What are the benefits of BC’s Pay Transparency Act?

By Caitlin Vdovine
Dec 7, 2023
Photo credit: tumsasedgars/iStock/Getty Images

Pay transparency is an emerging practice that involves openly disclosing compensation information, such as salary ranges, with employees and potential employees. More and more companies are getting on board with pay transparency, thanks to new laws across Canada, the United States, and around the world.

Many companies are also proactively choosing to implement pay transparency because it's good for both them and their employees. In this article, we’ll explore how BC’s newly enacted Pay Transparency Act can take us beyond legislation and help foster healthier, more productive, and fair working environments while improving organizations’ overall performance.

What is Pay Transparency?

Pay transparency is the practice of sharing compensation information with employees and job seekers. This can include not only salary ranges but also how and why pay decisions are made. It’s a strategy that organizations can use to promote pay equity and build trust among employees and job applicants. 

Pay Transparency in BC

In May 2023, British Columbia introduced the  Pay Transparency Act, which officially came into effect on November 1, 2023. This law aims to make sure everyone in the province is paid fairly.

Key components of the Act include:

  • Salary Range Disclosure: All organizations are required to disclose the expected salary or salary range on all publicly advertised job postings. The size of the range is at the employer's discretion and other extra items like bonuses, overtime, tips, or benefits do not need to be disclosed.
  • Pay History: Employers are now prohibited from asking about a job applicant's previous pay, preventing past compensation from influencing future offers.
  • Pay Secrecy: Employers can also no longer discipline current employees for discussing their pay with their coworkers, fostering a more transparent and open environment.

In addition, over the next three years, companies with 50+ employees, will have to publicly report on their gender pay gap.  

Benefits of pay transparency 

  1. Creating a culture of trust

    One of the primary benefits of pay transparency is its ability to improve communication and trust within an organization. I often hear the sentiment that employees’ perception of pay fairness is as important as their actual pay.

    If employees believe they are being paid unfairly it can be detrimental to their morale, job satisfaction, and engagement. When employees can see how their pay fits into the greater structure and see evidence of fairness in their compensation, it eliminates any perception of unfairness. When employees believe they are being paid equitably, it can lead to a more engaged workforce, which contributes to the overall success of the organization. 

  2. Attracting and retaining top talent

    Pay transparency can enhance an organization's ability to retain and attract top talent. As mentioned, employees who feel that they are paid fairly are more likely to be motivated, stay with the company for longer periods, and be more committed to their work.

    This translates to lower turnover rates and reduced recruitment and training costs for companies. In a job market where transparency is valued, companies that openly share their pay practices are more likely to be seen as fair and attractive places to work. This can be used as an opportunity to highlight an organization’s commitment to fairness and equity, which job seekers are drawn to. 

  3. Encouraging fair pay decisions and practices

    Pay transparency encourages organizations to develop standardized and well-defined compensation structures instead of making pay decisions on the fly. When these structures are visible through publicly posted pay ranges, it becomes easier to identify and correct inconsistencies in compensation decisions.

    When salary information is open and accessible, it becomes difficult for discriminatory pay practices to persist. By shining a light on any unfair pay gaps, organizations are encouraged to fix discrepancies, promoting a more diverse and inclusive workplace. Pay transparency can also narrow historical wage gaps by ensuring that employees in similar roles with similar qualifications are paid equally, regardless of their background. 

Implementing pay transparency can be intimidating but the pay off is creating more equitable, inclusive, and efficient workplaces. BC’s Pay Transparency Act represents an opportunity to take that step toward ensuring that employees are paid fairly and that organizations operate with transparency and integrity. When companies embrace pay transparency, they get an edge in attracting top talent and fostering a culture of trust and fairness. In our rapidly evolving world of work, pay transparency can be a key component of success for organizations and employees alike.

Caitlin Vdovine, CPA, CMA, is a senior consultant at White & Gale Consulting where she specializes in developing total rewards solutions that help build progressive and equitable organizations. White & Gale’s purpose is to build better workplaces and expand the well-being of organizations and their people.