Pay equity: why HR must move from compliance to talent strategy

Progress on pay equity is real, but slow and profoundly uneven. That’s the message from the Ontario Pay Equity Office, which reports that, on an hourly basis, women in Ontario earned 88 cents for every dollar earned by men in 2025, leaving a 12 per cent wage gap — a slight improvement from 82 cents nearly three decades ago. 

However, when average annual earnings are considered — capturing bonuses, commissions and differences in hours worked — the gap widens sharply: Ontario women earned 72 cents on the dollar in 2023, a 28-per-cent gap, according to Statistics Canada. The latter figure is an improvement from 62 cents 30 years ago. 

Ontario’s wage gap is identical to Canada’s at 12 per cent, while provincially, it ranges from 18 per cent in Alberta to five per cent in New Brunswick — with Prince Edward Island the only province with women earning more than men, by four per cent. 

For Katherine Scott, a senior researcher at the Canadian Centre for Policy Alternatives, the current moment sits on top of decades of ongoing work.

“Pay equity has been a long slog in Canada, as it's been 75 years since the 1951 ILO Convention brought the principle of pay equity into human rights legislation,” says Scott. 

That history matters for HR leaders because it underscores how often organizations have treated pay equity as a legal obligation to be managed rather than as a core design issue in how work is valued and rewarded, she says. 

From ‘long slog’ to strategic point 

Global evidence points in the same direction. Across OECD countries, the median full-time working woman earns about 88 cents for every dollar earned by the median full-time man, an unadjusted gender pay gap of 11.9 per cent, according to a 2023 OECD report. 

Scott notes that early Canadian progress relied heavily on complaints-based human rights systems and fragmented provincial legislation, with only Ontario, Quebec and now the federal jurisdiction imposing proactive obligations on both public and private employers. That has created a patchwork regime where resourcing, enforcement, and support for employers vary widely, raising strategic questions for national employers about how consistent their internal approach really is across jurisdictions. 

At the same time, the political climate has become more challenging for organizations to address equity initiatives in their strategy: “The conversation is more difficult today than it was even a year ago,” says Scott. “You've seen a complete reversal with the contagion that flows north from the border, and the vilification of diversity, employment, equity initiatives. — whether that's on the front burner in Canada, certainly we've seen a step back from it.” 

Transparency is changing compensation expectations 

The pay equity landscape in Canada is also unfolding against a wave of new reporting and transparency rules. The OECD report found that pay transparency can “empower workers and their representatives to fight against individual or systemic pay inequities by giving them access to information about their colleagues’ salaries,” and can increase public pressure on employers to act. However, the same analysis warns that transparency alone is not a cureall, as it can expose unjustified gaps, fuel dissatisfaction, and even flatten pay by reducing rewards for high performance, if not paired with robust job evaluation and governance. 

Canadian employers are already feeling those pressures, according to Jayna Koria, a partner at Mercer.

“There's a heightened awareness of pay equity, and I would say just more global awareness as well,” says Koria. “In Canada, it’s being fueled by compliance and pay transparency becoming a topic — even if you're not in a province where it might be mandated, there's more discussion about it globally because there are certain states that have it now.”

 For HR leaders, that means employee expectations are being set not just by provincial law, but by international norms, social media and global career platforms, says Koria. 

She believes that this shift makes proactive action an essential part of compensation strategy. 

“The amount of information that’s readily available for employees, they're accessing a lot of these websites that have access to free salary information,” she says. “So it’s imperative for most organizations to try and get ahead of that, whether it's from a compliance perspective or whether it's just empowering your own employees — and that includes leadership, managers, and other employees — on really understanding how compensation is managed within your own organization.” 

In practice, that translates into clearer salary structures, stronger manager training on pay discussions, and more deliberate communication of how decisions are made, says Koria. 

Common missteps that turn equity into risk 

Even with good intentions, organizations can undermine their own efforts. Scott points to one recurring trap: outsourcing the entire exercise. “I’ve heard this from folks working on the federal process, they hand it off and they think they've ticked the box,” she says. “But then they run aground because it's superimposed from outside and it doesn't integrate the voices.” 

Scott believes the process of incorporating pay equity into compensation planning is an opportunity for organizations and employees to engage together and use the expertise of each side.

“I think it can be a mistake to marginalize anyone — you can do this on the cheap or with a canned product from a provider, but you miss the opportunity to actually strengthen employment relations — which, of course, is what's going to go to your bottom line in terms of a better functioning business,” she says. 

For Scott, it’s good strategy to bring employee representatives and people managers into the process early and frame pay equity reviews as a joint problemsolving exercise rather than a closeddoor audit. 

Koria agrees that reliance on external sources can lead to pay equity initiatives falling apart once they’re implemented. 

“I feel like the biggest misstep is often looking just at external data, as opposed to also incorporating internal relativity,” she says. “The way forward is to have a solid job architecture in place that looks at internal value, from however you want to evaluate and level your jobs — that doesn't mean that you don't take the external market data into consideration, but it's actually looking at both together.” 

Building a strategic roadmap for pay equity 

Both Scott and Koria say that pay equity has to be embedded in core systems, not bolted on to compensation strategy. Koria stresses the basics: job architecture, salary structures, performance management, and governance.

“I think the best thing to do is always plan for that journey — understand your current programs or practices, and limitations, the strengths, risks, and gaps in your current environment,” she says. “This may not happen overnight, but having that road map and understanding all the areas that you would like to focus on is the next step.” 

After establishing that road map, an organization can implement a timeline and execute on its pay equity and compensation strategy, adds Koria. “It’s understanding where you are, plan for where you want to go, and execute,” she says. 

Scott recognizes that pushing for pay equity as a talent management issue can be challenging for HR leaders, given that it generally means a greater cost to the organization.

“Generating goodwill and certainly senior leadership buy-in is fundamental to the success of any initiative, and this is a more challenging climate where maybe folks are thinking this is so important as much anymore,” she says. “It's not 10 years ago when corporate social responsibility seemed to be having a moment.” 

The OECD’s review of gender pay reporting regimes found the most effective systems are those embedded “in broader, holistic efforts to end gender inequalities in the labour market,” coupled with strong communication, accountability and enforcement. That holistic view means linking pay equity metrics explicitly to talent management, not just compliance, says Scott. 

“It's not just about the presence of pay equity legislation — it’s part of the foundation of a real labour market that works effectively and equitably to support people and recognize their skills and talents,” she says, adding that organizations that align pay with the real value of work are better able to deploy skills, promote fairly, and retain high performers — all critical advantages in a tight labour market. 

This article is part of our Monthly Spotlight series, which in February focuses on compensation planning. Full coverage can be found here.