The Employment Equity Act prohibits unfair discrimination in the workplace. It does not say that all employees must be treated equally in terms of their remuneration and benefits. It permits fair differentiation between employees doing the same or ‘equal value’ work. Sadly, many employees and unions have jumped onto the bandwagon of a simplistic understanding of the phrase “equal pay for equal work”.

To quote Alexander Pope (An Essay on Criticism, 1711), “a little learning (knowledge) is a dangerous thing”.  I have come to appreciate this phrase in recent months in view of the many questions received on this topic from employees and employers on the one hand; and also the downright belligerence of some union officials who insist on declaring equal pay disputes without any basis in law. 

According to the Labour Appeal Court in the recent judgement of Pioneer Foods (Pty) Ltd v Workers Against Regression (19 April 2016), “… Differential treatment is ubiquitous in modern life and in the workplace.   The EEA does not regulate such differential treatment at all unless and until it is established that it is both “not rational” and constitutes “discrimination.”

It should therefore be clear that not all differences in terms and conditions / remuneration are prohibited or will be unfair. Employers are not required to pay all their comparable employees the same remuneration. Only unfair discrimination is prohibited and there are various grounds on which pay differentiation can be perfectly justified.

The topic is complex and will no doubt still be the subject of a lot of litigation, however I shall attempt to summarise the most important principles in a practical manner.

The Employment Equity Act and Regulations

The relevant sections of the Act pertaining to equal pay claims are:

Section 6(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, birth or on any other arbitrary ground.”

Section 6(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 of the grounds listed in subsection (1), is unfair discrimination.”

It is therefore only unfair discrimination if there is a difference in remuneration between employees who are suitable comparators; and if that differentiation is based on a prohibited ground.

Who must prove what in an equal pay claim? (Section 11(2))

When there is a challenge of unfair discrimination by an employee on the basis of equal pay, there are specific issues that must be determined objectively. A mere abstract allegation of unfair discrimination based on a difference in pay is not enough to require the employer to defend itself – the complainant must first provide some facts to substantiate his/her claim.

1.     The employee must first prove the following:
1.1.   Identify a valid comparator (another employee who allegedly is paid more) who works for the same employer.

1.2.   It must be established that the complainant and the comparator are in fact (not just based on perception) doing the same work; or substantially similar work; or work of equal value as described in Regulation 4 of the EEAct.

1.3.   Then facts must be presented by the complainant to show that there is indeed a differentiation in terms and conditions of employment (including remuneration and benefits) between him/herself and the comparator;

1.4.   If there is differentiation, then the complainant must present the ground on which he/she alleges that the differentiation is unfair and show that the differentiation is directly or indirectly linked to – either:

• a discriminatory ground listed in section 6(1) such as race, gender, disability, etc; or
• another arbitrary or similar ground which is not listed in section 6(1). 

Differentiation on a ground not listed in section 6(1) may constitute unfair discrimination if it is analogous to the listed grounds (i.e. impairing the dignity of the employee in a manner comparable to the listed grounds), arbitrary or irrational (serving no legitimate purpose).

This point is the hurdle that most employees cannot jump – not understanding that any difference in pay must be linked to unfair bias or irrational treatment of some sort, or the courts will not intervene. Often only a vague allegation of unequal pay is made by an employees or unions and the exercise is nothing more than a fishing expedition – without any basis in the provisions of the EEAct.

2.     If and when all of the above have been proved by the complainant, the process going forward will depend on the alleged ground of discrimination that the complainant has identified. Even if the differentiation is seemingly linked to a prohibited ground, there could still be justification which would make the differentiation fair. Differentiation / discrimination is not unfair if the employer’s conduct or application is rational; fair or otherwise justifiable.

(1)   If the complainant alleged and proved that the pay differentiation is linked to one of the listed grounds in section 6(1) – e.g. race, gender, etc. - then unfair discrimination is presumed at this point, unless the employer now presents evidence to rebut this presumption by proving -

• that the discrimination did not take place; or
• that the discrimination is justified in some way, and accordingly fair.

(2)   If the complainant alleged unfair discrimination linked to an unlisted / arbitrary ground, there is no presumption of unfair discrimination which the employer must disprove, and the complainant in addition also has to prove:

• that the conduct complained of is not rational or amounts to discrimination;
• that the discrimination is unfair in that no justification grounds apply.

Examples of when a difference in pay is justified and not unfair, according to the Employment Equity Act:

• Taking affirmative action measures consistent with the purpose of the EE Act;
• Inherent requirements of the job.
• (Regulation 7) If the differentiation is fair and rational  (the conduct is for a legitimate purpose and not biased against an employee or a group employees); and it is based on one or a combination of certain factors such as -

®           seniority/length of service,

®           qualifications, ability, competence or potential above the minimum performance levels;

®           performance, quantity or quality of work;

®           temporary placements due to demotion or training;

®           shortage of relevant skills, or the market value in a particular job classification; etc.

Case law examples

1.  In South African Municipal Workers Union obo Tetyana v Nelson Mandela Bay Municipality (November 2015), the employee (Tetyana) was an outside applicant appointed as one of five assistant directors and the only woman.  Two of the other assistant directors, who were on the same grade that she was, were on higher salary notches and she claimed unfair gender discrimination.

It was not disputed that she was paid less than the two male comparators, but they had been in the employ of the Municipality as project managers before their appointments as assistant directors. This meant a drop in remuneration and they requested the adjustment of their grades and/or their salary notches. It therefore seemed more probable that they were on higher notches due to the “financial anomaly” than because they were males. The court concluded that “the salary progression of these employees and that of Ms Tetyana could not have been the same given their background in the establishment”.

2. In Duma v Minister of Correctional Services & others, 2 February 2016, geographical location was identified as a discriminatory unlisted ground.  Ms Duma was employed in the Western Cape and had been placed at salary level 8, but believed that she should have been on level 9, as was the case in equivalent positions in some other provinces. She claimed that she was discriminated against on the ground of her geographical location.

As this is not a listed ground of discrimination, the onus was on the employee to establish discrimination and unfairness. The facts were confirmed by the court, i.e. that she was treated arbitrarily on a ground that impacted on her dignity; that the employer had presented nothing to show that it was necessary to differentiate between the provinces; and that that the employee had been prejudiced financially over a number of years as she had not been remunerated at the correct levels.

The employer merely denied discrimination, but presented no evidence to substantiate this. The court accordingly found that the employee had proved unfair discrimination.

Conclusion

Employees, unions and employers should take note of what the law seeks to protect in respect of pay differentials, and not see it as a “free-for-all” or a sudden entitlement to huge leaps in some employees’ salaries.

As per the Constitutional Court in Prinsloo v Van der Linde [1997] ZACC 5: “……. it is necessary to identify the criteria that separate legitimate differentiation from differentiation that has crossed the border of constitutional impermissibility and is unequal or discriminatory ‘in the constitutional sense’.”

Legitimate and objective business considerations still have their place in determining remuneration. Also, employees who are better qualified, more experienced or who perform better, can be paid more than their counterparts, subject to consistent application of performance evaluations. Only pay differentiations that are baseless, irrational, capricious, biased or unfair, should be pursued under the equal pay provisions.

Written by Judith Griessel, Griessel Consulting

For more information, please contact Judith at judith@griesselconsulting.co.za