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Equal work for equal pay – length of service and different geographic areas may be arbitrary criteria

1 May 2016
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The Employment Equity Amendment Act, 2013, introduced two changes to section 6 of the Employment Equity Act, 1998 (the EEA). The first is that discrimination in terms of section 6(1) may be unfair on any of the listed grounds, or on any other arbitrary ground. The second is the insertion of section 6(4) which says that “a difference in terms and conditions of employment between employees of the same employer performing the same or substantially the same work or work of equal value that is directly or indirectly based on any one or more of the grounds listed in subsection (1) is unfair discrimination.” The Employment Equity Regulations of 2014 provide guidance on how to determine whether work is for equal value. They also list factors justifying differentiation in terms and conditions of employment that would not constitute unfair discrimination. Included in this list are, for example, the individuals’ respective seniority or length of service, their respective qualifications, performance and quality of work and the existence of a shortage of relevant skill. The implications of unfair discrimination on non-listed or arbitrary grounds formed the basis of two recent decisions.

In the case of Duma v Minister of Correctional Services and others, the applicant contended in the Labour Court that she was unfairly discriminated against because colleagues in the same role who worked in other provinces were paid more. Duma was appointed to the position of Senior Correctional Officer (SCO), on salary level 8, as a Manager of Legal Services for the Voorberg Area of the Western Cape. Some months later, the post advertised as SCO was amended to an Assistant Director (ASD) post (salary level 9) with the implementation of the Occupation Specific Dispensation. Instead of being upgraded to level 9, Duma remained in her position as SCO at salary level 8. Other employees in the same position as Duma, who were employed in other regions including Limpopo, Mpumalanga, North-West and KwaZulu-Natal, were remunerated on ASD level 9. As a result of remaining on salary level 8, Duma lost out on additional remuneration each month. This, she submitted, amounted to a separate act of unfair discrimination every time she was paid on level 8 instead of 9, which resulted in continuous and repetitive unfair discrimination.
In considering whether the alleged ground of discrimination entitled the applicant to the relief sought, the court considered the provisions of the EEA prior to the 2014 amendments since they had not yet come into operation when the dispute arose. At the time, section 6(1) of the EEA did not include the phrase “or on any other arbitrary ground”.

The court held that, to succeed with a claim for unfair discrimination in terms of section 6(1), it must be shown that there was differentiation which amounted to discrimination that was unfair. If the discrimination was on a ground specified in section 6(1), discrimination was automatically established and was presumed to be unfair. However, if the ground for alleged discrimination was not listed, the applicant had to prove a) that the differentiation amounted to discrimination and b) that it was unfair. It had to be proved, accordingly, that the unspecified ground for differentiation was of a nature that was likely to negatively impact on the fundamental human dignity of the applicant in a comparably serious manner to a listed ground. Further, it had to be proved that the discrimination was unfair and thus, that the discriminatory measure was not proportionate to the goal it sought to achieve.

In this case, the Department of Correctional Services simply denied that it had discriminated unfairly against Duma. It led no evidence as to why Managers of Legal Services in other provinces were placed on a higher level than Duma and why they were remunerated at a higher rate. In the circumstances, the court stated that the basis of differentiation, being geographical location, was completely arbitrary and indeed, had the ability to negatively impact the human dignity of the applicant in a comparably serious manner to a listed ground. Therefore, the differentiation amounted to discrimination. The discrimination was furthermore unfair because the Department had failed to show a rational and proportionate connection to the purpose of the differentiation. The court ordered the Department to pay Duma compensation in the amount equivalent to the difference between the remuneration she received at the time her claim arose in August 2009 and the amount she would have received had she been remunerated on level 9 from the date of her translation in terms of the Occupation Specific Dispensation.

One of the first cases determined under section 6(4) of the EEA, as amended, is Ndlela & others and Philani Mega Spar (2016) 37 ILJ 277 (CCMA). Here, the question was whether an employer, who offered membership of a provident fund only to employees with five or more years of service, unfairly discriminated against employees who had worked for less than five years. Accordingly, was discrimination on the basis of length of service justified? The applicants, all of whom were employed by the respondent for less than five years, argued that the differentiation based on length of service was arbitrary and thus amounted to unfair discrimination.

The respondent sought to justify the differential treatment on the basis that offering membership of a provident fund to longer-serving employees was to reward them for long service and to encourage them to remain with the company. The benefit was therefore designed as a retention and reward mechanism and accordingly, it was argued, the differential treatment was reasonable, logical, not unfair, and thus, not without reason or justification.

The commissioner emphasised that the benefits connected to membership of a provident fund stretch further than other, more traditional reward and retention mechanisms, such as additional leave or a special bonus for long service. Although the EEA Regulations recognise that seniority and length of service may be justifiable grounds of differentiation, the question was whether the provision to specific employees of a benefit that includes retirement savings and funeral and disability benefits, on the sole basis of length of service, was rational and justifiable.
The commissioner found that the cut-off period of five years of service was completely arbitrary as no empirical or objective evidence was led by the employer to support its arguments for the justification of the differential treatment. Furthermore, providing the benefit to longer-serving employees was disproportionate to the purpose of rewarding and retaining such employees. The impact of the differentiation on shorter-serving employees undervalued their worth to the extent that it also undermined their human dignity, which a reward of a less fundamental benefit would not have done. The discrimination on the basis of length of service was therefore arbitrary and unfair.

The commissioner stated that while there may be a rational element in the decision to reward employees for long service, the differentiation must be measured against the arbitrariness of the ground and the reasons justifying it. Where the effect of the differentiation undermines the human dignity of the group being discriminated against, the purpose of the differentiation cannot be rational and justifiable.

It is clear from the above that employers who offer benefits to selected employees will have to justify this differentiation with rational and objective evidence in order to show that the basis of discrimination is not arbitrary and therefore not unfair. Simply because the Employment Equity Regulations permit differentiation on the basis of seniority or geographical location does not give employers carte blanche to provide benefits to employees on these bases without in fact justifying their reasons for doing so. Bald denials and random grounds for differential treatment will therefore not suffice. Employers must be able to provide evidence that the ground for differentiation, for example length of service, is in fact rationally connected to achieving the particular goal, such as reward or retention. In addition to providing the rational connection, the differentiation must be fair and the interests of both the employer and employees must be balanced, with particular emphasis given to the impact that any discrimination might have on employees.