Equal Pay is a frequently discussed topic:

Is it unfair to pay two different employees a different wage or remuneration for the same work? It may seem like an obvious YES, but the answer is actually no. No, it’s not unfair to remunerate employees differently for the same work, but – and here’s the caveat – as long as these varying wages are not based on discrimination.

An amended law to protect employees
Towards the end of 2014, The Employment Equity Amendment Act 47 of 2013 and the Employment Equity Regulations, 2014 came into effect and subsequently, the Minister of Labour, Mildred Nelisiwe Oliphant, published the Draft Code of Good Practice on Equal Pay for Work of Equal Value (No. 38031).

The objective of the code is to provide practical guidance to employers and employees on how to implement equal remuneration for work of equal value. It also promotes the elimination of unfair discrimination with regard to pay, especially if the discrimination is based on gender, race, or disability.

The criteria examined to determine equal value

It’s all good and well to assume that work of equal value should be remunerated equally, but what criteria are applied to reach the conclusion of equality? In Section 5.3, the code lists the criteria used to evaluate job value, which include:

  • the responsibility demanded of the work, including responsibility for people, finances and material;
  • the formal and informal skills and qualifications required to perform the work;
  • the physical, mental and emotional requirements of the work.

The code also recommends that employers take into consideration the conditions under which the work is performed – these include physical and psychological conditions, as well as geographic location (although these specific criteria won’t be applicable to all assessments).

The factors that justify pay differentiation

In section 7, the code lists the factors that determine or justify why different employees are remunerated differently. These include:

  • the individuals’ seniority or duration of service;
  • the individuals’ qualifications, skills, and their potential above the minimum acceptable levels required for the job;
  • the individuals’ performance, which includes both their quality and quantity of work. This factor is based on the condition that employees are equally subject to the employer’s performance evaluation system and no discrimination is applied during grading;
  • where an employee is demoted due to company restructuring (or other legitimate reason) without a reduction in remuneration (and the employee’s salary is fixed at this level until the other employees in the same job category reach the same level);
  • where an individual is employed temporarily in a position in order to gain on-the-job experience or training, and is subject to different employment terms and conditions compared to full-time employees;
  • where there is a shortage of the relevant skill in a particular job classification;
  • any other relevant factor that does not unfairly discriminate.

How do employers evaluate jobs for the purpose of equal pay?

The code provides some guidelines with regard to evaluating various jobs to determine whether employees are being subjected to equal remuneration; how to determine which jobs should be evaluated; how to ensure that the evaluation process is not discriminatory; and what to do should remuneration be found to not be justifiable.

However, while the Draft Code of Good Practice on Equal Pay for Work of Equal Value is as specific as it is succinct, the process of determining equal pay for equal work is a complex one. Done wrong, it can result in costly and unpleasant consequences, which will affect your business’s finances and legal standing, team morale, company reputation, and even employee turnover.

This Post first appeared on Pastel Payroll