Equal Pay for Work of Equal Value – Part 2

Aug 6, 2015

Equal Pay4Part 1 dealt with the Code for Good Practice on equal pay for work of equal value and three key issues to examine whether an employer is complying with its obligation for equal payment policies.
To avoid unfair discrimination, employers must pay their employees equal salaries or face fines of up to 10% of their annual turnover.
The Employment Equity Act (EEA) prohibits discrimination on several grounds, including race, gender, etc. It also includes discrimination in terms of pay and benefits. Employees who do similar work should receive similar pay and benefits irrespective of race, gender, belief, and so on, unless there’s a valid reason for differences.
For example, if a female employee is a star performer and receives performance bonuses while a male employee, an under-performer, does not. In this example, the difference in gender is incidental to the differentiation, and not the cause of it, so it is fair. But, what about employees at different levels in the organisation receiving different packages? This is where the EEA is very clear in income differentials.
What does the term ‘Income Differential’ mean?
The term refers to the difference in earnings between one level of employees and another level in the same company.
For example, the difference between the earnings of all employees in the mid-management level of a business compared to the earnings of all employees at a supervisor level of the same business.
This is a normal situation in any business, with different job grades or levels of responsibility earning different salaries and receiving different perks. While one can expect the difference in pay levels because of different levels of authority and responsibility, and so it is not seen as discrimination as such, the EEA requires employers to look at ways of reducing wage or income differentials.
This is not because the gap is indicative of current discrimination, but it results in the denial of equal opportunities under apartheid. Form EEA 4 is there to assist with this narrowing of the gap: it requires employers to identify the gaps and to put in place plans to narrow it.
However, to make sure employers do not fall foul of the law, the following four steps will assist in making sure that an employer pays fairly.
Four steps to guarantee fair pay practices 
Employers need to review all their employees’ salaries to ensure they are applying ‘equal pay for equal work’. In other words, employers should do an annual pay audit.
Here are four steps to do an audit:
Step # 1. Identify and group together like employees
For example, administrators, sales representatives etc. Do salary calculations on criteria of similar work, similar positions, responsibility, skills and qualifications.
Step #2. Compare their remuneration for discrepancies
Make sure there is no discrimination against any employee.
Step #3. Identify differences
There may be pay differentials if there are valid business reason for doing so.
Step #4. Rectify unfair differences or those that do not have good business reasons
When an employee complains about salary differences, tell him that a salary audit is done annually. Explain what is being done to make sure all salaries are fair.
If employers are guilty of discrimination, they could be liable for fines of up to 10% of their annual turnover… and they probably even have to back-pay the employee that has been unfairly discriminate against!

The content does not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such. Kindly contact us on info@labourman.co.za or 021 556 1075 to speak to one of our consultants.


Wallace Albertyn

Wallace Albertyn is a Senior Associate and Legal Advisor at LabourMan Consultants.

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