Business & Economy

Thursday, 08 August 2019 13:59

What is Equal Pay for Work of Equal Value and How Can We Defend it?

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What is Equal Pay for Work of Equal Value and How Can We Defend it?

On the 8th 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 4th 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”.

Two examples of this inequality are:

  • The women’s team received a bonus of $90 000 for reaching the quarterfinals. If the men had reached the quarterfinals of the 2018 men’s FIFA World Cup they would have received a bonus of $550 000.
  • The USA women’s team received $4 million dollars for winning the 2019 Women’s FIFA World Cup whereas France received $38 million for winning the 2018 men’s FIFA World Cup. This is more than the $30 million total prize money that was awarded during the women’s World Cup.

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 organizations rather than across industries or the national market. As a result, the legislation focusses 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 the 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 defense 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 organization and forms the basis of a number of remuneration tasks such as pay scale modeling and benchmarking.
  • Have you developed market-related pay scales for your organization? Pay scales are instrumental in controlling the variation of pay that is considered acceptable within an organization. Developing a pay scale is a process whereby an organization 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 organization and this allows high performers to be separated from poor performers when it comes to rewarding differentiation.
  • Finally, and most importantly, do you have a well-documented Remuneration policy for your organization? The policy defines the goals and ambitions of an organizations remuneration structure which sits at the heart of all remuneration decisions taken within an organization. This should be viewed as a critical component of an organizations constitution as it governs the expenditure on what is often an organization's largest expenditure line item – human capital. Human capital is also, often a key strategic driver of an organization and as a result, it is of fundamental importance that this is set in line with the goals of an organization.

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 organizations 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. 

-- ENDS --

Written by: Bryden Morton, B.Com (Hons) Economics, Data Manager – This email address is being protected from spambots. You need JavaScript enabled to view it. and Chris Blair, B.Sc Chem. Eng., MBA – Leadership & Sustainability, CEO – This email address is being protected from spambots. You need JavaScript enabled to view it.

About 21st Century

21st Century is one of the largest full-spectrum specialist Remuneration and Reward consultancies in Africa, with national and international capability. We have more than 60 skilled employees and service over 1700 clients, including Government, Parastatals and two-thirds of the companies on the JSE. We place a large emphasis on sustainable remuneration, transformation, and social upliftment, and are focused on your organization's strategy at all times... assisting you to achieve your business objectives, drive your company's performance, engage and retain your staff and comply with legislation.  

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