Federally regulated employers have a new compliance deadline on the horizon. New equal pay provisions under the Canada Labour Code (CLC) come into force on October 20, 2026, establishing a statutory framework that requires equal pay for substantially similar work, regardless of an employee’s employment status.

For employers with a mix of full-time, part-time, temporary and agency workers, this is more than a paperwork exercise. It requires a real look at how pay decisions are made and documented. Here is what employers need to know, and what they should be doing now to get ready.

What’s changing?

The amendments introduce a statutory requirement that employees performing substantially similar work receive equal pay, regardless of differences in employment status. In practice, this means that temporary workers and part-time employees must be compensated on the same basis as comparable full-time or directly employed workers performing substantially similar work.

The equal pay obligation also extends to temporary help agency placements: an agency worker assigned to a federally regulated workplace must be paid the same as a comparable employee of the client employer performing substantially similar work. The cost of engaging an agency cannot be passed on to the worker in the form of a reduced hourly rate.

Are there exceptions?

Yes. A pay differential will not run afoul of the new provisions of the CLC where it is attributable to:

  • a system based on seniority;
  • a system based on merit; or
  • other prescribed factors that are legitimate and non-discriminatory.

These exceptions are useful, but they are not a blank cheque. Employers who intend to rely on them should make sure the underlying systems are formalized, consistently applied and well documented. An informal or ad hoc practice of paying more senior-looking employees more will not hold up well if it is challenged.

Do employers have to explain pay differences up front?

Not proactively. The obligation under the new provisions is reactive rather than proactive—employers are not required to affirmatively disclose or publish the basis for pay differentials among their workforce.

That said, where an employee requests information about their rate of pay and the reasons for any differential compared to a comparator, the employer must provide that information. Employers should be prepared to explain—in writing, if requested—why a particular employee is paid differently than a colleague performing substantially similar work. Getting caught without a good answer is not a good look, and it may expose the employer to a complaint.

What about temporary help agency workers?

Employers that rely on temporary staffing agencies to fill roles in federally regulated operations should take a close look at what those workers are actually being paid. The rate paid to an agency placement must be comparable to what the client employer pays its own employees for substantially similar work—the agency’s fee cannot be recovered by discounting the worker’s hourly rate.

Any existing gaps between agency and directly employed pay rates for comparable work need to be identified and closed before October 20, 2026.

Does this affect job postings?

The equal pay provisions do not directly regulate job postings. That said, employers should take the opportunity to review posted pay ranges for consistency with actual pay practices. This is not an invitation to remove pay range information from postings—doing so may conflict with separate pay transparency requirements—but employers should make sure the ranges they are advertising line up with what is actually being offered to candidates and incumbents alike.

How does this compare to Ontario?

Ontario employers may recall that this is not entirely new territory. Ontario introduced similar “equal pay for equal work” provisions in 2017 under the Fair Workplaces, Better Jobs Act, 2017 (Bill 148), which prohibited pay differentials based on employment status—part-time, temporary, casual or seasonal versus full-time. Those provisions, however, were short-lived: they were repealed under the Making Ontario Open for Business Act, 2018 (Bill 47) before they had a real chance to take effect.

Today, the Ontario Employment Standards Act, 2000 provides for equal pay for equal work only on the basis of sex—it prohibits paying an employee of one sex at a lower rate than an employee of another sex for substantially the same work, but it does not address differentials based on employment status. In effect, the federal CLC amendments are filling a gap that Ontario chose not to maintain.

Federally regulated employers that also operate provincially regulated workforces in Ontario should be alert to this distinction, as the compliance obligations will differ depending on which regime applies to a given group of employees.

 

What should employers be doing now?

With the effective date approaching, federally regulated employers should be using the coming months to get ahead of the new requirements:

  • Conduct a compensation review across federally regulated operations to identify pay differentials among employees performing substantially similar work that are not clearly attributable to seniority, merit or another permissible factor.
  • Document your compensation philosophy, including pay progression rules and the basis for any legacy or grandfathered rates.
  • Prepare HR and payroll teams to respond promptly and consistently to employee inquiries about pay differentials, including in writing where requested.
  • Audit agency worker pay rates against comparable directly employed roles and close any gaps before October 20, 2026.
  • Review job posting language and posted pay ranges for consistency with actual compensation practices.
  • Cross-reference existing pay equity plans and processes, which may already address some of these requirements, to avoid duplicative or inconsistent compliance efforts.

Looking ahead

The new equal pay provisions reflect a broader trend toward greater scrutiny of how employers structure and justify compensation, particularly for non-standard work arrangements. Federally regulated employers should not wait until October to take stock—a compensation review takes time, and gaps identified close to the deadline may be difficult to remedy on short notice.

For further information about the new equal pay provisions under the Canada Labour Code, or other employment law issues, please contact a member of the Employment, Labour & Equalities Group.