Before new pay transparency legislation takes effect in Ontario, it’s important for employers to ensure their current compensation structure is in order, says Dominic Girard, a senior consultant in compensation at Arthur J. Gallagher and Co.
If passed, the legislation would require employers to include expected salary ranges in job postings so candidates are better poised to make informed decisions when accepting a position. Potential and current employees will be privy to salary information for jobs shared on public forums and channels.
Read: How Ontario pay transparency legislation will impact employers
When organizations are implementing salary structure, it’s important to eliminate any discrepancies in salaries among employees before communicating any changes or updates, says Girard, likening it to cleaning a home before inviting guests over for dinner. “It’s the same concept with compensation structures. While some differences may exist due to tenure or experience, employers don’t want discrepancies in salaries that can’t be explained.”
Under current legislation, Ontario employers can’t prevent employees from discussing compensation. Younger workers are more open about discussing their compensation package with their colleagues and peer groups, he says, adding the new pay transparency legislation will influence employee expectations on some level. Before going public with compensation details for roles, he recommends employers communicate to employees about how the pay structure will be applied.
Read: Canadian jurisdictions enacting pay transparency legislation, but more work to be done
Smaller companies that don’t have well-structured compensation policies and practices will be most impacted by the legislation. In order to attract and retain skilled professionals, these companies will need to quickly establish defined compensation processes and may also have to go the extra mile and include other aspects of the compensation and benefits package, including perks, in job postings.
“Companies that maybe aren’t able to be competitive on the base salary [may] need to offer something else in terms of employment conditions, such as growth possibilities, development possibilities, career path, incentive compensation or more time off. They will need to be more vocal about [these other offerings] . . . when they post a job. What we see with clients is the ones that are good at attracting and retaining their employees are also good at communicating what they have to offer.”
But even larger companies can fall short when it comes to communicating their policies, says Girard, noting training in this area will be critical. “Managers need to be trained on compensation and how to communicate with employees in this area, so they have appropriate responses ready for any questions that arise.”
Read: How employers can leverage pay transparency to achieve pay equity