Equal Pay for Work of Equal Value! What does this mean?
The Employment Equity Amendment Act, 47 of 2013 [EEA] and the Employment Equity Regulations, 2014 [EER] came into effect on 01 August 2014. Section 6(4) provides that 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 of the grounds listed in subsection (1) or any other impermissible or arbitrary ground is unfair discrimination.
Companies are required to actively seek Equity
A remuneration structure methodology is essential if one now seek to comply with these sections of the legislation relating to equal pay for work of equal value.
In order to assess whether an employer is compliant with section 6(4) it must first be established that the work is the same or similar or of equal value. As a result, the following factors must be considered, namely the:-
- level of responsibility demanded of the position. This includes responsibility for people, finances, process controls and material;
- skills, competencies and qualifications, including prior learning and experience required to perform the work, whether formal or informal;
- effort required to perform the work be it physical, mental and emotional;
- conditions under which work is performed, including physical environment, psychological conditions, internal requirements as well as location. These should be assessed and considered in terms of its relevancy.
The role of Job Evaluation
Companies and institutions who makes use of a formal Job Evaluation System or those who have implemented formal Job Grades, would already have the basis or foundation for proper assessments. It is so because Job Evaluation Systems already assesses the majority of the factors indicated above, and as such a result, or grade which is the same, already implies that the work is the same, similar or of equal value as contemplated in section 6(4).
By implication then, employees on the same grade within the same business should in compliance with the legislation be within the same salary range, hence “Equal Pay for Work of Equal Value”. How does one then achieve such parity?
The most important determinations would be to establish and maintain remuneration or salary ranges within the business. Salaries for employees can therefore no longer be arbitrary and without basis. Without established Remuneration / Salary ranges, one has no way of determining equity, or even defending what could be a justified basis for differentiation in salary. Remuneration / Salary ranges could be developed per Job Grade, Occupational Levels as contemplated in EEA9 or even down to Job or position specific level. The latter must be done within the overall range determined for the occupational level or Job Grade. EEA9 has 6 Occupational Levels, namely
Occupational Levels
1. Top Management/Executives
2. Senior Management
3. Professionally Qualified & experienced specialists/mid-management
4. Skilled Technical & Academically Qualified/ Junior Management / Supervisors / Foremen / Superintendents
5. Semi-Skilled & discretionary decision-making
6. Unskilled & defined decision-making
Whilst not all occupational levels have jobs in all businesses, it is important to establish which ones are applicable to your business. What is imperative though, is that different positions within the same grade must be within the same occupational category. As an example, an HR Manager on Peromnes Grade 7, and a Contact Centre Manager in the same grade must both be in the same Occupational Level, eg Professionally Qualified & experienced specialists/mid-management. You cannot place one in Junior management and the other in Middle management within the same organisation.
Process & Methodology
One could easily establish remuneration / salary ranges by determining a few parameters.
- Range must have a start and end of range value. The range can be determined based on established remuneration guides which can be adopted as is, or the more acceptable method is to determine the 50th percentile of a range and then determine you businesses minimum or maximum. A common approach is to use a factor of 15% or 25% on either side of the 50th percentile, eg if the 50th percentile for a supervisor is R20 000.00 per month, then the remuneration range would be R15 000.00 – R25 000.00 if one uses a 25% factor.
- Determine common factors for differentiation within the range. Businesses may determine a differentiation within a range between employees on the bases of acceptable factors. These may include, performance, length of service, training purposes and relative knowledge and experience compared to their peers. In this regard, an employer may have one employee at the start of the established range, whilst the other is on the maximum on condition that a clear differentiation factor justifies such a gap in salary. There are no exceptions to the fact that it must be within the same established range, except for employees under training.
- Employers can go as far as developing salary ranges for each occupation and job/position as well, with the understanding that they fit into the established range for the same grade. If a range for clerks on grade 12 is from R5 000.00 to R10 000.00, then an HR Clerk could be from R7 000.00 to R10 000.00 due to the complexities of the job, whilst a filing clerk on the same grade could be from R5 000.00 to R10 000.00.
Job Evaluation vs Remuneration
It is commonly argued that some jobs which appear to operate on the same level within the same business are more important or critical than another, hence different salary ranges are applied. If this is true, then the objective measure from a recognised job evaluation system would render a different grade. Job Evaluation is therefore regarded as an objective measure and should not be supplemented by subjective notions by managers.
The salary as contemplated in the EEA and EER refers to the total package of employment inclusive of Basic Salary, Allowances, Medical Aid & Pension Fund contributions, Leave days allocations and any other payments in kind like Housing, Water & Electricity etc. It is therefore important to measure across all the remuneration factors especially when having to report Total Remuneration in the EEA4.
Established salary ranges can be supplemented by variable remuneration requirements, like critical or scares skills allowances, or retention allowances, but it still contributes towards the Total Remuneration Package for an employee in terms of the EEA definitions.
Once the foundational aspects are in place, it is then much more objective to apply the methodology, therefore, to benchmark and measure each employee grouping against the established ranges. Gaps would be apparent if they exist.
Businesses are obliged to put plans in place to address any gap in remuneration, and it may be implemented over a period of time. This applies to underpayments, as well as over-payments. These must be formally consulted with the affected employees and must be in writing in the form of an undertaking. To understand the focus discussions from the Department of Labour in their 2019 roadshows on Equal Pay for Work of Equal Value, you can also read http://www.labour.gov.za/show-us-the-salary-gap-between-highest-earners-and-lowest-earners-department-of-employment-and-labour
In short a fool-proof and safe course of action would include:
- Use an objective measure like a formal Job Evaluation System or Job Grades
- Identify the Occupational Categories and Levels according to EAA9
- Determine methodologies for remuneration systems and ranges
- Establish Remuneration Guides from reputable Salary Surveys
- Craft remuneration ranges per Occupational Levels or Job Grades
- Analyse against existing employee groups
- Identify Gaps
- Consult with affected employees
- Formalise corrective measures.
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