Pay transparency has emerged as a pivotal issue in the ever-evolving landscape of employment practices. Recent developments, including the passage of Ontario’s Bill 190, Working for Workers Five Act, 2024 to mandate pay transparency, effective Jan. 1, 2026, have thrust this topic back into the spotlight.
Key compensation provisions of this new regulation:
- Disclosure of the range of expected compensation for publicly/externally advertised positions for work to be performed within Ontario
- Applicable to positions that have expected compensation less than $200,000 (inclusive of non-discretionary bonuses and other monetary compensation an employee is likely to earn)
- Maximum range of expected compensation not to exceed $50,000
- Applicable to organizations with more than 25 employees
WTW’s recent Pay Transparency Survey provides key insights that will help to understand the implications of this bill.
Delving into pay transparency-related trends and insights, the survey is more relevant than ever for organizations gearing up to comply with new regulations and respond to growing demands for transparency.
Current state of pay transparency practices
Despite the growing emphasis on pay transparency, the survey found that only one-quarter of Canadian organizations have a formal philosophy about the pay information they will share with internal and external stakeholders.
Additionally, organizations are not confident in their pay programs and fear compensation-related questions from both employees and managers. Finally, pay programs have been put on cruise control and have not been updated to reflect changes in labour markets, economic conditions and socio-economic trends.
About half of Canadian organizations are concerned about salary compression, according to WTW’s’ Pay Effectiveness and Design Survey. However, increased pressure on organizations to change their pay programs has been countered with budget constraints, which have been both a driver and a barrier to change.
Global organizations are tasked with deciding whether to adopt a uniform pay transparency approach or something more localized. This decision requires careful consideration of various factors, including a consistent employee experience, local regulations, cultural norms and operational feasibility.
Drivers of change
The Pay Transparency Survey reveals that an increasing number of organizations are ramping up their efforts to meet pay transparency obligations. While regulatory requirements are a significant driver, they are not the only factor in the push for change. Other factors include:
- Outdated pay programs. As organizations have struggled to keep pace with rapid workforce changes, their confidence in the fairness and competitiveness of their pay programs has dropped.
- Organization values and culture. As organizations strive to differentiate themselves, a commitment to fairness and equity often is a driver for attracting and retaining talent.
- Environmental, social and governance (ESG) initiatives and shareholder expectations. ESG initiatives often include fair pay as a social responsibility consideration and shareholders are more frequently demanding fair pay.
- Employee expectations. Today’s workforce demands greater transparency and fairness, and organizations are responding.
In many cases, multiple factors converge to drive greater pay transparency within organizations.
Preparing for prime time: Key steps
To ensure readiness for pay transparency, organizations should be comfortable answering “yes” to three key questions:
