Equal Pay Obligations Under The Canada Labour Code Take Effect October 20, 2026

New equal pay obligations under the Canada Labour Code (the “Code“), which also require federally regulated employers to respond to employee wage-review requests, are set to come into force on October 20, 2026.

The new section 182.1 will prohibit (subject to certain exceptions) federally regulated employers from paying one employee a rate of wages that is less than the rate paid to another employee due to a difference in their employment status if the employees work in the same establishment and under similar conditions, perform substantially the same kind of work, and perform work that requires substantially the same skill, effort and responsibility.

Section 182.2 will permit employees who believe their wage rate is lower than required by section 182.1 to request a review of their wage rate.

Prohibition on Status-Based Wage Differences

The core prohibition is set out in full in subsection 182.1(1):

An employer is prohibited from paying one employee a rate of wages that is less than the rate paid to another of that employer’s employees due to a difference in their employment status, if

(a) they work in the same industrial establishment;

(b) they perform substantially the same kind of work;

(c) the performance of that work requires substantially the same skill, effort and responsibility;

(d) their work is performed under similar working conditions; and

(e) any other factor that may be prescribed by regulation is present.

The prohibition on wage differences only applies if all five conditions are met. To conduct any comparison, employers must compare wage rates calculated in the same way. In addition, determining whether two positions require substantially the same skill, effort, and responsibility requires employers to assess the employees’ actual duties, rather than job titles or classifications.

Permitted Exceptions

Even where all comparator conditions are satisfied, a wage differential will not violate section 182.1 if it exists due to a system based on:

1. seniority;
2. merit;
3. the quantity or quality of each employee’s production; or
4. any other criterion established by regulation.

Employers will bear the onus of establishing that an exception applies. Each exception must reflect a genuine, consistently applied system. For that reason, employers relying on seniority or merit systems should ensure that their systems are codified in writing, consistently administered, and capable of producing auditable records prior to the effective date.

Adjusting Wages

Subsection 182.1(3) will bar employers from reducing an employee’s wage rate to comply with equal wage requirements. Therefore, wage parity must be achieved by adjusting wages upward. Employers who identify a wage gap cannot address it by lowering the higher-paid comparator employee’s rate.

Section 182.2 – Employee Request for Review

Section 182.2 will create a formal, employee-initiated review mechanism that will permit employees to require a review of their wage rate.

The employer’s response to any such request, due within 90 days, must take the form of either a written statement confirming a resulting wage increase or a written explanation of the reasons for which the employee’s existing rate is compliant with the Code.

Back-Pay Obligation Upon Wage Increase

Where a review results in a wage increase, the employer will be required to back-date the increase to the date of the initial request, rather than adjusting the wage rate upon the date of the completed review. As a result, employers are incentivized to complete wage rate reviews as promptly as possible.

Anti-Reprisal Protection

Subsection 182.2(3) will prohibit employers from dismissing, suspending, laying off, demoting or disciplining an employee because the employee has made a request for a wage rate review. Moreover, employers may not take a request into account in any decision to promote or train the employee.

This anti-reprisal prohibition covers a wide range of adverse employment actions and extends to promotional and training decisions. Employers must ensure that managers and HR personnel are trained to handle review requests in a neutral and procedurally sound manner, with no adverse employment consequences for the requesting employee.

Recommendations for Ensuring Compliance

The federal wage rate rules are the latest in a number of measures implemented across jurisdictions that will require employers to increase pay transparency and establish more formal pay bands or classifications.

Since the above equal wage rate amendments take effect on October 20, 2026, federally regulated employers should promptly begin taking steps to ensure compliance. These steps can include:

• conducting a wage audit to compare compensation structures across employee statuses (full-time, part-time, casual, etc.) within individual establishments;
• identifying appropriate comparator groups based on work performed, skill, effort, responsibility, and working conditions – rather than based on job title or classification alone;
• for any existing wage differential, preparing and retaining documentary evidence to justify the difference;
• developing an internal procedure for handling written employee requests; and
• reviewing policies and training to better ensure compliance with the new standards.

Employers with varied workforces, meaning those with full-time, part-time, casual, seasonal, and other statuses, are likely to face the greatest exposure. However, as employers that have conducted other pay equity and pay transparency analysis are likely aware, wage rate gaps can arise in unanticipated places. These new requirements under the Code will make codifying merit and seniority-based pay differences much more important.