Equal treatment wage rules for federally regulated employers

At a glance

• Effective 20 October 2026, new “Equal Treatment” wage rules under the Canada Labour Code (the Code) will require equal pay for employees regardless of employment status (full-time, part-time, permanent, or temporary).

• Employers must avoid differences in wage rates based on an employee’s employment status where the employees perform substantially the same work, apply substantially the same skill, effort, and responsibility, work under similar conditions, and work in the same industrial establishment.
• Employees may request a wage review, and employers must respond in writing within 90 days.
• Exceptions apply for systems based on seniority, merit, quantity or quality of production, geographic differences, and red-circling.
• Temporary help agencies are also covered by similar equal treatment requirements.

Background

On 6 May 2026, the federal government published regulations (SOR/2026-75) in the Canada Gazette, Part II, bringing into force the “Equal Treatment” provisions of the Code. These provisions were first enacted in 2018 through Bill C-86, the Budget Implementation Act, 2018, No. 2, but required supporting regulations before they could take effect. The regulations clarify key definitions and procedural requirements, and the new rules will come into force on 20 October 2026.

For a transitional period of two years until 20 October 2028, existing collective agreements that permit wage differences based on employment status will be exempt from these requirements.

Key definitions

The regulations define the following key concepts:

• Employment status means an employee’s status as full-time, part-time, permanent, or temporary. Full-time generally means working an average of 30 or more hours per week. Temporary includes fixed-term, seasonal, casual, or irregular employment.
• Industrial establishment is determined by reference to Employment Insurance regions (Schedule I of the Employment Insurance Regulations) and may include more than one physical location. For remote workers, this is generally the location where they most often reported for work before their remote working arrangement, or where they would report to work in person if there were no remote working arrangements. For transportation workers, this is the location of their home terminal, station, base, or port.
• Comparable wages refer only to the same type of rate of wages (time-based rates, mileage rates, commission rates). All time-based wages (hourly, daily, weekly, monthly or annual salaries) can be compared with each other.

Exceptions

A wage differential is permitted where it is attributable to one or more of the following:

• a system based on seniority or merit;
• a system that measures earnings by quantity or quality of production;
• red-circling (maintenance of a wage rate following demotion or reclassification);
• increases in wage rates due to recruitment or retention difficulties during labour shortages;
• differences in the geographic area where the employee works; or
• differences attributable to travel status.
• The particulars of any system providing for a difference in wage rates must be communicated in writing to employees or be readily accessible for examination.

Wage review requests and enforcement

Employees who believe they are not receiving equal pay based on their employment status may request a wage review from their employer. The employer must provide a written response with reasons within 90 days, either confirming the employee’s wage rate has been increased or explaining why the current rate complies with the Code.

Employers cannot reduce an employee’s wage rate to achieve compliance.

Employers must maintain records of all wage review requests, written responses, and systems relied upon to justify a wage differential. Administrative monetary penalties may apply for violations. The Code also prohibits reprisal against employees who exercise their right to request a wage review.

Takeaways for employers

To prepare for the new “Equal Treatment” wage rules under the Code taking effect on 20 October 2026, employers should begin now to:

• Review existing wage rates across employee classifications to assess compliance.
• Determine whether any of the permitted exceptions apply to existing differences in the wage rates.
• Update record-keeping practices to ensure the required documentation (particulars of systems that support any differences, wage review requests and responses) is maintained.
• Prepare internal processes to respond to employee wage review requests within the 90-day window.
• Note the two-year transitional period for existing collective agreements that permit wage differences based on employment status (expiring 20 October 2028).