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Print articleWhen can a difference in pay be justified?
April, 2018 - Andi Micalow
The decision in National Education Health & Allied Workers Union on behalf of Sinxo & others and Agricultural Research Council is important primarily for two reasons. Firstly, it deals with when an employee can claim that he or she has been discriminated against on an arbitrary ground as envisaged in section 6(1) of the Employment Equity Act, 1998 (the “EEA”). Secondly, it serves as an alert to employers that when formulating a defence to an equal pay claim, the defences set out in regulation 7 of the 2014 Employment Equity Regulations (the “EE Regulations”) must be considered carefully.
In this case, the applicants had been employed by the Agricultural Research Council (“ARC”) as farm foremen for a lengthy period of time. As a result of organisational restructuring, they were graded as farm supervisors at global grade (GG) 5. Other employees, who the applicants claimed performed the same work as them, were graded as farm foremen at the higher grade of GG8. The applicants were aggrieved by this difference in treatment and referred an equal-pay claim in terms of section 6 of the EEA to the Commission for Conciliation, Mediation and Arbitration (“CCMA”). They argued that they performed the same jobs as the farm foremen and that they were being discriminated against on an arbitrary ground. The employer argued that the difference in pay grades and salaries could be justified on the basis that the two jobs required different outputs and that the farm foremen required a matric certificate and a tertiary qualification in order to do their job. The applicants did not have these qualifications.
The commissioner came to the conclusion that the applicants were doing the same or substantially the same work as the farm foremen, and that the difference in pay constituted discrimination on an arbitrary ground. The commissioner accepted that the test for determining whether discrimination on an arbitrary ground has taken place is whether the differentiation on this basis impacted on the dignity of the applicants. She found that this was the case. This finding meant that she had to consider whether the discrimination on an arbitrary ground was fair and rational. The employer’s justification was that the two positions had different outputs and that a different qualification was required for the respective posts.
The commissioner, having already satisfied herself that the two posts were substantially the same, considered whether the employer’s qualification requirements were based on fair and rational grounds. She found that, although qualifications are a factor justifying differentiation in terms of regulation 7 of the EEA Regulations, the defence would be fair and rational only if it is established that it is not biased against an employee or group of employees based on race, gender, disability or any other ground listed in section 6(1) of the EEA and is applied in a proportionate manner. In other words, a defence justifying differentiation as set out in the EEA regulations does not automatically result in the differentiation being rational or fair.
The commissioner took into account that qualification levels were not a neutral factor in South Africa and that previously disadvantaged people had been given inferior education and schooling opportunities. She noted that a matric certificate at the time of the applicant’s employment was extremely rare for black and coloured people in the agricultural sector. The commissioner pointed out that the employees had performed the work of farm foreman for many years before the grading process and it was unclear why a matric certificate had become a mandatory requirement for the job, at least in respect of those who already occupied the post. She concluded that the differentiation was not fair or rational and amounted to unfair discrimination.
Comment
The question of what constitutes an arbitrary ground is an important one as its application could lead to uncertainty. Although she did not refer to the decision, the commissioner followed the approach first adopted in the context of the EEA in Pioneer Foods v Workers Against Regression (WAR) and Others, and accepted that the test is whether the ground on which differentiation takes place has the potential to impair the fundamental dignity of persons as human beings or to affect them adversely in a comparably serious manner. This test has its origins in South African constitutional jurisprudence, but it still begs the questions: What does an impairment of dignity mean? When is dignity infringed? In effect, the commissioner found that a mere differentiation in salary can constitute an infringement of dignity.
In Duma v Minister of Correctional Services and Others, the court found that “the ground of geographical location as a basis to prejudice an employee (by paying them less for the same work as another employee in a different location) has the ability to impair the dignity of that person in a manner comparable to the listed grounds and amounts to discrimination.” This suggests that a finding that a person’s dignity has been infringed is a relatively easy one to make.
The award also serves as a valuable caution to employers who are faced with an equal-pay dispute. It is not sufficient to simply refer to one of the defences mentioned in regulation 7 of the EE Regulations to justify a difference in remuneration – the defence must also be fair and rational.
The decision in Ndlela & others v Philani Mega Spar illustrates this point. In this case, the employer’s decision to introduce a provident fund for employees with more than five years’ service was found to constitute unfair discrimination against employees with less than five years’ service. The employer sought to justify the differentiation on the grounds of length of service on the basis that it was an employee retention measure. The commissioner found that this reason did not stand up to analysis and was not logical.
In this case, the applicants had been employed by the Agricultural Research Council (“ARC”) as farm foremen for a lengthy period of time. As a result of organisational restructuring, they were graded as farm supervisors at global grade (GG) 5. Other employees, who the applicants claimed performed the same work as them, were graded as farm foremen at the higher grade of GG8. The applicants were aggrieved by this difference in treatment and referred an equal-pay claim in terms of section 6 of the EEA to the Commission for Conciliation, Mediation and Arbitration (“CCMA”). They argued that they performed the same jobs as the farm foremen and that they were being discriminated against on an arbitrary ground. The employer argued that the difference in pay grades and salaries could be justified on the basis that the two jobs required different outputs and that the farm foremen required a matric certificate and a tertiary qualification in order to do their job. The applicants did not have these qualifications.
The commissioner came to the conclusion that the applicants were doing the same or substantially the same work as the farm foremen, and that the difference in pay constituted discrimination on an arbitrary ground. The commissioner accepted that the test for determining whether discrimination on an arbitrary ground has taken place is whether the differentiation on this basis impacted on the dignity of the applicants. She found that this was the case. This finding meant that she had to consider whether the discrimination on an arbitrary ground was fair and rational. The employer’s justification was that the two positions had different outputs and that a different qualification was required for the respective posts.
The commissioner, having already satisfied herself that the two posts were substantially the same, considered whether the employer’s qualification requirements were based on fair and rational grounds. She found that, although qualifications are a factor justifying differentiation in terms of regulation 7 of the EEA Regulations, the defence would be fair and rational only if it is established that it is not biased against an employee or group of employees based on race, gender, disability or any other ground listed in section 6(1) of the EEA and is applied in a proportionate manner. In other words, a defence justifying differentiation as set out in the EEA regulations does not automatically result in the differentiation being rational or fair.
The commissioner took into account that qualification levels were not a neutral factor in South Africa and that previously disadvantaged people had been given inferior education and schooling opportunities. She noted that a matric certificate at the time of the applicant’s employment was extremely rare for black and coloured people in the agricultural sector. The commissioner pointed out that the employees had performed the work of farm foreman for many years before the grading process and it was unclear why a matric certificate had become a mandatory requirement for the job, at least in respect of those who already occupied the post. She concluded that the differentiation was not fair or rational and amounted to unfair discrimination.
Comment
The question of what constitutes an arbitrary ground is an important one as its application could lead to uncertainty. Although she did not refer to the decision, the commissioner followed the approach first adopted in the context of the EEA in Pioneer Foods v Workers Against Regression (WAR) and Others, and accepted that the test is whether the ground on which differentiation takes place has the potential to impair the fundamental dignity of persons as human beings or to affect them adversely in a comparably serious manner. This test has its origins in South African constitutional jurisprudence, but it still begs the questions: What does an impairment of dignity mean? When is dignity infringed? In effect, the commissioner found that a mere differentiation in salary can constitute an infringement of dignity.
In Duma v Minister of Correctional Services and Others, the court found that “the ground of geographical location as a basis to prejudice an employee (by paying them less for the same work as another employee in a different location) has the ability to impair the dignity of that person in a manner comparable to the listed grounds and amounts to discrimination.” This suggests that a finding that a person’s dignity has been infringed is a relatively easy one to make.
The award also serves as a valuable caution to employers who are faced with an equal-pay dispute. It is not sufficient to simply refer to one of the defences mentioned in regulation 7 of the EE Regulations to justify a difference in remuneration – the defence must also be fair and rational.
The decision in Ndlela & others v Philani Mega Spar illustrates this point. In this case, the employer’s decision to introduce a provident fund for employees with more than five years’ service was found to constitute unfair discrimination against employees with less than five years’ service. The employer sought to justify the differentiation on the grounds of length of service on the basis that it was an employee retention measure. The commissioner found that this reason did not stand up to analysis and was not logical.
