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Employment Equity Act, 1998 (Act No. 55 of 1998)

Code of Good Practice

Integration of Employment Equity into Human Resource Policies and Practices

Part B : During Employment

12. Remuneration

 

12.1 SCOPE

 

Remuneration is any payment in money or in kind, or both in money and in kind, made or owing to any person in return for services rendered15. Employers must ensure that remuneration policies and practices are applied consistently without unfair discrimination on the  basis of any one or combination of the prohibited grounds.

 

12.2 IMPACT ON EMPLOYMENT EQUITY

 

12.2.1 Remuneration differentials most commonly constitute direct unfair discrimination, where an employer pays designated employees less than non-designated employees doing the same or equivalent work simply because they are designated employees. Remuneration discrimination can also be indirect or systemic because it stems from remuneration policies and practices that have an adverse or disparate impact on black people, women and people with disabilities.

 

12.3 POLICY AND PRACTICE

 

12.3.1 Employers should audit their existing remuneration policies to ensure that they are based on the principles of pay equity. This requires a comparison of jobs as well as a job evaluation system that is objective, rational and applied consistently to all job functions. It is recommended that all employers consider developing a written remuneration policy, or at the very least written guidelines, to ensure that clear rules exist on how remuneration is determined. This should be communicated in an appropriate format to all employees.

 

12.3.2 Employers should conduct regular audits of their remuneration practices among employees to identify the lack of awareness about applicable criteria and perceptions of unfair discrimination in remuneration.

 

12.3.3 Where barriers or discrimination in remuneration are identified, and unless these can be justified, the employer should in consultation with stakeholders develop a strategy for barrier removal.

 

12.3.4 Job evaluation systems should be objective as these are often the basis on which remuneration differentials emerge.

 

12.3.5 Remuneration should be based on the value of the post. In this regard, the following factors may be taken into account:

 

12.3.5.1 Performance and Outputs: the employee's outputs, measured by the performance management process, should carry the most weight in determining individual remuneration levels.

 

12.3.5.2 Employee potential: This involves estimated ability and competence, as well as the capacity to develop these over time. Estimated ability refers to conceptual and management skills which have not yet been demonstrated, whilst competence refers to knowledge and expertise gained, which can be informed by previous outputs or experience.

 

12.3.6 Employers should monitor income differentials to ensure that these do not contribute to unfair discrimination.

 

12.4 KEY LINKS TO OTHER TOPICS IN THE CODE

 

12.4.1 Performance Management - Although indirect factors such as motivation and commitment may be considered, it is important to ensure that these are free of unfair discrimination.

 

12.4.2 Recruitment and Selection - In order to attract employees from designated groups, an employer should offer market related salaries and benefits.

 

 

15 The meaning of remuneration in relation to leave pay, notice pay and severance pay is clarified by the Determination issued by the Minister of Labour in terms of Section 35 of the Basic Conditions of Employment Act.