With labor shortages in several sectors and a faltering economy, compensation management is currently one of the major human resources challenges.

So, what are the major trends in compensation management?

Flexible overall compensation

The expectations in terms of working conditions and recognition differ from one generation to another. For example, younger people tend to value enriching experiences, professional development and personal fulfillment more than direct remuneration. Offering employees flexible work arrangements such as variable pay programs, personalized benefits or flexible/hybrid work schedules helps meet the expectations of different generations. Practices fostering a personal/professional life balance improve the well-being of employees, which increases their job satisfaction, which, in turn, contributes to their retention.

Transparent compensation practices

Marked by the adoption of salary transparency laws in several provinces, transparency is a trend that stems from the growing necessity for employees to know their salary growth potential within the company they work for, to ensure that they are compensated fairly in comparison with colleagues in similar functions and to ensure their overall compensation is competitive with the market.

British Columbia, Prince Edward Island and Newfoundland have already passed laws to disclose salary ranges when posting jobs, which also prohibit asking candidates about their current and past salaries and prohibit penalizing employees for disclosing their salaries. Ontario has similar legislation under consideration.

In the spirit of more transparent communications, more and more companies are more clearly defining their internal compensation practices, performance evaluation criteria and advancement opportunities. A compensation transparency policy may include, among other things, the disclosure of salary policies and salary scales applicable to different positions in the organization. Transparency in compensation practices helps strengthen employees’ sense of fairness, trust and commitment to the company they work for.

Fair compensation practices

In Canada, diversity, equity and inclusion (DEI) initiatives have a significant impact on fairness in compensation practices within companies. These initiatives involve, among other things, identifying and addressing biases in hiring, evaluation and promotion practices. On the compensation side, they help establish objective, clear and non-discriminatory compensation criteria.

In Quebec, a pay equity analysis is mandatory every five years for companies with 10 or more employees. Canada has adopted a similar law for businesses under federal jurisdiction.

DEI programs have enabled companies to increasingly prioritize pay equity by eliminating unjustified pay gaps between genders and minority groups. Well-defined and fair compensation policies not only comply with the law, but also facilitate the attraction and retention of employees.

Well-being programs at work

Concerns about mental health in the workplace have intensified in recent years. Now, many workers expect their employers to offer wellness and employee assistance programs. These programs are designed to support employees’ overall health, both physical and mental.

Thus, a growing number of small/medium-size companies are following in the footsteps of large companies by offering their employees resources and tools to manage the personal and professional challenges they may face.

It has been shown that workplace health and wellness programs can effectively help improve engagement, which can translate into better job performance and reduced absenteeism.

Stand out in compensation

With increased competition to attract and retain talent, companies are implementing competitive compensation policies to retain their employees.

Companies must not only implement competitive, flexible, fair, transparent compensation policies that promote employee well-being, but they must also stand out. For example, they can implement market-related scales, annual or bi-annual salary reviews, generous and personalized recognition programs, or “tailor-made” working conditions.

Whatever options you choose, the key is to continually adapt to your employees.

To face current labor challenges, small/medium-size companies will have to significantly review their compensation practices. The trends reflect a shift towards more transparent, equitable and adaptive practices to reduce workforce volatility and meet the specific needs of new generations.

As an employer in Quebec, you must ensure compliance with your obligations under the Pay Equity Act.

Here are some questions to ask yourself in order to see more clearly on this subject.

What is Pay Equity in Quebec?

Pay equity is the right of people in typically female jobs to receive a salary equal to that of a person in typically male jobs of equivalent value in the same organization, even if the jobs are different.

The Pay Equity Act requires that an initial pay equity exercise be completed and then an evaluation of the maintenance of pay equity be carried out every five years.

Is my organization subject to the Pay Equity Act?

Your organization is subject to it if it is under provincial jurisdiction and has had an average of 10 or more employees during its reference period (generally a calendar year).

You will then have 4 years to complete your initial pay equity exercise. The exercise must be completed before December 31st of the 4th year following the year in which the employer reached the threshold of 10 or more employees

Please note that if you acquire a company which is subject to the Act, you inherit its pay equity obligations.

What does a pay equity exercise consist of?

Generally speaking, the analysis first consists of:

• Identifying job categories within your organization
• Determining the sexual predominance of the job categories
• Evaluainge and comparing the job categories
• Estimating salary gaps between predominantly female and predominantly male job categories
• If necessary, correcting salary gaps
• Displaying results

When should you complete the evaluation of the Pay Equity maintenance?

The evaluation of the pay equity maintenance is an obligation which returns on a fixed date every five years. During these five years, changes to the compensation or working conditions of certain jobs, and the creation or abolition of jobs, may occur in the organization, which may have an impact on pay equity. You will therefore need to assess whether or not the events that have occurred since the previous assessment have created salary gaps.

You must keep all information used to assess pay equity for a period of 6 years after posting.

The CNESST asks me to complete a Declaration (DEMES), is this the same as my pay equity exercise?

No, completing the Employer Declaration on Pay Equity (DEMES) is an obligation separate from the initial exercise or the maintenance assessment. This is an online form that allows the CNESST to know the progress of your pay equity obligations. Employers who are subject to the Act must complete it.

Can I be supported in my pay equity work?

The CNESST provides you with information capsules available online through its website.

You can use the services of an external consultant to carry out pay equity work in your company.

At Gamma HR, we have extensive experience in the field of pay equity to help you determine your obligations and support you through the different stages.

Pierre-Yves Legault
Total Compensation Consultant
pylegault@gamma.hr
1-514-775-1140