Setting Timescale to zero pauses things, but I couldn't unpause and the characters just stood frozen, so I tried to do something more with events in the following manner:
Event: Start Button is down ---> Action: System - Set time scale to 0
I then used a Global variable with the "add to value" action where on the first press it would add 1 to the value and on the second press it would add 1 again to become '2'. I then put in:
Event:"Is Global variable "Pause" equal to 2? ----> Action: System - Set time scale to 1.0.
... But I can't get it to work because it appears that Construct is adding to the value every milisecond, instead of only increasing the value by 1 each time I press the pause button. It's not even responding at all now, meaning that the characters just keep moving around as normal.
Back in the summer, I had a similar problem with the "add to value" action in regards to Global variables with a different type of thing, but I was able to use "set value" and base the calculation of the value on a collision, and even though it was still buggy it worked to a degree.