Fair wages

Fair wages in Canadian government procurement means wages that meet or exceed a defined legal or prevailing-wage threshold for the relevant occupation and region. Fair-wage policies exist to stop suppliers from competing for government contracts by paying substandard wages. Employment and Social Development Canada (ESDC) describes the purpose this way in its consultation on a modern fair-wages policy.

The term is used in two related ways. As a policy, a fair-wage requirement obliges contractors and subcontractors to pay at least designated wage levels, often based on prevailing wages. As a contract condition, it appears in supplier conduct requirements that call for legal minimum and overtime wages, paid directly to workers, alongside broader labour-rights standards.

The former Fair Wages and Hours of Labour Act

The clearest federal example of a fair-wage regime is the Fair Wages and Hours of Labour Act and Regulations, which applied to federal construction contracts containing a fair-wage clause. Contractors who bid on covered projects had to agree to meet the wage and labour conditions set under the Act. They also had to post those conditions prominently at the workplace and keep records showing compliance, available for inspection by Labour Program inspectors.

The Act and Regulations were repealed on January 1, 2014. Contracts that contain a fair-wage clause continue to be governed by them for the duration of those contracts, as set out in the Government of Canada open data record. Older construction contracts can therefore still carry these obligations.

Wage requirements in the PSPC Code of Conduct for Procurement

Public Services and Procurement Canada (PSPC) addresses wages through its Code of Conduct for Procurement. The Code requires vendors and their subcontractors to pay at least the legal minimum and overtime wages for hours worked. It also requires wages to be paid directly to the worker or to a worker-controlled account.

Other federal organizations use the same wording. The Canada Revenue Agency's supplier code for procurement requires suppliers and subcontractors to pay at least legal minimum and overtime wages and to pay workers directly or through a worker-controlled account.

Fair wages as an ethical-procurement certification

PSPC has also tied fair wages to bid certifications. For certain goods, including personal protective equipment, bidders were required to certify that they and their first-tier subcontractors comply with fundamental human-rights and labour-rights requirements. Access to fair wages and safe working conditions was among those requirements, as described in PSPC's briefing material on ethical procurement and forced labour.

In these cases the certification reaches one tier down the supply chain. A bidder answers for its own practices and for those of its first-tier subcontractors.

The proposed modern fair-wages policy

ESDC has consulted on a modern federal fair-wages policy intended to apply to government procurement. The stated aim is the same as that of earlier regimes: to prevent competition based on substandard wages. Under such a policy, contractors would typically pay above a threshold defined by prevailing wages for the occupation and region. The consultation page presents this as a policy under development, not as a final procurement rule that applies to every contract.

What fair wages means for a supplier

Check each solicitation and contract for wage and labour clauses. Confirm whether the Code of Conduct for Procurement applies, and whether the bid requires a certification that covers first-tier subcontractors. Make sure payroll practices match the requirement to pay at least legal minimum and overtime wages, paid directly to workers or to a worker-controlled account. If you hold a federal construction contract with a fair-wage clause, keep posting the labour conditions and retaining compliance records for the life of that contract.