Toronto, ON – September 16, 2026 – Starting October 20, 2026, federally regulated employers will need to follow new “equal treatment” provisions under Part III of the Canada Labour Code. In practical terms, employers may need to take a closer look at how they set wage rates for full-time, part-time, permanent, and temporary employees who perform similar work.
Many employers already aim for consistent pay across comparable roles. The new rules make that goal a legal requirement and create a good reason to review compensation practices now, especially where employees doing similar work receive different wage rates because they have different employment statuses.
What Do the New Provisions Require?
Under the new equal treatment provisions, federally regulated employers will be prohibited from paying an employee a lower rate of wages than another employee because of a difference in employment status (full-time, part-time, permanent, or temporary) where:
- the employees work in the same industrial establishment;
- they perform substantially the same kind of work;
- the work requires substantially the same skill, effort, and responsibility; and
- the work is performed under similar working conditions.
To be comparable, the employees’ wages must be calculated using the same type of wage rate (for example, hourly, mileage, piece-rate, commission, or per-load rates).
The key question is not whether employees have the same job title. Employers will need to look at the work employees actually perform, including the kind of work, the skill, effort, and responsibility it requires, and the conditions in which it is performed. The work does not have to be identical for the provisions to apply.
The legislation prohibits employers from reducing an employee’s wage rate to achieve compliance with these legislative requirements.
There is also a parallel framework applicable to federally regulated temporary help agencies. However, these legislative changes will likely be of more limited application because most temporary help agencies are provincially rather than federally regulated. Employers that use temporary help should nevertheless confirm which jurisdiction applies to the agency and the work arrangement.
When Different Rates of Pay May Still Be Permitted
Not all wage differentials will be prohibited. The legislation permits differences in pay that result from a system based on:
- seniority;
- merit;
- the quantity or quality of an employee’s production; or
- certain prescribed criteria established by regulation.
The prescribed criteria include:
- maintaining an employee’s higher wage following a reclassification or demotion (“red circling”);
- wage increases implemented to recruit or retain employees during a labour shortage;
- differences based on the geographic area in which employees work; and
- certain circumstances involving employees on travel status.
A pay difference is more likely to be defensible when it comes from a genuine, consistently applied compensation system rather than from an employee’s status. For example, an employer may use a documented seniority scale, a merit program with clear criteria, or a production-based system that applies to all comparable employees. The employer should be able to show how the system works, how it produced the wage difference, and that its details were communicated in writing or are readily available to employees.
Employee Requests for Review
Employees who believe they are being paid less than another employee because of their employment status may request a review of their wage rate. Employers must conduct the review and provide a written response within 90 days. The response must either explain why the existing wage rate complies with the legislation or confirm that the employee’s wage rate has been increased to achieve compliance. Employees must complete this review process before filing a complaint with the federal Labour Program.
How Employers Should Prepare
In advance of October 20, 2026, federally regulated employers should review existing compensation practices to identify wage differentials between employees performing substantially similar conditions. Compare wage rates within the same rate type, record the reason for each difference, and test that reason against the permitted exceptions. Next, make sure any seniority, merit, or production-based system is applied consistently and is available to employees. Finally, designate who will receive wage review requests, gather the relevant records, approve responses, and track the 90-day deadline.
- Build a reliable review process. A workable process should include a central intake channel, a standard request form, a designated decision-maker, a checklist for comparing the employees’ work and wage rates, a template response letter, and reminders well before the 90-day deadline. Keep the request, supporting records, analysis, decision, and written response together in a secure file.
The Bottom Line
The new equal treatment provisions represent a significant change for federally regulated employers, but preparation can be manageable if it starts early. First, identify comparable employee groups. Next, review and document wage differences. Finally, test the process for handling employee requests. Taking these steps before October 20, 2026 will make it easier to address gaps thoughtfully rather than under the pressure of a complaint or deadline.
Protea LLP is available to help your organization navigate and prepare for these upcoming legislative changes.
