Effective October 20, 2026, employers under federal jurisdiction must comply with new requirements on equal treatment and the use of temporary help agencies.
Introduced into the Canada Labour Code (the “Code”) by the Budget Implementation Act, 2018, No. 2, these provisions will come into force at the same time as the Regulations Amending Certain Regulations Made Under the Canada Labour Code (Equal Treatment and Temporary Help Agencies) (the “Regulations”) and IPG-122, the Interpretations, Policies and Guidelines regarding Equal Treatment (“IPG-122”). The Regulations set out, among other things, the criteria for comparing employees, the rate of wages differences that remain permissible, and the new record-keeping obligations, while IPG-122 provides guidance on applying the new provisions of the Code and the Regulations.
This new regulatory framework follows the legislative amendments we discussed in April 2025 in the article “Amendments to certain labour standards: what should federally regulated employers expect?”. We present the key points that federally regulated employers should keep in mind as they prepare for these new requirements to take effect.
Criteria for comparing employees
As of October 20, 2026, an employer is prohibited from paying an employee a lower rate of wages than the rate paid to another employee due to a difference in their employment status, provided certain conditions are met. In particular, the employees must work at the same industrial establishment, perform substantially the same kind of work, have substantially the same skill, effort, and responsibility requirements, and work under similar working conditions.
1. Employment status
“Employment status” will refer to an employee’s status as full-time, part-time, permanent, or temporary. A temporary employee includes, among others, a person hired for a fixed term or on a seasonal, casual or irregular basis. For full-time status, the Regulations refer first to the collective agreement, then to the employment contract, and, failing that, to an employer policy communicated to the employee. If none of these documents settles the question, a threshold of 30 hours per week will generally serve as a reference point.
2. Industrial establishment
Next, the concept of “industrial establishment” will be key. To this end, branches, sections, or other divisions of a federal enterprise located within the same economic region for employment insurance purposes will be considered part of the same establishment. Specific rules also allow employees in the transportation sector, as well as those who work entirely remotely, to be attached to an establishment.
3. Rate of wages
The Regulations specify that only wages calculated using the same type of rate of wages will be comparable, for example, a rate based on time, a mileage rate, a piece rate, a per-load rate, or a commission rate.
4. Substantially the same kind of work
IPG-122 also provides useful guidance on what constitutes work that is “substantially the same”. The focus must be on the work actually performed, rather than solely on the job title or generic job description. Two jobs need not be identical: minor differences will not necessarily prevent a comparison if the main responsibilities remain the same.
Exceptions to the equal treatment obligation
Equal treatment does not, however, mean that all employees performing comparable work must receive the same rate of wages.
In particular, the Code will permit a difference when it results from a system based on seniority, merit, or the quantity or quality of each employee’s production. The Regulations add, among other things, the maintenance of the rate of wages following a reclassification or demotion, certain increases in the rate intended to address a shortage of skilled labour, the region where the employee works or the employee’s travel status, as well as certain differences that apply specifically to employees on travel status.
However, it will not be enough to invoke one of these factors after the fact. A system that may justify a wage difference must apply to all employees with comparable rate of wages, and its details must be communicated to them in writing or be readily available for review.
Requests for review, posting and record-keeping
An employee who believes they are being paid a lower rate of wages due to their employment status may ask their employer to review their rate of wages. The employer will then have 90 days to review the request and provide a written response either stating that it is increasing the rate to comply with the Code or explaining why the current rate is compliant. If an increase is required, a retroactive amount must also be paid. The employee will also be protected against reprisals.
Employers must also inform their employees in writing about job opportunities or promotions, regardless of their employment status. In addition, employers must maintain certain records, including those describing the systems relied on to justify a wage difference, as well as written requests for review and the responses to those requests.
The Regulations also amend the administrative monetary penalties regime to designate several violations of the new provisions.
Temporary help agencies
The new rules governing temporary help agencies will also take effect on October 20, 2026.
Among other things, a federally regulated agency may not pay an employee assigned to a client a rate of wages lower than the rate that client pays its own employees when the Code’s comparison criteria are met. The rules governing the industrial establishment, the type of rate of wages, and exceptions will apply in substantially the same way.
Agencies will also be prohibited from engaging in several practices, including charging employees certain fees related to their hiring, obtaining an assignment, or preparing for a job or an assignment. They will also be prohibited from preventing or attempting to prevent an employment relationship between their employee and a client. Certain restrictions will also apply to fees charged to a client when it hires the agency employee directly.
Transitional period for certain collective agreements
Where a collective agreement in force on October 20, 2026 permits differences in rates of wages based on employment status, its provisions will prevail for a period of two years. A similar transitional measure applies to collective agreements covering employees of temporary help agencies.
Preparing for october 20, 2026
October 20, 2026 marks the culmination of a reform announced in 2018. Federally regulated employers should use the coming months to review their wage structures and identify any rate of wages gaps among permanent, temporary, full-time, and part-time employees performing comparable work.
Employers in unionized workplaces should also review their collective agreements to determine whether the transitional measures apply to them and, if so, plan the necessary adjustments before they expire.
Note that it will be prohibited for employers to reduce employees’ rate of wages in order to comply with the new requirements.
Lastly, to avoid any surprises, employers should obtain legal guidance to assess the impact of these new requirements on their organization and put in place the necessary measures to prepare for their coming into force.