Avoid unfair discrimination - pay your employees equal salaries!
The Employment Equity Act prohibits discrimination on several grounds, including race, gender, etc.
It also includes discrimination in terms of pay and benefits. Employees who do similar work should receive similar pay and benefits irrespective of race, gender, belief, and so on, unless there's a valid reason for differences.
For example, Jane's a star performer and receives performance bonuses while John, an under-performer, doesn't. In this example, the difference in gender is incidental to the differentiation, and not the cause of it, so it's fair.
But, what about employees at different levels in the organisation receiving different packages? This is where the EEA is very clear in income differentials… Let's take a look.
What does the term 'Income Differentials' mean?
The term refers to the difference in earnings between one level of employees and another level in the same company.
For example, the difference between the earnings of all employees in the mid-management level of a business compared to the earnings of all employees at a supervisor level of the same business.
This is a normal situation in any business, with different job grades or levels of responsibility earning different salaries and receiving different perks. While you can expect the difference in pay levels because of different levels of authority and responsibility, and so it isn't seen as discriminationas such, the EEA requires companies to look at ways of reducing wage or income differentials.
This isn't because the gap indicative of current discrimination, but it results in the denial of equal opportunities under apartheid. Form EEA 4 is there to assist with this narrowing of the gap: it requires companies to identify the gaps and to put in place plans to narrow it.
But, to make sure you don't fall foul of the law, use these four steps to make sure you pay fairly.
Four simple steps to guarantee fair pay practices
Do an annual pay audit. In other words, review all your employees' salaries to make sure you're applying 'equal pay for equal work'.
Here are four steps to do your audit:
Step # 1. Identify and group together like employees
For example, administrators, sales representatives etc. Do your salary calculations on criteria of similar work, similar positions, responsibility, skills and qualifications.
Step #2. Compare their remuneration for discrepancies
Make sure you aren't discriminating against any employee.
Step #3. Identify differences
You can pay differentials if you have a valid business reason for doing so.
Step #4. Rectify unfair differences or those that don't have good business reasons
Next time an employee complains about salary differences, tell him you do an annual salary audit. Explain what you do to make sure all salaries are fair.
If you're guilty of discrimination, you could be liable for fines of up to 10% of your annual turnover… And you'll probably even have to back-pay the employee you unfairly discriminate against!
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