With new rules, employee pay is increasingly being put on display

Organizations looking to fill open positions have traditionally been cautious about disclosing compensation in job postings.

Ultimately, many view compensation as a “competitive advantage” or disadvantage, depending on your point of view, says Paola Accettola, managing director of True North HR Consulting. She adds that private companies typically bristle at publishing salaries, arguing that it should be their decision whether or not to disclose compensation for open positions. Some companies feared that disclosing salaries could lead to competitors targeting their talent with more generous compensation packages, Ms. Accettola says.

Now, that norm is largely being shaken as large employers compete for talent in a tight labor market and have to abide by new rules, she notes.

A key factor driving disclosure in Canada is new legislation in the country's largest labor markets that requires salary ranges to be included in job postings. “In Ontario, the legal framework is now in place – but the details still need to be finalized,” says James Fu, a lawyer specializing in employment law and a partner at Borden Ladner Gervais LLP (BLG) in Toronto.

Citing recently passed Ontario law that came into effect in March, the new law requires employers to disclose salary ranges. However, it remains to be seen what the regulations will be regarding salary disclosure or how the rules will be enforced for those who do not comply, he says. “So the house is built, but not quite ready for occupancy.”

While there is still uncertainty for now, it is clear that compensation transparency will soon be the norm – if not law – in Canada, and the change will be for the better for employees and even employers, many human resources experts say.

Georgia Harper, president of The Headhunters Recruitment LP in Vancouver, says publishing salaries helps respect employees' time, as it can be frustrating for an employer to put a candidate through a lengthy interview and then leave them due to reject his salary expectations.

“Publicating salaries shows that an organization is willing to be honest and transparent and helps attract candidates whose expectations match what is offered,” she says, and it also helps reduce pay disparities based on factors such as gender, ethnicity or age.”

Ms Accettola points out that parts of the industry are already one step ahead of regulation.

“When you post a job on Indeed – probably the largest job site that everyone uses – you must provide salary ranges.”

In May, Indeed announced the rule change to promote pay transparency, citing potential candidates searching for salary information and adding that it helps promote pay equity. The online job exchange referred to its own recent survey, which shows that 80 percent of employees say that fair pay is a top priority when starting a new job. Additionally, Indeed's survey found that 67 percent of job seekers consider salary information to be the most important part of a job description. Many jurisdictions in the U.S. are implementing pay transparency regulations, and Indeed said it wants to achieve widespread adoption with its policy change.

The change is also widely seen as a step towards eliminating the gender pay gap. “There is still a huge gap between men and women,” explains Ms. Accettola.

A 2023 report from Statistics Canada shows just how big this gap is. Despite improvements over the past 25 years, Canadian-born women have been found to earn, on average, about 9 percent less than Canadian-born men. “It's all moving toward the idea that people should be paid fairly,” she says, noting that pay transparency will also help minority groups who are often even more underpaid.

Ontario's new legislation may be the most effective yet, but it is not the first jurisdiction to do so. British Columbia passed legislation in 2023. It now contains regulations for publishing salary ranges. For example, posts may not state “$20 per hour and above” or “up to $30 per hour,” but may state “$20 to $30 per hour.”

Prince Edward Island also passed similar legislation in 2022 – but due to its size, the change in regulations is expected to have less impact on the overall Canadian market compared to BC and Ontario.

Human resources professionals are already preparing for official implementation in Ontario, says Philippe de Villers, chief executive of Chartered Professionals in Human Resources Canada (CPHR).

“Specifying salary ranges is the easy part, but before you do that, you need to make sure your employees in similar positions are within those salary ranges,” says Mr. Villers, who is based in Montreal.

“If the posting says $80,000 to $100,000, the first question from an employee – who makes $80,000 – is, 'How come I don't make $100,000?'”

Providing salary ranges can also be more complicated for executive job openings, Ms. Harper adds. “A role could be somewhat malleable and tailored to (a potential employee's) specific skills and expertise… and therefore compensation may also be flexible.”

Ms Harper points out that the new rules will likely require a degree of trial and error for employers to find the right area. She also suggests that they offer more than just salary information and include health benefits, vacation, stock options, childcare and bonuses to attract top talent. “The salary is only one part.”

While many welcome transparency, some employers also fear the rule changes could lead to even greater wage inflation – already a cause for concern given the pandemic, Mr Fu says. “Given the potential, internal adjustments should be made sooner rather than later.”

When existing employees are paid fairly, companies are less at risk of losing them to other employers with better wages, he adds.

All of this means it's in an organization's best interest to be proactive, says Ms. Accettola.

Leading employers are already considering pay equity and transparency as core elements of their diversity, equity and inclusion (DEI) policies, helping to attract leading candidates, particularly among Millennials and Generation Z.

“Best-in-class organizations are more likely to view change through a DEI lens and are not motivated by legislative changes alone,” says Ms. Accettola. “And pay equity and pay transparency are really the key to success.”