The South African economy is beleaguered by inequality in a number of different forms. Unfortunately, South Africa’s apartheid past has played a significant role in the creation of these inequalities; however, legislation and policies have been put in place to address these issues. A central piece of legislation is that of Equal Pay for Work of Equal Value.
The essence of this legislation is that it seeks to ensure that individuals that perform substantially the same (sufficiently similar) level of work are remunerated in a consistent manner so that the level of work and level of pay correlate to one another. This legislation requires monitoring pay practices within singular organisations rather than across industries or the national market .As a result the legislation focusses on internal relativity between employees’ remuneration. . The legislation is designed to support pay equity through limiting and/or reducing unfair discrimination and unfair discriminatory practices.
However the following proviso should be noted – Discrimination is not unfair if it is in the pursuit of affirmative action or inherent to the job. The legislation is not confined to remuneration only but also covers the terms and conditions of employment.
Work of equal value is defined in three categories:
- Work is identical or interchangeable
Substantially the same work:
- Work is not identical or interchangeable but sufficiently similar so that they can reasonably be considered to be the same
- This is based on an objective assessment of actual duties and responsibilities to meet the definition
Work of equal value:
- Different jobs that have a comparative relative complexity, responsibility, decision making level etc.
- This requires a Job Evaluation system eg. see a demo at www.jeasy.bizFor this report the Grade of the employee has been used as the benchmark grade for the purpose of comparing work of Equal Value.
The legislation does make provision for fair discrimination. These are some of the differentiators that can be used to discriminate fairly:
- Seniority/ length of service
- Qualifications/ ability/ competence/ potential
- Performance / quality of work / quantity of work provided that a robust performance evaluation system has been applied equally
- Fixing demoted employee’s salary at a certain level until other employees in the same job category reach this level – grandfathering
- Temporary positions for purpose of training/gaining experience
- Shortage of relevant skill / market value in a particular job classification eg. scarce skills
- Any other relevant factor
Recently, a number of cases claiming that this legislation has been violated have been filed. Often the rationale behind why these cases have been filed is not fully understood by the employer as a result of a limited understanding of how to prepare a solid defence against breaching the legislation. Although a number of actions can be taken in response to the legislation, four specific items are of particular importance.
- Do you have an accepted job grading system? Job grades are of paramount importance as these effectively value the position and allow positions to be compared against other positions of a similar level. Job grading is a process of evaluating the ‘value of the job’ within an organisation and forms the basis of a number of remuneration tasks such as pay scale modelling and benchmarking.
- Have you developed market related pay scales for your organisation? Pay scales are instrumental in controlling the variation of pay that is considered acceptable within an organisation. Developing a pay scale is a process whereby an organisation sets out an acceptable scale within which pay per grade can vary and implementing this so that pay may not exceed the upper and lower limit of the scale per grade.
- Have you got a robust Performance Management system in place? Performance Management is important as this allows defendable performance scores to dictate why certain individuals may earn more than others, within an acceptable range. Performance management is a process of evaluating each employee’s performance of their role within an organisation and this allows high performers to be separated from poor performers when it comes to reward differentiation.
- Finally, and most importantly, do you have a well-documented Remuneration policy for your organisation? The policy defines the goals and ambitions of an organisations remuneration structure which sits at the heart of all remuneration decisions taken within an organisation. This should be viewed as a critical component of an organisations constitution as it governs the expenditure on what is often an organisations largest expenditure line item – human capital. Human capital is also, often a key strategic driver of an organisation and as a result it is of fundamental importance that this is set in line with the goals of an organisation.
The prevalence of Equal Pay for Work of Equal Value disputes finding their way into the market is on the rise and will continue to rise for the foreseeable future. Most organisations have fair pay practices in place but this does not mean their employees won’t challenge them under the Equal Pay for Work of Equal Value legislation. Employers can make sure that they have the correct building blocks in place to enable them to not only manage but also document their position with reference to the legislation. This will ultimately allow them to defend their position in the face of unfair pay allegations.
Bryden Morton, B.Com (Hons) Economics, Data Manager – [email protected]
Chris Blair, B.Sc Chem. Eng., MBA – Leadership & Sustainability, CEO – [email protected]
About 21st Century
21st Century is one of the largest full-spectrum specialist Remuneration and Reward consultancies in Africa, with national and international capability. We have more than 60 skilled employees, and service over 1700 clients, including Government, Parastatals and two thirds of the companies on the JSE. We place a large emphasis on sustainable remuneration, transformation and social upliftment, and are focused on your organisation’s strategy at all times… assisting you to achieve your business objectives, drive your company’s performance, engage and retain your staff and comply with legislation.
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