‘Gather what your compensation practices and policies are, document how you do things and why we do it that way’
Federally regulated employers have until Oct. 20, 2026 to prepare for new "Equal Treatment" wage rules that will prohibit paying employees performing substantially similar work at different rates based solely on their employment status.
And one employment lawyer says the change could prompt a wave of employee-initiated wage reviews.
The rules, which amend the Canada Labour Code, require that employees paid on the same basis — for example, hourly or by commission — receive the same wage rate as colleagues doing the same or substantially similar work.
"Outside of those sort of lawful and justified exceptions, generally speaking, employees who are paid on the same basis and do the same work should be paid the same," Michelle McKinnon, an employment lawyer who has advised employers on similar provincial exercises, tells HRD.
On May 6, 2026, the federal government published the Regulations Amending Certain Regulations Made Under the Canada Labour Code (Equal Treatment and Temporary help Agencies): SOR/2026‑75 (Regulations) in the Canada Gazette, Part II.
Rooted in broader pay equity push
McKinnon said the new rules sit alongside pay transparency legislation, such as the regime introduced in British Columbia, as complementary tools meant to close persistent wage gaps. "I think these two work in tandem to ensure and give effect to pay equality at the end of the day, to address these pay gaps that exist," she said.
She cautioned that change will not happen overnight. "It's just something that is a very slow process," McKinnon said, adding that in her experience, unequal pay is often the result of "a historic issue that has sort of rolled over," rather than deliberate discrimination.
The rules permit wage differences justified by seniority, merit, productivity, labour-market shortages, or hardship postings, among other factors. McKinnon pointed to experience and qualifications as a common justification.
"They have more skills, they've got more experience and qualifications that they are bringing to the table," she said of one hypothetical case involving a longer-tenured employee.
Employees who believe their wage rate is unjustified will be able to request a formal review, and employers will have a set period to respond by either raising the wage or explaining the differential, McKinnon said. Employers who fail to address a confirmed discrepancy risk administrative monetary penalties. This creates a direct compliance and cost exposure that HR teams need to plan for now, rather than after a review request arrives.
Two-year exemption for unionized workplaces
Existing collective agreements that permit wage differences based on employment status will be exempt from the new rules for two years, until Oct. 20, 2028, while non-unionized workplaces must comply once the rules take effect this October.
McKinnon urged employers to begin a compensation review immediately. "Gather what your compensation practices and policies are, document how you do things and why we do it that way. Do that comparative analysis, and identify any potential gaps," she said.
She added that preparation, not reaction, should guide employers' next steps. "I always say preparation is the key.”
She said she would rather know if there are any issues that need to be addressed now “rather than being reactive," McKinnon said.
Previously, George Vuicic, a labour and employment lawyer in Hicks Morley’s Ottawa office, also told employers that, prior to Oct. 20, they should:
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audit workforce classifications against the new definitions of employment status
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review and formalize compensation systems, ensuring consistency and documentation
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confirm industrial establishment mappings, particularly for remote and mobile employees
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assess wage comparability methodologies and rate structures
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implement enhanced recordkeeping protocols
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for temporary help agency arrangements with federal agencies, align contracts and practices with the client‑based system framework
