Address pay equality in the workplace in light of new legislation.
Legislation on equal pay for work of equal value was enhanced by the publication of the Code of Good Practice on Equal Pay for Work of Equal Value in June of this year. Our legislation and code have been developed by combining elements of other equal work equal pay legislation from countries such as the US, Canada, the UK and New Zealand, with inputs from our existing Labour Relations Acts as well as our own Constitution. In an attempt to reduce discrimination in terms of pay in the workplace, the legislation is an effort to make entities such as the Council for Conciliation Mediation and Arbitration (CCMA) more accessible in terms of equal pay disputes.
Today, the equal work equal pay movement is a powerful global phenomenon. Leading organisations around the world, including tech giants such as Pinterest and hosting services provider GoDaddy, recently pledged to review all employee compensation data with a view to (gender) equality. Some companies are taking transparency and equality even further – they have pledged to share employee salaries within the company whilst others have taken it a step further still by pledging to make all salaries completely public. Transparency seems to be the name of the game today in dealing with equal pay issues.
Application in South Africa
Broadly speaking, the policy changes have defined two different cases in terms of which an objection may be brought against an employer by an employee or group of employees. The Act states that:
“No employer may unfairly discriminate, directly or indirectly, against any employee, in any employment or pay policy or practice, on a wide variety of grounds, such as race, sex, gender, HIV status, language, political opinion, age and religion or any other arbitrary ground”.
The onus of proof will however be different for a case brought in terms of one of the defined grounds as compared to when a case is brought in terms of an arbitrary ground. Where an objection is raised in terms of one of the defined grounds, such as gender or race, the burden of proof rests with the organisation who would be required to prove that there is no basis for a salary or wage differential as alleged, and that the salary or wage differential is in fact defensible. Accepted defensible criteria include areas such as experience, education, productivity, the amount of work required to be done, the relative sizes of the two jobs, scarcity of skills and individual labour premiums, as well as geography and cost of living factors.
It should be noted here that Affirmative Action or BEE requirements supersede the new legislation as BEE is in fact recognised as an acceptable defence in terms of an equal work equal pay challenge. Where a charge is brought on arbitrary grounds, being any other alleged grounds or basis other than those explicitly defined in the act, the burden of proof shifts from the employer to the employee who would have to prove that the arbitrary ground or basis of dispute did exist and that this in turn had unfairly impacted on them in terms of pay.
In addition, a threshold based on earnings has been put in place by the act, whereby employees earning less than R205,000 per year may apply to the CCMA for their case to be heard, whilst employees earning more than the threshold and their respective employers must both agree to a CCMA arbitration or else the case is immediately referred to the labour court.
Implications for organisations
The new legislation is likely to have far reaching implications for South African organisations in terms of effectively managing their internal equity issues related to pay. Anomalous pay differences will need to be identified and investigated as these could potentially put the organisation at risk in terms of a potential challenge, whilst at the same time the organisation should be in a position whereby it is able to explain pay differences on the basis of one of the acceptable criteria as outlined previously, should they in fact be challenged.
What this means in practical terms is that organisations need to take a fresh and serious look at all of the following in order to ensure effective compliance:
– job evaluation and job grading;
– internal equity analysis in terms of pay and benefits;
– the recruitment process;
– the promotions process;
– the performance management;
– annual increase processes; and
– leadership and talent management process.
Proving that there is no inherent bias in any of these systems will also become important should any of them be challenged. In terms of all of these key people management processes, it is probably time for many South African organisations to get their respective houses in order.
Case law is starting to surface and this will no doubt establish the precedents along which the new laws will be interpreted by the courts. But there is no doubt that interesting times lie ahead for all South African organisations concerning the efficient management of equal pay for work of equal value amongst their people.
Paul Hunter is the Head of Reward at Hay Group, www.haygroup.com/za.
This article appeared in the October 2015 issue of HR Future magazine.