What is Equal Pay for Work of Equal Value … and how can we defend it?

On the 8^th of July 2019, the New York Times published an article which speaks to the core of the gender pay gap in sport. The male and female teams achieved opposite results; the USA Women’s Soccer Team won the 2019 FIFA World Cup (Their 4^th World Cup victory) while their male counterparts lost the final of their Regional Championship against Mexico.

This contradiction of fortunes has once again brought to the fore the issue of gender pay inequality, not only in sport but other professions as well.

The article states that the USA Women’s Soccer Team have in the past campaigned for equal pay (equal to their male counterparts) and currently the team has “collected more trophies and begun to produce more revenue than the men”. But the female teams earn substantially less than the male team. The combination of superior results and revenue generation are the most compelling pieces of evidence that this inequality should not persist.

Although this is only one example of pay inequality, income and pay inequality continues to persist in various shapes and forms across the world. South Africa, as a result of the legacy of apartheid, has a number of inequality challenges and disparities such as employment and equal pay. The Equal Pay for Work of Equal Value Legislation stipulates the grounds on which it is decided whether discriminating between two employees’ levels of pay is justified or not.

The essence of this legislation is that it seeks to ensure that individuals that perform substantially the same (sufficiently similar) level of work are remunerated in a consistent manner so that the level of work and level of pay correlate to one another. This legislation requires monitoring pay practices within singular organisations rather than across industries or the national market.

As a result the legislation focuses on internal relativity between employees’ remuneration. The legislation is designed to support pay equity through limiting and/or reducing unfair discrimination and unfair discriminatory practices. Examples of unjustified reasons for differentiating employees’ pay are:

Race
Sex/Gender
Pregnancy
Marital Status
Family Responsibility
Ethnic or Social Origin
Colour
Sexual Orientation
Age
Disability
Religion
HIV Status
Conscience
Belief
Political Opinion
Culture
Language
Birth
Any arbitrary ground

However the following proviso should be noted – Discrimination is not unfair if it is in the pursuit of affirmative action or inherent to the job. The legislation is not confined to remuneration only but also covers the terms and conditions of employment.

Work of equal value is defined in three categories:

Same work:

Work is identical or interchangeable

Substantially the same work:

Work is not identical or interchangeable but sufficiently similar so that they can reasonably be considered to be the same
This is based on an objective assessment of actual duties and responsibilities to meet the definition

Work of equal value:

Different jobs that have a comparative relative complexity, responsibility, decision making level etc.

The legislation does make provision for fair discrimination. These are some of the differentiators that can be used to discriminate fairly:

Seniority/ length of service
Qualifications/ ability/ competence/ potential
Performance / quality of work / quantity of work provided that a robust performance evaluation system has been applied equally
Fixing demoted employee’s salary at a certain level until other employees in the same job category reach this level – grandfathering
Temporary positions for purpose of training/gaining experience
Shortage of relevant skill / market value in a particular job classification eg. scarce skills
Any other relevant factor

Recently, a number of cases claiming that this legislation has been violated have been filed. Often the rationale behind why these cases have been filed is not fully understood by the employer as a result of a limited understanding of how to prepare a solid defence against breaching the legislation.

Although a number of actions can be taken in response to the legislation, four specific items are of particular importance.

Do you have an accepted job grading system? Job grades are of paramount importance as these effectively value the position and allow positions to be compared against other positions of a similar level. Job grading is a process of evaluating the ‘value of the job’ within an organisation and forms the basis of a number of remuneration tasks such as pay scale modelling and benchmarking.
Have you developed market related pay scales for your organisation? Pay scales are instrumental in controlling the variation of pay that is considered acceptable within an organisation. Developing a pay scale is a process whereby an organisation sets out an acceptable scale within which pay per grade can vary and implementing this so that pay may not exceed the upper and lower limit of the scale per grade.
Have you got a robust Performance Management system in place? Performance Management is important as this allows defendable performance scores to dictate why certain individuals may earn more than others, within an acceptable range. Performance management is a process of evaluating each employee’s performance of their role within an organisation and this allows high performers to be separated from poor performers when it comes to reward differentiation.
Finally, and most importantly, do you have a well-documented Remuneration policy for your organisation? The policy defines the goals and ambitions of an organisations remuneration structure which sits at the heart of all remuneration decisions taken within an organisation. This should be viewed as a critical component of an organisations constitution as it governs the expenditure on what is often an organisations largest expenditure line item – human capital. Human capital is also, often a key strategic driver of an organisation and as a result it is of fundamental importance that this is set in line with the goals of an organisation.

The prevalence of Equal Pay for Work of Equal Value disputes finding their way into the market is on the rise and will continue to rise for the foreseeable future. Most organisations have fair pay practices in place but this does not mean their employees won’t challenge them under the Equal Pay for Work of Equal Value legislation.

Employers can make sure that they have the correct building blocks in place to enable them to not only manage but also document their position with reference to the legislation. This will ultimately allow them to defend their position in the face of unfair pay allegations.

Written by:

Bryden Morton
Data Manager
B.Com (Hons) Economics
[email protected]

Chris Blair
CEO
B.Sc Chem. Eng., MBA – Leadership & Sustainability
[email protected]