All you need to know about implementing Equal pay for Equal Work


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Overview of the changes made to section 6 of the Employment Equity Act that requires employers to ensure equality between workers performing equal or similar work, which exposes employers to additional risk.

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  • All you need to know about implementing Equal pay for Equal Work

    1. 1. All you need to know about… Implementing Equal pay for Equal work
    2. 2. May 2014 "People Management Simplified" 2 There are numerous amendments to this Act, but this discussion focuses on the changes to section 6, and other sections that are relevant to this topic. Legislative Framework The Employment Equity Amendments Bill contained the first amendments to the Employment Equity Act, (EEA), since it was enacted in 1998.
    3. 3. May 2014 "People Management Simplified" 3 "(4) A difference in the terms and conditions of employment between employees of the same employer performing the same or substantially the same work or work of equal value is a form of unfair discrimination and is prohibited on any one or more grounds of unfair discrimination listed in subsection (1 ). Section 6(1) is amended as follows: The grounds for unfair discrimination are expanded to include discrimination "on any other arbitrary ground". A new section 6(4) is introduced as follows:
    4. 4. May 2014 "People Management Simplified" 4 Section 11 states that whenever unfair discrimination is alleged the onus is on the employer to establish that it is fair. Other relevant sections - 1 Section 19 requires an employer to perform an analysis of the organisation’s employment policies and practices to ensure that no discrimination exists in the business. Section 18 states that whenever the employer consults on matters pertaining to the Act, the employer must make all relevant information available to allow the other party to consult effectively.
    5. 5. May 2014 "People Management Simplified" 5 The Act defines “employment policies and practices” as: “employment policy or practice” includes, but is not limited to:- a) Recruitment procedures, advertising and selection criteria; b) Appointments and the appointment process; c) Job classification and grading; d) Remuneration, employment benefits and terms and conditions of employment; e) Job assignments; f) The working environment and facilities; g) Training and development; h) Performance evaluation systems; i) Promotion; j) Transfer; k) Demotion l) Disciplinary measures other than dismissal; and m) Dismissal. Other relevant sections - 2
    6. 6. May 2014 "People Management Simplified" 6 The amendment to section 6(1) means that the grounds for unfair discrimination will no longer be limited to those currently listed, (i.e. race, gender etc.), but will also include discrimination "on any other arbitrary ground". What do the changes actually mean? - 1 This change brings consistency with the terminology used in section 187(1)(f) of the LRA which prohibits discriminatory dismissals.
    7. 7. May 2014 "People Management Simplified" 7 The purpose of the new section 6(4) is to deal explicitly with unfair discrimination by an employer in respect of the terms and conditions of employment of employees performing the same or substantially the same work, or work of equal value. What do the changes actually mean? - 2
    8. 8. May 2014 "People Management Simplified" 8 In terms of section 11, any disparities that exist in the terms and conditions of employment of employees performing the same or similar work, or work of equal value, will amount to unfair discrimination, unless the employer can show that these differences are in fact based on fair criteria such as experience, skill, responsibility, etc. What do the changes actually mean? - 3
    9. 9. May 2014 "People Management Simplified" 9 In terms of section 18, (and section 16 of the LRA), an employer is obliged to provide the other parties to any consultations with all the relevant information to allow them to consult effectively. What do the changes actually mean? - 4 This will require employers to be transparent and disclose information regarding pay scales, allowances, fringe benefits, incentives, social benefits, job evaluation etc., and to explain the methodologies used to determine eligibility and values.
    10. 10. May 2014 "People Management Simplified"10 Considering that section 19 exists since the inception of the Act, and that employers have been required to confirm that this analysis has been carried out on past Employment Equity returns, it is assumed that employers have conducted the required analysis, and that no discriminatory employment processes or practices exist within their organisations that will be exposed due to the changes to the Act. What do the changes actually mean? - 5
    11. 11. May 2014 "People Management Simplified"11 Examining the elements of Section 6(4) - 1 “Terms and conditions of employment” - 1 This discussion will focus on the remuneration and benefits components because we believe that the amendments to the Act will bring these components under very close scrutiny. (This does not mean that the other components are less important!) “Terms and conditions of employment” consists of a number of components, including remuneration, fringe benefits, social benefits, workplace rules, working hours, shift system, etc.
    12. 12. May 2014 "People Management Simplified"12 Examining the elements of Section 6(4) - 2 “Terms and conditions of employment” - 2 In the Act “remuneration” is broadly defined as “payment in money or in kind, or both in money and in kind …..”, which consistent with the BCOE interpretation, can be accepted to represent the sum of the values of any: • Basic pay; • Fringe benefits; • Fixed Allowances; and • Company contributions to benefit funds, e.g. Pension, Provident, Medical, Funeral etc. This sum is commonly referred to as “Cost to Company”, (CTC), and when discrimination regarding remuneration is alleged, it is probable that CTC will be relied upon as the measure.
    13. 13. May 2014 "People Management Simplified"13 Examining the elements of Section 6(4) - 3 “performing the same work” Logically this would seem to indicate more than one employee employed in the same position performing the same functions. Identifying this category of employee is straight-forward and should pose no challenges.
    14. 14. May 2014 "People Management Simplified"14 Examining the elements of Section 6(4) - 4 “performing substantially the same work” Logically this would seem to indicate more than one employee employed in “similar” positions, performing “similar” functions. This could mean anything! The challenge here will be to identify and agree on the factors that determine “similar”, and here we foresee a lot of confusion as these factors will be subjective opinions influenced by individual interest. After all, “operating a machine is operating a machine”, or, “a clerk is a clerk, is a clerk…” Really? Definitely not!
    15. 15. May 2014 "People Management Simplified"15 Examining the elements of Section 6(4) - 5 “performing work of equal value” Logically this would seem to indicate more than one employee employed in any position performing functions of “equal value”. This could also mean anything, and for the same reason provided in the previous item, the challenge will be to identify and agree on the factors that determine “equal value”.
    16. 16. May 2014 "People Management Simplified"16 Most employees believe that they are underpaid and that the services they render add more value than those provided by others. Current difficult economic times and high debt levels put pressure on employees to seek opportunities to increase their earnings. The changes to the Act provide such an opportunity, and invites both trade unions and non-unionised employees to place the employer’s employment policies and practices under severe scrutiny. We believe that employees and their unions are going to grasp the opportunity with both hands, and it can also be expected that they will exercise their rights pertaining to information disclosure and transparency. What is the risk and why is there urgency? Employers can therefore expect a flood of alleged discrimination allegations and possibly even labour action, which if not resolved to the employee’s satisfaction, will be referred to a Bargaining Council or the CCMA for resolution.
    17. 17. May 2014 "People Management Simplified"17 • Not only will labour action and defending these claims be disruptive, costly and a drain on the employer’s resources, it is also possible that the employer will be saddled with huge settlement costs in the form of compensation awards and possible back-pay. • Awards against the employer could have a snowball effect as other employees are encouraged to seize the opportunity. • Once the general perception exists that the employer practices discrimination, its reputation and the trust relationship with its employees, trade unions and society at large could be severely harmed. • If the matter attracts the attention of the Department of Labour this could result in an Employment Equity Audit, which we understand to be quite challenging! • The consequences of this could be compliance orders and huge financial penalties! The Risk The risk is that:
    18. 18. May 2014 "People Management Simplified"18 • Negotiation and consultation with trade unions and employees; • Revisions to company policies and procedures; • Revisions of employment contracts; • Revisions of Job Descriptions and Work Instructions; • Payroll system changes; and • Rule changes for social benefit schemes, (Pension, Provident, Medical aid etc.) The Urgency - 1 The urgency exists because correcting any identified discriminatory practices or disparities could take time as the following may be necessary:
    19. 19. May 2014 "People Management Simplified"19 It would be desirable for employers to rectify any issues of their own accord, and at their own pace, rather than in response to a demand or the threat of legal action. How can this risk be mitigated? Employers should therefore urgently audit their employment policies and practices to ensure that any discrimination or disparities, (including those “created” by the new amendments), are eliminated. Discriminatory practices, once identified, should be eliminated as soon as possible, and where disparities remain, employers must ensure that they have logical explanations for these that would be deemed to be “fair and reasonable” by an external body like a Bargaining Council or the CCMA.
    20. 20. May 2014 "People Management Simplified"20 Review all employment policies, procedures and practices to ensure that no discrimination exists based on the factors listed in section 6(1) of the Act. If any discriminatory processes or practices are identified, it is time make amendments. The Solution - 1 A consultation and communication process with the trade unions and workforce will probably be required, which could take months!
    21. 21. May 2014 "People Management Simplified"21 • Race, gender, age, marital status, disability etc. • What are the qualifying criteria for membership? • If certain funds/benefits are only available to certain employees, can this be motivated? • Are the contribution levels and benefits “equal” for all members of the funds? The Solution - 2 Review the structure and rules of social benefit funds, (Pension, Provident, Medical, etc.) Consider for example: If any discriminatory processes or practices are identified, it is time to get the rules amended. Approval from the FSB, as well the consultation and the communication process with the trade unions and workforce could take months!
    22. 22. May 2014 "People Management Simplified"22 Review the “structure” of the organisation. If an organisational chart, (organogram), does not exist, it is time to make one. The Solution - 3
    23. 23. May 2014 "People Management Simplified"23 The Job Descriptions must be sufficiently detailed to allow a “job value” to be determined using a formal job evaluation process, and to motivate any disparities that may exist. If Job Descriptions do not exist, it is time to make them. Depending on the number of positions in the organisation, creating, reviewing and amending job descriptions to provide the required detail is a considerable management and administrative task that requires consultation with the trade unions and the workforce, which could take months! You might wish to refer to our guide “All you need to know about writing competency and outcomes based Job Descriptions” to assist you The Solution - 4 Review the job descriptions for each position on the organisational chart to ensure that they correctly depict the responsibilities, functions and duties performed by the incumbent/s.
    24. 24. May 2014 "People Management Simplified"24 This will become critical later for identifying “similar work, or work of equal value”, and for defending the organisation’s pay and benefit structures. If a formal job evaluation (grading) system is not in place, it is time to implement one. Depending on the number of positions in the organisation, implementing a job evaluation system is a considerable management and administrative task that requires consultation with the unions and the workforce, which could take months! You might wish to refer to our guide “All you need to know about conducting Job Evaluation using the Paterson Grading syst to assist you. The Solution - 5 Consider the “hierarchy” of the organisation. Every position in the organisation should be assigned a “job value”, which could be a Job Grade determined in a structured and methodical manner using a formal job evaluation process.
    25. 25. May 2014 "People Management Simplified"25 It could prove useful to simultaneously conduct an external benchmarking and parity exercise by positioning the organisation’s job grades and pay scales against the market, (external equity), and to establish the market values for key positions. This could assist to motivate any disparities that may exist. The Solution - 6
    26. 26. May 2014 "People Management Simplified"26 If not already in place, adopt CTC as the manner in which the organisation expresses the value of a position, i.e. “Remuneration package”. The Solution - 7 As this would be a material change to the workforce’s terms and conditions of employment, implementation will require consultation with the unions and the workforce, which could take months! Addendums to, or revised employment contracts will have to be produced to record these changes.
    27. 27. May 2014 "People Management Simplified"27 The “deemed value” of fringe benefits that do not have a fixed value such as company cars, housing, cell phones, computers, etc. must be calculated and included. Produce a table reflecting the CTC per employee, per job grade, and identify any disparities that exist, (verify internal equity). Motivate the disparities, and if this is not possible, devise a strategy and action plan as to how these will be rectified. Execute the action plan - Risk mitigated! The Solution - 8 Perform an analysis of the existing actual remuneration and benefits per employee to determine their CTC value.
    28. 28. May 2014 "People Management Simplified"28 As can be seen from this presentation, these changes to the legislation are high risk and could cause considerable harm to an organisation if not managed correctly and timeously. You are therefore encouraged to act as soon as possible! Conclusion However, much of the preparation and corrective action that needs to be taken is of a specialist nature, and the required skills may not be available within your organisation. You are reminded that Pay Matters specialises in these matters, and is available to assist you to ensure that you comply with the legislation, and thereby protect your organisation from unnecessary harm.
    29. 29. May 2014 "People Management Simplified"29 Who is Pay Matters? PAY MATTERS is a Human Resources Solutions provider located in Port Elizabeth, South Africa, that offers a comprehensive range of affordable, high quality, legally compliant, and reliable shared Human Resources Management services to Corporate, SMME and Domestic employers within the Nelson Mandela Bay Metropole area, (Port Elizabeth, Uitenhage and Despatch), and surrounds. Satisfying an employer’s human resources, labour relations and payroll requirements is our prime function, and we would welcome the opportunity to be of service to you!
    30. 30. May 2014 "People Management Simplified"30 PAY MATTERS’ Shared Services Allow us to assist you to administer and manage your Human Resources, Labour Relations and Payroll while you focus on your core activities. Enjoy the many benefits of having the expertise and resources of a professional Human Resources Department available to you at an affordable cost! We are confident that, due to our expertise, 40 years of demonstrated on-the-job experience, flexible range of services, and our method of conducting business, we can add value to most employers, and look forward to providing a tailor-made solution for you. We believe that by entrusting your business to PAY MATTERS you can rest assured that the services we provide will be legally compliant, and that your employees will be paid correctly and timeously each payday, while your assets and business interests will be protected.
    31. 31. May 2014 "People Management Simplified"31 Our services include a selection of Human Resources, Labour Relations, Payroll and other supplementary services, that are offered either independently or in combinations to allow flexibility, and eliminate unnecessary costs. Furthermore, in each of these categories, PAY MATTERS offers three levels of service, being Primary, Enhanced and Premium. This additional flexibility allows PAY MATTERS to provide an employer with a tailor made package designed specifically to satisfy their needs. Our integrated systems and processes are designed to maximise individual contribution and thereby enhance business performance. Our method of people management is proactive rather than reactive, thus ensuring employee satisfaction, and resulting in stability and harmony in the workplace. What services does PAY MATTERS offer?
    32. 32. May 2014 "People Management Simplified"32 • Strategic Planning • Due diligence/process audits • Organisational Structuring • Workforce Planning • Development/Review of Policies & Procedures • Development/Review of Workplace Rules • Development/Review of Job Descriptions • Development/Review of Job Grading structure • Performance Management • Absence Management • Skills Audits/Gap Analysis • Skills Development Plans • Employment Equity Plans/Reports • Employee Satisfaction Surveys • Remuneration package structuring • Incentive Reward Systems • Market Surveys/Benchmarking • Wage negotiations • Facilitation/Mediation • Chairing of Disciplinary/Appeal Hearings We also specialise in:
    33. 33. May 2014 "People Management Simplified"33  Provide access to specialist skills and knowledge that improves the overall efficiency of the organisation;  Provide premium services at an affordable cost;  Provide the option of a "one-stop" solution to satisfy most Personnel Management requirements;  Enhance business performance by as much as 30 - 40%;  Protect an employer’s interests and minimise their risk exposure by ensuring efficient controls and legal compliance;  Relieve an employer from the administrative burden associated with payroll and human resource management;  Promote harmony and stability in the workplace; and  Protect employee interests by ensuring that they are managed fairly and correctly, and that they are paid accurately and timeously. PAY MATTERS’ services are designed to:
    34. 34. May 2014 "People Management Simplified"34 Last but not least
    35. 35. May 2014 "People Management Simplified"35 To learn more about how our wide range of services can add value to your business please visit our website Alternatively Submit your enquiry by e-mail, and we will contact you or Call George on 082 572 0644 or 041 452 3702 to set up an appointment to discuss your requirements
    36. 36. May 2014 "People Management Simplified"36 Thank you for your time We look forward to being of service to you