The Department of Labour recently released the draft Equal Pay Code of Good Practice for comment.
The objective of this Code is to provide guidance to employers and employees on how to apply the principle of equal remuneration for work of equal value in their workplaces. It applies to all employers and employees covered by the Employment Equity Act.
It is interesting to note that the Code speaks about applying the principle of equal remuneration for work of equal value. This is inconsistent with the reference to terms and conditions of employment which is in the Employment Equity Act No 47 of 2014 and the Regulations passed into law on 1 August 2014 has been the term in discussion throughout the legislative process.
The term “remuneration” is defined by the Code with reference to the definition in the Act and other labour legislation. Remuneration 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.
While it is important to note that the Code in itself does not impose additional legal obligations on an employer, employers must examine all aspects of their remuneration policies, procedures and practices to ensure compliance with the principle of equal remuneration for work of equal value and ensure that they are applied without discrimination on the grounds listed in the Employment Equity Act. The Code provides guidance when interpreting the Act and the Regulations.
The Act does not necessarily require an immediate flick of the switch to absolute equality, however it provides that every employer must take steps to promote equal opportunity in the workplace by eliminating unfair discrimination in any employment policy or practice. Guidance in this regard is provided for in the Code of Good Practice on the Integration of Employment Equity into Human Resources Policies and Practices.
When examining whether the obligation to apply remuneration equity in the workplace is being complied with, the Code suggest that three key issues require scrutiny:
* Are the jobs that are being compared the same, substantially the same or of equal value in terms of an objective assessment?
* Is there a difference in the terms and conditions of employment, including remuneration, of the employees in the jobs that are being compared?
* If there are differences in the terms and conditions of employment, can these be justified on fair and rational grounds?
It is important to note that a difference in remuneration will only be unfair discrimination if the differences are directly or indirectly based on race, sex, gender, disability or any other grounds listed in section 6(1) or any other arbitrary ground established in terms of section 11 of the Act.
The Code then takes this further by listing grounds for differential treatment. Interesting is the obligation the Code adds by suggesting that employers need to do an exercise on the evaluation of jobs based on gender as a result of past discriminatory practices.
The Code takes the bold and direct step of placing a company’s remuneration committee front and centre when it comes to compliance with the Code. The Code recognises and emphasises the integral part these committees play in ensuring equal treatment.
The Code is an attempt to comply with our international law obligations imposed by Article 3 of the ILO Equal Remuneration Convention 1951 (No. 100), which requires that “measures shall be taken to promote objective appraisal of jobs on the basis of the work to be performed,” by recognising the need for an objective appraisal of remuneration and lists factors relevant to evaluating the value of a job.
As employers we need to utilise a job evaluation system that is fair and transparent and does not have the effect of discriminating unfairly on any listed or arbitrary ground. Where differentiation is found not to be justifiable, we need to determine how to address inequalities identified, without reducing the remuneration of employees to bring about equal remuneration.
It is interesting to note that despite the need to assess the value of the job, there is no legal requirement for employees to use a job evaluation system.
It is Global Business Solutions view that as employers we need to utilise a system which is legally and objectively justifiable and as such have designed a system to address this vexing problem.
As recommended by the Codes we suggest that an annual review occurs as part of not only your labour legislative compliance but also to ensure that you are operating in line with the best practice principles of corporate governance.
Should anyone wish to engage in the process or find out more about the tool, please contact Menet@globalbusiness.co.za.
Written by Jonathan Goldberg