Employers received clarification on the rules applicable to equal pay when the Minister of Labour published the new Employment Equity Regulations on Friday, 1 August 2014. This is according to Johan Botes, Director in the Employment practice at Cliffe Dekker Hofmeyr. He explains that the previous regulations, published on 14 July 2009, were repealed and replaced with the new regulations.
"The regulations provide flesh to the legal framework of the Employment Equity Act (EEA), where the EEA deals with the elimination of unfair discrimination, affirmative action, the duties of employers in relation to affirmative action in the workplace and enforcing the provisions of the EEA," says Botes.
Botes notes that the legislature introduced provisions relating to equal pay for equal work as new additions to section 6 of the EEA which outlaws unfair discrimination in the workplace. Failing to treat workers equally when it comes to remuneration or other terms and conditions of employment is now pertinently listed as a form of unfair discrimination where the differentiation takes place on a prohibited or arbitrary ground. The Regulations confirms that employers must take steps to eliminate differences in terms and conditions of employment, including salary differences between employees doing work of equal value, where those differences are based on grounds listed in section 6(1) of the EEA. Those grounds include race, gender, sex, pregnancy, marital status, family responsibility, ethnic or social origin, colour, sexual orientation, age, disability, religion, HIV status, conscience, belief, political opinion, culture, language, and birth. Following the amendments to the EEA which also took effect on 1 August 2014, differentiation on "any arbitrary ground" is now also viewed as unfair discrimination.
"It is important to note that differences in salary may also be unfair discrimination where the differentiation is not directly based on any of the listed or prohibited grounds, but indirectly. It should be clear to everyone that no employer is able to base differences in remuneration for people doing the same work (or work of equal value) on a listed ground such as gender, family responsibility or religion.
"You cannot pay your male managers more than the female managers purely based on their gender. Similarly, it should be easy for all to see that you cannot pay your employees who are parents less than those who do not have this family responsibility," he explains.
Botes notes that by the same token, no employer can reasonably still harbour under any misapprehension that it can pay its Muslim staff less than it Christian employees, or the otherwise treat its Hindu staff differently from its Jewish employees, to use some examples of direct discrimination on listed grounds.
"But what if an employer differentiates by remunerating its newly hired employees substantially less than employees hired in the past? Length of service is not a listed ground and it does not have the characteristics of an arbitrary ground either. On the face of it, length of service could be a valid ground for differentiation that an employer could use to distinguish between employees in respect of terms and conditions of employment. But an employer should also consider the effect of using such a ground of differentiation in order to determine whether its employment practices will pass muster under the new EEA and its Regulations in respect of the equal pay provisions,” Botes says.
He explains that using the length of service example, this ground may result in unfair discrimination where all newly hired employees are black and all older employees are white, for example. An employer may remunerate older employees better than newly hired employees. However, where the older employees are all of a particular group (race, gender, sex and others) and the newly hired employees are from a different group, the indirect effect of the differentiation on terms and conditions of employment could be that the employer is actually discriminating against employees based on a prohibited ground, albeit that this is done indirectly.
"Employers should thus scrutinize their policies and employment practices to ensure that there is no differentiation between employees or groups of employees that takes place on any of the listed grounds, including any arbitrary ground. In conducting this audit employers should also test the effect of the differentiation to ensure that it does not indirectly (and hopefully inadvertently) discriminate against employees on any of the listed or an arbitrary ground, " he notes.
"Employers need not panic and convene Remuneration committee meetings to see how they can pay all employees doing work of equal value the same. Employers are still permitted to differentiate in respect of terms and conditions of employment between employees doing work of the same value.
"The Regulations provide the framework for (1) determining whether work is of equal value and (2) factors that may be used to validly differentiate between employees when considering terms and definitions of employment. In assessing whether work is of equal value, the employer should consider the responsibility demanded by the employee's role, the skills and qualifications required, the physical, mental and emotional effort involved and, where applicable, the conditions under which the work is performed. Utilising these guidelines will allow employers to determine whether an employee in, for example, a secretarial position in a specific department can claim that the work performed is of equal value to, say, that undertaken by a human resources official. Whilst this type of job classification and evaluation has become standard practice with many large employers, there are still a large number of companies who do not have any scientific basis for determining the relative worth of a position (and the terms and conditions of employment attached thereto). These employers are at risk should they have to justify the differences in remuneration or other benefits contractually afforded to different employees," Botes explains.
"Employers are able to justify differences in terms and conditions of employment where the differences are based on seniority or length of service, qualifications, ability or competence, the individual's work performance, anomalies caused by organisational restructuring, the temporary nature of a person's role (for example, where an employee acts in a higher position), additional recognition for scarce skills or market forces that places a premium on remuneration for certain roles, or any other relevant factors that does not amount to direct or indirect unfair discrimination. Prudent employers will thus ensure that it is able to justify any differences in terms and conditions of employees doing work of equal value on the grounds listed in item 7 of the Regulations. Due care must also be taken to ensure that the impact of the differentiation does not result in indirect discrimination. Even where a recognised ground of justification is used, such as seniority, employers may not rely on such a ground where this results in (direct or) indirect discrimination."
Botes notes that the amendments to the EEA and publication of the new regulations will focus attention on remuneration practices. Employers who have not yet audited their employment policies and practices are at risk or employees referring claims of unfair discrimination to the Commission for Conciliation, mediation and Arbitration. The CCMA is now empowered to arbitrate on such claims where the employees earn below the Earnings Threshold established in terms of the Basic Conditions of Employment Act. The current Earnings Threshold is R205 433.30 per annum. Employees previously had to refer their unfair discrimination claims to the Labour Court once the CCMA conciliated the matter. Now those employees earning less than R17 119.44 per month may have the claim resolved through arbitration at the CCMA. This should come as a relief to employees who may find the dispute resolution process at the CCMA less daunting than that at the Labour Court. Considering the CCMA's greater resources such a claim may now also be finalised more expeditiously. It can only assist in addressing the significant work load at the Labour Court by addressing these claims at the CCMA to finality instead of placing it on the congested Labour Court roll.
"In short, the amendments to the EEA and the introduction of new regulations (and repeal of the old ones) ushers in a new era of increased focus on equal pay for equal work. Scrupulous employers will not be affected by the amendments as their practices will already ensure that they do not unfairly discriminate against employees on prohibited grounds. Employers operating on the periphery may see their names in the law reports soon as employees are expected to hold their employers to book for such prohibited practices," Botes adds.