December 9th, 2014, Published in Articles: Vector, Featured: EE Publishers

The Employment Equity Amendment Act (EEA) of 2013 was promulgated into law and became effective on 1 August 2014. The act is principally about the elimination of unfair discrimination.

It is important to remember that, upon the engagement of a new employee, the employee’s remuneration was traditionally left to the contracting parties to agree on.

To the extent that such an agreement was not less than prescribed in a sectoral determination or collective agreement, it was sacrosanct and could not be changed by anyone except the contracting parties themselves.

Employers could cite all sorts of reasons to pay new employees less than others in similar positions. Some of this differentiation in remuneration constituted discrimination, in some instances with employers unaware that their conduct was discriminatory.

This situation has changed substantially with the amendments to the EEA. The Amendment Act has introduced, among others, under section 6, the concept of “equal pay for same work or work of equal value.”

Section 6 provides as follows:

“(1) No person may unfairly discriminate, directly or indirectly, against an employee, in any employment policy or practice, on one or more grounds, including 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 or on any other arbitrary ground.

“(4) A difference in terms and conditions of employment between employees of the same employer performing the same or substantially the same work or work of equal value that is directly or indirectly based on any one or more grounds listed in subsection (1), is unfair discrimination.”

The implication of these provisions is that the employer must analyse their conduct towards employees carefully and must ensure that such conduct cannot be interpreted as being unfairly discriminatory in terms of section 6(1). This conduct may be contained in the employer’s employment policies, procedures and/or practices. Sub-section (1) has always been in the act, except for the addition, “on any other arbitrary ground”.

Sub-section (4), which is a new addition to the act, is specific to terms and conditions of employment, which we know include, among others, employee remuneration. It forces employers to ensure that their reasons for differentiation in terms and conditions of employment, including the remuneration of employees performing the same work or work of equal value, are not on the grounds listed in sub-section (1) or are not arbitrary in nature. This effectively means that employers must now justify why employees performing the same work or work of equal value are paid differently. Failure to justify the differentiation will amount to unfair discrimination.

This interpretation suggests that fixed term contract employees, whose remuneration generally tended to be lower than that permanent staff, must be treated and paid the same as permanent staff unless there is justification for the differentiation.

In fact, Regulation3 (eliminating unfair discrimination) puts a positive obligation on the employer to take steps “to eliminate differences in the terms and conditions of employment of employees performing work of equal value if those differences are directly or indirectly based on a listed ground or any arbitrary ground … prohibited by section 6(1) of the Act”.

Work of equal value

“Work of equal value” is defined as work performed by an employee who is:

• Doing the same work as other employees of the same employer, if their work is identical or interchangeable.
• Doing the same as the work of other employees of the same employer, if the work performed by the employees is sufficiently similar and they can reasonably be considered to be performing the same job, even if their work is not identical or interchangeable.
• Doing work of the same value as the work of other employees of the same employer in different jobs, if their respective occupations are accorded the same value.

Note that it is not the title of the job which determines whether persons perform the same work; an objective assessment of the actual duties performed is required. This simply means that two different jobs can be equal because they have the same intrinsic value.

It is clear that the grading of jobs is critical in identifying and eliminating unfair differences in the remuneration and the terms and conditions of employment in an organisation.

The following criteria must be taken into account in terms of the Employment Equity Regulations, in assessing whether work is of equal value:

• The responsibility demanded of the work, including the responsibility for people, finances and material.
• The skills and qualifications required to perform the work, whether formal or informal, including prior learning and experience.
• Physical, mental and emotional effort required to perform the work.
• To the extent that it is relevant, the conditions under which the work is performed, including the physical environment, psychological conditions, time and geographic location where the work is performed.
• Any other factor which the employer can show is relevant in assessing the value of the work.

An employee who is being paid less than his counterparts doing the same or substantially the same work or work of equal value can now declare an unfair discrimination dispute against the employer under the Employment Equity Act. The CCMA is now empowered to arbitrate on such claims where 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. This means that those employees earning less than R17 119-44 per month may have the claim resolved through arbitration at the CCMA. Those earning above the threshold still have recourse to the Labour Court.

If the employee alleges that the differentiation in the terms and conditions of employment is based on one or more of the grounds listed in section 6(1), the employer will bear the onus of proving that the alleged discrimination did not take place or that the discrimination is rational and not unfair, or is justifiable.

Instances where the employee alleges that the differentiation in terms and conditions of employment is on arbitrary grounds, i.e. those grounds not listed in 6(1), the employee bears the onus of proving that:

• The employer’s conduct is not rational.
• The conduct amounts to discrimination.
• The discrimination is unfair.

The amendments do not put an absolute prohibition on employers differentiating in respect of terms and conditions of employment between employees doing work of the same value. The employer can justify the differentiation on the grounds outlined in Regulation 7, as follows:

• Individuals’ respective seniority or length of service.
• Individuals’ respective qualifications, ability, competence or potential above the minimum acceptable levels required for the performance of the job.
• Individuals’ respective performance, quantity or quality of work, provided that employees are equally subject to the employer’s performance evaluation system, that performance evaluation system is consistently applied.
• Where an employee is demoted as a result of organisational restructuring or for any other legitimate reason without a reduction in pay and fixing the employee’s salary at this level until the remuneration of employees in the same category reaches this level.
• Where an individual is employed temporarily in a position for purposes of gaining experience or training and, as a result, received different remuneration or enjoys different terms and conditions of employment.
• A shortage of relevant skills, or the market value in a particular job classification.
• Any other relevant factor which is not unfairly discriminatory in terms of the listed grounds in Section 6(1).

Cliffe Dekker Hofmeyr director Johan Botes raises an important cautionary note, urging employers to take due care to ensure that the impact of the differentiation based on any one or more of the items listed in Regulation 7 does not result in indirect discrimination. He says, for example, an employer may remunerate older employees better than newly-hired employees. This ground may result in unfair discrimination where all newly-hired employees are black and all older employees are white.

He further says that, in instances where older employees are all of a particular group (race, gender etc.) and the newly-hired employees are from a different group, the indirect effect of the differentiation on the 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.

PAK le Roux, co-author of the South African Law of Unfair Dismissal, reiterates the same position by indicating that some of the factors that justify discrimination prima facie may, upon closer scrutiny, constitute indirect discrimination, for example seniority and length of service. He postulates that an employee may contend that seniority as a factor in justification of discrimination is inherently unfair in that the employee, due to an earlier discriminatory practice, had been excluded from certain positions and therefore did not have the same opportunity to accrue seniority or experience.

I’m hoping that the Code of Good Practice on Equal Pay for Equal Work will provide greater guidance and certainty once it is gazette.

Stephen Khola, ECA national labour relations and HR director