Abstract

The Employment Equity Act (“EEA”) requires South African designated employers to extend their commitment towards fair remuneration practices beyond the internationally principled standard of equal pay for work of equal value. Designated employers are also required to eliminate disproportional pay differentials among the currently prescribed six occupational levels. This raises the question of how the construct “disproportional pay” or, more correctly, “pay differentials” should be interpreted and applied to ensure all disproportionality in pay differentials is eliminated. The EEA and its accompanying regulations and forms fall short in providing a clear conceptualisation or operationalisation of the construct. In this contribution, we consider how the construct “disproportional pay differentials” should be conceptualised and operationalised to equip the National Minimum Wage Commission (“NMWC”), which monitors pay differentials, with appropriate and clear guidelines on what constitutes proportional pay differentials. We use these definitions and operationalisations to propose regression analysis methods and hypothesis tests that may be applied to individual employee remuneration data sets to measure an organisation’s degree of compliance with the principle of proportional pay differentials. Additional measures are proposed to identify outlier employees that can be considered to be prima facie evidence of individual pay discrimination based on arbitrary grounds that are unconstitutional, unlawful and unfair. Ultimately, a framework is proposed that the NMWC can use and build on to develop standards of adherence to the principle of proportional pay differentials.