Code of good practice on equal pay/remuneration for work of equal value

On 1 June 2015 the Minister of Labour published the Code of Good Practice on Equal Pay / Remuneration for Work of Equal Value (“the Code”) in terms of the Employment Equity Act 55 of 1998 (“EEA”). The Code is aimed at providing practical guidance to employers and employees on how to apply the principle of equal pay / remuneration for work of equal value in their workplaces (as previously regulated in the EEA and the regulations pursuant thereto) and in doing so, eliminating unfair discrimination in respect of pay / remuneration. The Code applies to all employers and employees who are covered by the EEA.

The Code states that an employer must, in order to eliminate unfair discrimination, take steps to eliminate differences in terms and conditions of employment, including pay/remuneration, of employees who perform the same or substantially similar work or work of equal value that are directly or indirectly based on any other arbitrary ground in terms of section 6(1) of the EEA.   Differences based on any of the listed or any other arbitrary ground may constitute unfair discrimination.

When examining whether the obligation to apply pay/remuneration equity in the workplace is being complied with, three key issues require attention:

1. Are the jobs that are being compared the same, substantially the same or of equal value in terms of an objective assessment?
2. Is there a difference in the terms and conditions of employment, including pay/remunerations of the employees in the jobs that are being compared?
3. If there are differences in the terms and conditions of employment, can these be justified on fair and rational grounds?

In order to determine the value of a job for the purpose of applying the principle of equal pay/remuneration for work of equal value, an objective assessment in accordance with relevant and appropriate criteria must be undertaken. The basic criteria used to valuate jobs are:

1. The responsibility demanded of the work, including responsibility for people, finances and material;

2. The skills, qualifications, including prior learning and experience required to perform the work, whether formal or informal;

3. Physical, mental and emotional effort required to perform the work; and

4. The assessment of working conditions may include an assessment of the physical environment, psychological conditions, time when and geographic location where the work is performed.

These four criteria should form part of every job evaluation and are generally regarded as being sufficient for evaluating all the tasks performed in an organisation, regardless of the economic sector in which the enterprise operates. However the weighting attached to each of these factors may vary depending on the sector, employer and the job concerned.

The Code also acknowledges that discrimination in pay/remuneration based on the sex of employees is prevalent, to a greater or lesser degree, in all countries. In light of this, employers may be required to establish the value of male- and female-dominated jobs in order to be able to determine whether particular jobs have been undervalued and to align female-dominated jobs with comparable male-dominated jobs in the organisation.

The fact that there are no comparable male-dominated jobs to female-dominated jobs within the employer’s organisation does not necessarily imply that there is no discrimination on the grounds of sex or gender. A female employee who can show that a male employee who is employed to perform the same work would have been employed on different terms and conditions will be able to succeed in a claim for breach of section 6(4) of the EEA (that is, unfair discrimination will have been found to have occurred).

Once jobs have been evaluated and/or graded, the various jobs are to be allocated pay/remuneration packages in accordance with the pay/remuneration philosophy of the employer and the value of the jobs. Employers are required to ensure that unfair discrimination does not occur at any of these stages.

It is not unfair discrimination if the differentiation in pay/remuneration is not based on a listed or arbitrary ground. The EEA regulations provide that differentiation is not unfair discrimination if the difference is fair and rational and based on any one or more of the following grounds:

1. The individuals’ respective seniority or length of service;

2. The individuals’ respective qualifications, ability, competence or potential above the minimum acceptable levels required for the performance of the job;

3. The individuals’ respective performance, quantity or quality of work, provided that employees are equally subject to the employer’s performance evaluation system, and that the performance evaluation system is consistently applied;

4. Where an employee is demoted as a result of organisational restructuring or for any other legitimate reason without a reduction in pay/remuneration and fixing the employee’s salary at this level until the pay/remuneration of employees in the same job category reaches this level;

5. Where an individual is employed temporarily in a position for purposes of gaining experience or training and as a result receives different pay/remuneration or enjoys different terms and conditions of employment;

6. The existence of a shortage of relevant skill in a particular job classification; and
7. Any other relevant factor that is not unfairly discriminatory in terms of Section 6(1) of the Act.

These factors may not be used to determine pay/remuneration in a manner that is biased or indirectly discriminates against an employee or group of employees based on a listed or arbitrary ground in terms of section 6(1) of the EEA.

The Code provides for a process to be used when evaluating jobs for the purpose of equal pay/remuneration for work of equal value. In terms of this process, an employer must:

• Determine the scope of the audit to be conducted to identify inequalities in pay/remuneration on account of gender, race, disability or any other listed or on any other arbitrary ground;

• Identify jobs that would be subjected to the audit;

• Ensure that job profiles or job descriptions exist and are current before evaluating jobs;

• Utilise a job evaluation and/or grading system that is fair and transparent and does not have the effect of discriminating unfairly on any listed or arbitrary ground;

• Compare jobs that are the same, similar or of equal value in the employer’s own organisation or company. This should include comparing female – dominated jobs with male – dominated jobs as well as other jobs that may have been undervalued due to, race, disability or other discriminatory grounds;

• Select a method of comparing pay/remuneration, both in money and kind, in the relevant jobs: this can be done by using either the average or the median earning of employees in the relevant jobs as the basis for pay/remuneration comparisons or by using another method that will compare pay / remuneration in a fair and rational manner;

• Identify the reasons for differentiating in pay/remuneration as contemplated by Regulation 7 in the EEA regulations and determine whether they are justifiable;

• Where differentiation is found not to be justifiable, determine how to address inequalities identified, without reducing the pay/remuneration of employees to bring about equal remuneration; and

• Monitor and review the process annually.