New wage rate restrictions coming into force for federally regulated employers: Equal pay for employment status

On October 20, 2026, new equal pay provisions will come into force under amendments to the Canada Labour Code¹ and the Canada Labour Standards Regulations² (together, the Amendments). Under the Amendments, federally regulated employers will be prohibited from paying employees performing substantially the same kind of work at different wage rates based solely on their employment status – that is, whether they are employed on a full-time, part-time, permanent or temporary basis.

The Amendments are a unique addition to the various other pay equity regimes applicable to federally regulated employers in Canada. The Pay Equity Act focuses on ensuring pay equity between genders. The Employment Equity Act ensures equitable employment opportunities between various marginalized groups. The Amendments focus on ensuring employees are treated equally despite their employment status.

Equal pay requirements

The Amendments prohibit an employer from paying an employee a lower rate of wages than another employee because of a difference in employment status where those employees:

• perform substantially the same kind of work;
• hold roles that require substantially the same skill, effort and responsibility;
• work in the same industrial establishment; and
• are paid wages that are calculated using the same kind of wage rate.

Where all of these conditions are met, the employer is prohibited from paying a lower wage rate to an employee because of their employment status. Importantly, an employer cannot reduce any employee’s wage rate to comply with the new requirements. Disparities may only be corrected by raising the lower rate.

The term “industrial establishment” is defined broadly to include regions within the Employment Insurance Act, meaning it can include more than one physical location of the employer’s operations.

The Amendments further stipulate that if it is the employer’s practice to inform employees of promotional opportunities in writing, the employer must inform all their employees, regardless of employment status.

Exceptions

This new prohibition does not apply where the difference in wage rate is due to a system based on:

• seniority
• merit
• the quantity or quality of each employee’s production; or
• any other criteria prescribed by regulation. These criteria currently include:
  • “red circling” a common term used to describe where an employee is reassigned to a lower classification but retains their previous higher salary;
  • increasing rates of wages due to difficulty in recruiting or maintaining employees during a labour shortage;
  • “northern bonuses,” related to geographical regions and hardship locations; and
  • travel status pay for those employees required to travel.

Where such permitted differentials are in operation, they must (i) apply to all employees with comparable pay rates; (ii) have been communicated in writing to employees; and (iii) be readily available to employees for review.

Employee requests for review

If an employee believes their wage rate does not comply with the equal pay requirements, they may make a written request for the employer to review their rate. The employer must conduct the review and provide a written response within 90 days. That response must include either a statement that the employer has increased the employee’s wages to comply with the Code, or an explanation of why the employee’s current wages are already compliant.

Employers are prohibited from taking reprisals against an employee who requests a wage review. This includes dismissing, suspending, laying off, demoting or disciplining the employee. The employer also cannot take the request into account when making decisions about promotions or training.

Key takeaways for employers

Employers should review employee wage rates against the criteria outlined above well in advance of October 20, 2026, and accurately document any permissible differentials that may apply. Any wage disparities identified can only be addressed by an increase to the wage rate of the lesser paid employee.

If you have questions about how these Amendments may impact your workplace, our Labour and Employment team is here to help. Contact us to discuss questions on compliance and strategies for adjusting wage rates in your organization.

[1] Budget Implementation Act, 2018, No. 2, S.C. 2018, c. 27.

[2] Regulations Amending Certain Regulations Made Under the Canada Labour Code (Equal Treatment and Temporary Help Agencies), SOR/2026-75.

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