees

The business does not need to carry out pay equity work. It must, however, calculate its size every year. Once the average reaches 10 employees or more, the employer has four years to complete its initial exercise.

Businesses with 10 to 49 employees

The employer must complete an initial pay equity exercise, meaning it must determine whether predominantly female jobs in the business are paid the same as predominantly male jobs of equivalent value and, if not, establish the required pay adjustments. The Act does not require it to follow the formal four-step program or to set up a committee.

The employer may, however, choose to carry out a pay equity program under the obligations of a business with 50 to 99 employees. It must then notify the CNESST and its employees. It may then set up a committee if it wishes.

Businesses with 50 to 99 employees

The employer must carry out a pay equity program structured in four steps:

• identify job classes and whether they are predominantly female or male;
• describe the job evaluation method and tools;
• evaluate and compare the job classes;
• estimate pay gaps, calculate adjustments and set the terms for paying them.

A pay equity committee remains optional, and the employer does not need to notify the CNESST if it decides to set one up.

Businesses with 100 employees or more

The employer carries out the same four-step program, but within a pay equity committee, which is mandatory at this level. The committee has at least three members: at least two thirds represent employees, and at least half of those members are women. The other members are appointed by the employer.

A committee changes how the work unfolds: decisions are made with employees, which takes more time and good preparation, including training the members.

Not sure which obligations apply to your business? Our specialists determine the size of your business under the Act, complete your initial exercise or pay equity program, with or without a committee, and prepare your postings. Discover our pay equity services

Obligations common to all businesses covered by the Act

Whatever its size, a business covered by the Act must meet the following obligations:

• Post the results. The results of the initial exercise must be posted in visible places easily accessible to employees, followed by a second posting that answers their comments and questions.
• Evaluate maintenance every five years. The pay equity maintenance evaluation checks that events in the business have not created new gaps.
• File the DEMES. The Employer's Pay Equity Statement informs the CNESST of the progress of the work.
• Keep the documentation. The documents used for the work must be kept for at least six years, in particular in case of a CNESST audit.

What are the most common mistakes?

Counting employees on a single date

The number of employees at the time of the exercise does not determine the obligations. Only the average per pay period during the reference period counts.

Recalculating size after growth

A business that has grown since its reference period may think it now has to set up a committee, or conversely that it no longer needs one after downsizing. In both cases, the obligations established during the reference period apply.

Thinking a small business has nothing to do

A business with 10 to 49 employees has more flexible obligations, but it must still complete its initial exercise, post its results, evaluate maintenance every five years and file the DEMES.

Overlooking the absence of male job classes

Some businesses have no predominantly male job class to compare with. The Act provides specific rules for these situations: the absence of a comparator does not exempt the business from the exercise.

Frequently asked questions

My business now has more than 100 employees. Do I need a committee?

Not necessarily. Obligations are set according to the size of the business during its reference period. If the business had an average of fewer than 100 employees at that time, a committee is not mandatory, even if the workforce has grown since.

What is the deadline for the initial exercise?

As soon as the business reaches an average of 10 or more employees, the employer has four years to complete its initial pay equity exercise.

Can a business with 10 to 49 employees set up a committee?

Yes. The employer must then notify the CNESST and its employees that it will carry out a pay equity program under the obligations of a business with 50 to 99 employees. It may then set up a committee if it wishes.

Are federally regulated businesses covered?

No. Quebec's Pay Equity Act does not apply to federally regulated businesses, which fall under a different regime.

In summary

The size of the business, calculated as the average per pay period during the reference period, determines the form the pay equity work takes: a more flexible exercise for 10 to 49 employees, a four-step program for 50 to 99, and a committee-based program from 100 employees. Once established, these obligations no longer change, even if the workforce does.

Unsure about the size of your business or the process to follow? Talk to an expert about your pay equity needs.

This article is provided for information purposes only and does not constitute legal advice or professional advice. The rules surrounding the Pay Equity Act may change: for any specific situation, consult the CNESST or a qualified professional.

Sources: CNESST, Comprendre ses obligations en équité salariale; CNESST, Former un comité d'équité salariale; CNESST, Section 6 of the Pay Equity Act.