Why Pay Transparency Matters More Than Ever in Canada

Canadian workplaces have evolved to meet the needs of a more diverse, informed, and values-driven workforce. In this context, pay transparency has emerged as a key priority for both HR professionals and business leaders. Opaque salary structures or vague compensation promises are no longer acceptable to today’s employees. They demand clarity, equity, and accountability—and they have the data and digital networks to back up those expectations.

HR managers and executives must face pay transparency, which is, at the same time, a cultural shift, a compliance imperative, and a strategic opportunity. Embracing openness around pay can strengthen trust, enhance employee engagement, attract talent, and drive long-term retention. In this article, we’ll discuss pay transparency and how HR should approach this reality.

The work landscape in Canada today presents HR leaders with a collision between employee expectations, legal pressures, and workplace culture. Transparency is now a business necessity that demands updated policies, better communication, and bolder leadership.

Millennials and Gen Z workers are reshaping the norms of the workplace. These generations demand clear, honest communication from employers and, more importantly, when it comes to pay. Those employees want to know how organizations determine salaries and reward performance, as well as understand how their compensation compares to that of their peers.

This shift creates pressure on HR teams and leaders to dismantle outdated compensation frameworks. They’re expected to design systems that reflect fairness and inclusivity, while individuals come forward with greater scrutiny and demanding open conversations around pay.

Historically, decisions around pay have been shrouded in mystery in many organizations. Leadership would often rely on market benchmarks, subjective manager assessments, and individual negotiations to establish their pay policies. Inequities arose as an undesired result.

Externally, platforms like Glassdoor and Indeed allow employees to compare salaries with national averages. Internally, conversations among peers further fuel calls for transparency. In response, HR must develop compensation frameworks that are both fair and defensible.

Over the past few years, new legislation at the federal and provincial levels has compelled Canadian organizations to reassess their pay practices. Those who fail to comply with these regulations risk legal repercussions and severe reputational damage. Let’s find out more about that now. 

Canada’s legal landscape is increasingly driving organizations to adopt fair and open pay practices. HR and business leaders must understand and comply with federal and provincial laws, to ensure alignment and avoid legal challenges and damages to their reputation.

The Pay Equity Act (enforced by the Canadian Human Rights Commission) applies to federally-regulated employers with 10 or more employees. It requires employers to identify and proactively correct gender wage gaps. This includes creating and maintaining pay equity plans, as well as engaging employee representatives in the process.

Although not yet in force, Ontario’s Pay Transparency Act was passed in 2018 and sets a framework for future enforcement. It includes provisions requiring employers to include salary ranges in job postings, prohibits asking candidates about their past compensation, and mandates the submission of pay transparency reports.

Enacted in 2023, BC’s legislation requires employers to include salary or wage ranges in job ads. It also prohibits any kind of retaliation against employees who discuss or inquire about pay. Starting in 2024, large employers will need to submit annual pay transparency reports.

Quebec’s Pay Equity Act mandates that employers with 10 or more employees assess and correct pay disparities between male- and female-dominated job classes. Employers must conduct periodic audits and update their pay equity plans every five years.

Prince Edward Island’s Employment Standards Act was amended in 2022 to include pay transparency provisions. The legislation prohibits employers from seeking pay history from job applicants and from preventing employees from discussing wages. The law also encourages the inclusion of salary ranges in job postings.

Newfoundland and Labrador amended its Labour Standards Act in 2022 to strengthen pay transparency. The amendments prohibit employers from asking about previous compensation and protect employees who share or inquire about wage information.

Frame transparency as a strategic investment, not just a compliance box to check. Take a structured and strategic approach when transitioning from intention to action. HR is a key player in implementing practical solutions that drive equity, enhance morale, and future-proof organizations.

A foundational step is to define and document your company’s compensation philosophy. The questions you want to ask yourself are:

• What principles guide your pay practices?
• How do you define roles and salary bands?
• Who is involved in pay decisions?

Transparency starts with clarity. Make salary ranges visible. Outline how you determine bonuses and raises. Empower managers with the tools and language to have open, respectful salary conversations.

Audits are crucial for identifying pay gaps and ensuring legal compliance. Explore data-driven tools and make your job easier in evaluating pay by gender, role, tenure, and performance. If you discover any discrepancies, act promptly to correct them and notify everyone involved about the adjustments.

Best practices from HR leaders include:

• Conducting audits quarterly or biannually
• Using third-party experts for objectivity
• Sharing high-level findings with staff
  

Above all else, transparency is about trust. Rocki Howard, member of the Forbes HR Council, agrees: he says that organizations that communicate openly about pay decisions experience better morale, retention, and employee satisfaction.

Here are some actions you can take to improve communication:

• Provide regular forums for pay discussions
• Train managers to address tough questions
• Offer workshops that explain pay structures, raises, and promotion paths

Employees should have a grasp of where they stand regarding pay equity and transparency. One way to enable this is to implement digital platforms, such as compensation management systems, salary range tools, and internal portals. Those tools provide visibility and reinforce employee privacy, while also ensuring consistency, reducing errors, and supporting data collection for audits.

Besides building trust and fostering satisfaction, transparency is a good business practice. Organizations with clear and equitable pay practices:

• Attract stronger candidates
• Increase retention and engagement
• Avoid costly legal issues
• Strengthen brand reputation

One often-overlooked element of fairness and employee support is what happens when employees leave. Offering outplacement services—such as career coaching, resume support, and job search assistance—shows that your organization values people at every stage of the employee lifecycle.

Offering outplacement reinforces trust, increases retention and engagement, boosts your employer brand, and helps departing employees to transition with dignity, in case a layoff occurs. The workplace climate is increasingly focused on fairness, so fostering inclusion and accountability is always a smart, human-centred move.

Pay transparency is a mandate in today’s workplace. HR professionals and managers must possess courage, commitment, and a willingness to transform outdated systems to provide employees with the transparency they demand and deserve. To get there, it is vital to adopt transparent policies, conduct regular equity audits, and communicate effectively with employees.

Finally, by offering outplacement services during periods of transition, your organization will be even better positioned to support its teams and reinforce a culture of care. In a world where employees value equity more than ever, this kind of commitment speaks volumes.If you need help implementing outplacement services in your organization, reach out to us. Careerminds is a modern, result-driven outplacement firm rooted in a people-first culture. Contact us today and learn more about the Careerminds approach to outplacement.