The Evolving Landscape of Pay Transparency in Canada

Canada has seen a significant shift toward pay transparency legislation in recent years. For small business owners, understanding these laws — both current and upcoming — is critical to ensuring compliance, fostering equitable workplaces, and maintaining competitiveness. This article provides an overview of pay transparency trends across Canada and practical tips to ensure compliance.

Pay Equity vs Pay Transparency

While pay transparency is a new concept, Canada has long had legislation that addresses pay equity. This is addressed through human rights legislation, which requires employers to pay employees who perform work of equal value the same. Pay transparency is a new and evolving concept in Canada, which is about being transparent about pay practices externally. Pay transparency helps to achieve true pay equity because transparency highlights any pay gaps. In other words, pay transparency is a mechanism to achieve true pay equity.

Pay Transparency Rules

While each Canadian jurisdiction will have their own specific rules around pay transparency, there are general trends which have emerged from pay transparency laws across Canada. These include:

1. Disclosing expected pay or pay ranges in publicly advertised job advertisements;
2. A prohibition on asking job applicants about their pay history;
3. Retaliation against employees for exercising their rights under pay transparency legislation; and
4. In some cases, pay transparency reporting.

The biggest area where compliance concerns come up is around the first requirement above – i.e. posting pay information. In many cases the legislation itself is not clear about what pay information should be posted. For example, in British Columbia, the Pay Transparency Act requires that employers post pay information but does not address whether that is only an employee’s base pay or all other forms of compensation. However, the BC government has since posted guidance on what pay information is to be posted, and I expect other Canadian jurisdictions to adopt a similar approach. 

The guidance from the BC government on posting pay information provides that only an employee’s base pay has to be posted. There is no requirement to post information on things like benefits, commission, bonuses or other forms of incentive compensation. That is entirely at the employer’s discretion.

However, while it is discretionary, it would be difficult to provide a full picture of an employee’s compensation package without including this information. Some employers have chosen to voluntarily disclose additional compensation information to be transparent and competitive in the market. 

In another area that creates a lot of concern for employers is the disclosure of pay ranges. Again, legislation is not always clear on how broad these ranges can be. In BC, the government published guidelines that provide that employers are free to post whatever range they want to post, but it cannot be an open-ended range, such as saying $10 and up. You have to say between $10 – $20.

This stands in contrast to new pay transparency legislation that will come into effect in Ontario starting 2026, which provides that the range cannot exceed $50,000. It is therefore important to ensure that employers familiarize themselves with the legislation in the jurisdiction where they hire employees.

Another important issue is that pay transparency legislation will be interpreted and applied broadly, meaning that if you post a job advertisement in Ontario but that job is potentially available to BC residents, then that job posting would need to comply with BC’s pay transparency legislation in addition to Ontario’s new pay transparency legislation (and potentially the legislation applicable in other Canadian jurisdictions). It is therefore critical to ensure that employers have considered where their job advertisements are being posted and who may potentially be job applicants in terms of jurisdictions. 

As alluded to above, Ontario has new pay transparency legislation that will be coming into effect starting 2026, and Ontario’s legislation introduces requirements that do not necessarily apply elsewhere. These requirements relate to a prohibition on being able to ask about a job applicant’s Canadian experience, disclosing the use of AI in hiring practices and informing job applicants within 45 days of the hiring decision.

Finally, it is important to keep in mind that, in some Canadian jurisdictions, employers can be fined for not complying with pay transparency laws.

Practical Compliance Advice

While Canadian jurisdictions have their own pay transparency rules, I generally recommend that employers take the following steps to ensure compliance with pay transparency laws:

1. Jurisdiction: Consider where your publicly advertised job postings will be available and posted and whether that job posting needs to comply with the pay transparency rules of multiple Canadian jurisdictions. 
2. Compensation Analysis: Before posting information about pay in job advertisements, ensure that your internal compensation practices and ranges are aligned with the market in which your business operates (i.e. where you compete with talent). I recommend speaking with a compensation specialist to undertake that analysis, and also to ensure that you are basing your analysis on the right market compensation data. 
3. Educate Hiring Managers and Recruitment Professionals: Consider educating hiring managers and recruitment professionals on the new pay transparency laws to ensure they are familiar with the “do’s and don’ts” of pay transparency. For example, in BC they cannot ask a job applicant about their pay history. I also recommend updating any standard interview questions to align with any prohibitions on what can be asked of job applicants.
4. Communicate with Employees: Communication with employees is essential. Many employers are concerned about communicating information about pay to their employees, but the reality is that pay transparency can actually be a tool to build trust and loyalty with your employees. Employees will have questions about pay information that is being posted, and it is best for any answers to come directly from their employer. 

Conclusion

Pay transparency laws are an evolving area that introduces new complexities for employers. While it does increase compliance issues, it can be a strong tool to attract and retain top talent and to distinguish your business from competitors.

Written by Michelle McKinnon

Michelle McKinnon is a partner in the Employment & Labour Group at Cassels and specializes in the area of workplace law, which includes employment law, labour law, human rights and accessibility, health and safety, privacy, pay equity and pay transparency, and litigation.

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