With financial penalties now in development and maintenance reviews underway, Canada's Pay Equity Act is moving into an active enforcement phase for HR teams
Lori Straznicky, Pay Equity Commissioner of Canada, tabled her 2025–2026 Annual Report in Parliament on June 17, 2026. The report sets out where compliance stands across federally regulated sectors and what the Commissioner’s priorities are for the year ahead.
The Pay Equity Act applies to close to 5,000 federally regulated employers and 1.4 million employees. It covers private and public sector organizations, parliamentary workplaces, and the Prime Minister’s and ministers’ offices with an average of 10 or more employees.
What federally regulated employers must act on now
For HR professionals and plan sponsors at federally regulated organizations, the report signals a shift toward active enforcement. Two obligations are now active for most covered employers:
- Five-year maintenance review. Most employers were required to begin this process in 2025–2026. It requires reassessing compensation practices, identifying changes that have affected pay equity since the original plan, and implementing corrections where gaps are found
- Annual statement submission. Employers submitted their first annual statements this year, creating a new data trail the Commissioner is using to monitor compliance
Pay equity financial penalties now in development
Changes to the Pay Equity Regulations in June 2024 created a system of administrative monetary penalties (AMPs).
Throughout 2025–2026, the Commissioner continued developing AMP policies, procedures, and operational processes — including internal guidance and decision-making tools.
AMPs allow the Commissioner to issue financial penalties for certain violations and make information about those violations public.
Employers who have not yet posted a final pay equity plan face potential exposure under this regime. The framework moves through education and corrective action plans before escalating to financial penalties.
Of 172 authorization requests received in 2025–2026, 94 per cent sought an extension to posting deadlines. The Commissioner granted 158 applications fully, two in part, and denied one.
Compliance rates by sector
Of the 643 annual statements received in 2025–2026 – representing close to 12 per cent of all covered employers – compliance varied by sector:
- road transportation reported the highest rate at 37.8 per cent
- followed by air transportation at 18 per cent
- telecommunications, broadcasting and related services came in at 12.8 per cent
Non-unionized employers reported higher compliance rates than unionized employers. In air transportation, the compliance rate was 29.6 per cent for non-unionized employers, compared with 7.2 per cent for unionized employers.
Of the 643 employers who submitted statements, 129 – close to 20 per cent – reported owing wage increases to female employees. The average hourly wage increase owed to female-predominant job classes was $2.37.
In banking, medium and large non-unionized employers reported pay equity adjustment gaps exceeding 30 per cent. In road transportation, small non-unionized employers reported a gap of close to 25 per cent.
Wage gap trends by age group
Statistics Canada’s Quality of Employment data shows that women’s average hourly wages grew 21.3 per cent between 2006 and 2024, compared to 15.9 per cent for men. Gaps persist across all age groups.
Figure 1
Gender wage gap by age group, Canada
Percentage gap in average hourly wages, men vs. women
Ages 15–24
Ages 25–54
Ages 55+
Source: Statistics Canada Quality of Employment data, as reported in the Pay Equity Commissioner’s 2025–2026 Annual Report, Canadian Human Rights Commission, June 2026
These wage disparities have documented carry-through effects on retirement savings and pension outcomes for women.
Looking ahead: audits and ongoing monitoring
The Commissioner’s 2026–2027 priorities include monitoring compliance with final pay equity plan postings, with a stated focus on larger organizations. Enforcement action may be taken where appropriate, according to the report.
The Annual Statement Portal is available to support reporting obligations.
The Commissioner engaged more than 360 stakeholders through workshops and technical briefings during the year.
For HR professionals managing pay equity alongside broader total rewards and DEI compliance obligations, updated guidance tools are available through the Canadian Human Rights Commission.
For the latest news on workplace compensation, benefits compliance, and HR legislation, visit our HR and group benefits news section.
