The new section 6(4) of the Equity Act (EEA) effective from 1 August 2014 classifies as unfair discrimination differing terms and conditions of employment where:
- this difference is based on the grounds for unfair discrimination listed in the EEA and
- the employees affected are doing work of equal value.
It is stressed that this provision is already in effect, and non-compliant employers are currently liable for prosecution at the CCMA. In order to assist employers to comply the DOL has designed a draft code on equal pay for work of equal value. The final code is expected to be passed shortly.
The Code, read together with section 6(4) of the EEA, requires all employers including the State to implement very specific measures to achieve this goal, including job grading, pay comparison and explanation of pay differentials.
SCOPE AND MEANING OF THE EQUAL PAY CODE
What is “Work of Equal Value”?
This refers to two or more jobs that may be entirely different but have the same rating value as each other. For example, it is possible that the job of a sales rep. and that of a machine operator could be at the same grade level in terms of job evaluation criteria that cut across different jobs.
NB: it is not the employee who is graded; it is the demands of the job that are evaluated whether it is occupied or vacant.
What is Remuneration and How Must its Fairness be Monitored?
The term “remuneration” as defined in the EEA and other labour legislation includes any payment in money or in kind, or both, made or owing to any person in return for working for another person, including the State. The statutory concept of remuneration includes deferred remuneration, commission and other forms of variable compensation or pay. Employers must, therefore, examine all aspects of their remuneration policies, procedures and practices to ensure compliance with the principle of equal remuneration for work of equal value.
Practical necessity requires that all employers establish Remuneration Committees which should:
- annually review all remuneration and benefits received by employees to ascertain whether they are legally compliant, appropriate and competitive, and
- assist senior management in setting up and administering a remuneration policy.
THE CODE PROVIDES THREE STEPS TO DETERMINE COMPLIANCE WITH SECTION 6(4):
The first step requires a determination of whether the jobs being compared are the same, substantially the same or of equal value in terms of an objective assessment. This means that the Code does not prescribe which job grading system is used but only that an objective measure is required.
What Criteria Must Be Used to Assess and Compare the Value of different Jobs?
The Code provides for the following three factors: the responsibility demanded by the work, the skills and qualifications required for the work, and the physical, mental and emotional effort required to perform the work. The weighting attached to each of these factors may vary depending on the sector, employer and the job concerned.
The second step requires a determination of whether there are any differences in terms and conditions of employment, including remuneration of the employees in the jobs that have to be graded and compared.
The final step requires the employer to determine whether the differences identified are justifiable on fair and rational grounds. Differences are justifiable if they are based on any of the following grounds:
- the individual’s seniority or length of service;
- the individual’s qualifications, ability or competence;
- the individual’s performance or quality of work;
- whether the employee has been demoted for any legitimate reason but draws a salary still fixed at a higher level than employees in his/her new job category until their remuneration reaches that level;
- where an individual is temporarily in a position for the purpose of gaining experience or training;
- a difference in terms and conditions due to the existence of a shortage of relevant skill in a particular job classification.
The size and intricacy of the task of implementing the above requirements in a practical, operationally effective and legally compliant manner require the use of experts versed in labour law and in the implementation of job grading systems.
To attend our Labour Law Update 2015 seminar in Johannesburg on 5 June 2015 please contact ronni@labourlawadvice or phone Ronni on 0845217492.
BY lvan lsraelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or on e-mail address: firstname.lastname@example.org. Go to www.labourlawadvice.co.za.