August 12, 2020

Diversity and inclusion: What should employers expect, legally speaking ?

Diversity and inclusion have been hot topics these past few years, and Canada has been a world leader on the subject. Recent studies have shown that innovation, efficient problem solving and greater creativity are just a few of the benefits of diversity and inclusion in the workplace. But there’s more. These benefits confer a competitive advantage and lead to higher profit margins. One study, the McKinsey Global Institute’s 2017 report,[1] states that implementing gender equity measures could add $150 billion to Canada’s GDP in 2026.

From a legal perspective, what obligations do employers in Quebec have in terms of inclusion and diversity?

Right to equality

For provincial jurisdiction employers, the primary obligation is to comply with the fundamental right to equality enshrined in the Charter of Human Rights and Freedoms (the Charter) and other supra-legislative laws. In our opinion, this right does not give rise to a positive diversity and inclusion obligation on the part of employers. It does, however, impose a negative obligation on employers not to discriminate, for instance, when hiring employees or determining and applying working conditions.

Not all distinctions will be considered discriminatory. To be considered as such, a distinction must be based on a ground listed in the Charter, such as sex, gender identity or expression, pregnancy, sexual orientation, language, ethnic or national origin and handicap.

Although this obligation does not go so far as to impose hiring quotas for women or visible minorities, compliance with this obligation could result in significant operational or financial constraints for employers. Hiring a pregnant candidate (the cost of her maternity leave replacement) or reinstating an employee with considerable physical limitations would be two examples. In these situations, employers cannot simply stop the hiring process or refuse to reinstate since they are bound to explore reasonable accommodation solutions to  resolve the issue.

One way out is available to employers, however: undue hardship. Essentially, employers must demonstrate that all possible accommodation measures would represent undue hardship that could take on many forms, including an unwarranted interference with the business’s operation, excessive costs or safety risks. In such a scenario, it is important that employers properly maintain records and document all steps that were taken before claiming undue hardship. This documentation will prove indispensable in absolving employers from liability, especially if they are claiming that no realistic and reasonable accommodation measures exist.

Pay equity

Employers’ obligations do not end there. Some issues relating to the role of women in the workplace have been addressed by lawmakers, notably women’s right to equal pay. This right aims to offer those who occupy positions in predominantly female job classes the same compensation as employees who occupy positions of equal value in predominantly male job classes. In other words, this obligation requires more than “equal pay for equal work”; employers must guarantee “equal pay for different but equivalent work.”

How does this obligation apply in real life? Under the Pay Equity Act, employers are required, among other things, to carry out a pay equity audit every five years after the initial pay equity audit and correct any compensation differences the audits may have identified starting on the date of the event leading to that difference. Compensation adjustments must be prospective and retrospective, the latter being made by a lump-sum payment, the former by a salary adjustment.

Publicly traded corporations’ duty to disclose

Finally, the regulations amending the Canada Business Corporations Act (CBCA) require CBCA‑incorporated publicly traded corporations to disclose, among others, whether or not they have a diversity policy for their board of directors or senior management, whether or not the policy includes targets for the representation of four “designated groups” (i.e., women, Aboriginal peoples, persons with disabilities and members of visible minorities) and statistics on the representation of these groups. For more information on the subject, click here to consult Norton Rose Fulbright’s legal update published on July 8.

Take-away

This brief note does not present an exhaustive analysis of the legal aspects of diversity and inclusion. What it does, however, is reveal that provincial jurisdiction employers currently aren’t  legally obligated to implement many of the measures studies on the subject have proposed as objectives.

Even so, employers should remain diligent and attentive. Complying with the non-discrimination obligation is often far more complex than anticipated.

In closing, here are a few practical recommendations for employers interested in proactively and voluntarily implementing a diversity program or policy:

  • disclose accurate and detailed information on your diversity practices;
  • describe your diversity and inclusion practices and demonstrate the extent to which they will allow you to achieve your objectives;
  • disclose only numbers or statistics on the designated groups’ representation that are strictly objective, verifiable and accurate;
  • consider providing statistics for previous years, if available, to illustrate any progress made;
  • set realistic but ambitious objectives; and
  • don’t forget that these objectives are targets to be reached, not an end in themselves; striving to reach them at all costs could unexpectedly result in discriminatory decisions, especially in the context of your selection and hiring processes.

 

Authors: Caroline Jodoin and Iones Deda Alves

 

[1] Sandrine Devillard, Tiffany Volgel et al., “The power of parity: Advancing women’s equality in Canada,” McKinsey Global Institute, June 21, 2017

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