Minimum Wages versus Fair Pay versus Motivated Employees – the role of the payroll professional

We live in a complex society. Paying employees fairly is a constant challenge.

Code of equal pay for equal work

On 1 June 2015 the Minister of Labour’s Code of Good Practice on Equal Pay/Remuneration for Work of Equal Value was published[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][1].This document forms part of the Employment Equity Act, 1998 (Act No 55 of 1998 as amended).

In short, the essence of the code is as follows:

“The Code states that an employer must, in order to eliminate unfair discrimination, take steps to eliminate differences in terms and conditions of employment, including pay/remuneration, of employees who perform the same or substantially similar work or work of equal value that are directly or indirectly based on any other arbitrary ground in terms of section 6(1) of the EEA.   Differences based on any of the listed or any other arbitrary ground may constitute unfair discrimination.”[2]

So how does the payroll professional determine whether to pay equal pay for equal work? There are 3 considerations[3]:

1. Are the jobs that are being compared the same, substantially the same or of equal value in terms of an objective assessment?
2. Is there a difference in the terms and conditions of employment, including pay/remunerations of the employees in the jobs that are being compared?
3. If there are differences in the terms and conditions of employment, can these be justified on fair and rational grounds?

Further discussion of the Code of Good Practice on Equal Pay/Remuneration for Work of Equal Value falls outside the scope of this article. However, Paymaster People Solutions encourages its readers to consult this document at considerable length. To access a (downloadable) free copy thereof, visit this link.

Minimum wages

By now we all know that that there is (an ongoing) rigorous debate surrounding the question of the (National) minimum wage. A new (National) minimum wage is likely to be agreed soon. Preliminary expectations are that it could be pegged at around R 3500 – R 4500 per month. This remains a speculative assumption, thus the industry pensively has to continue to wait and see what concrete agreement/s (and facts) will transpire in this regard.

Employee Motivation

If you endorse Maslow’s principle “Hierarchy of Needs” theory, then a good basic salary, paid fairly, is required in order to continue with the natural upwards-progression in Maslow’s (triangle) of trying to satisfy these hierarchy of needs. Similarly, if we look at Herzberg’s two-factor theory we note that so-called Hygiene factors (i.e. money per se) does not lend itself to “positive satisfaction” or “higher motivation” levels. Moreover, perceived unfairness (and inequality) demotivates employees (i.e. destroys current levels of existing motivation in an employee).

So what does this mean for the payroll department?

The payroll department (as business function) acts as custodian and “keeper of the law”. Therefore, payroll professionals have to ensure that all staff—who are appointed with the same job title and job description—within the organisation, are paid equally. A caveat to this blanket-rule may be considered if there are valid (and transparent) reasons for a deviation from the normative principle being suggested.

It is the duty of the payroll professional to ‘raise a flag’ and point out potential challenges in cases such as these. Where necessary, the payroll professional is expected to make recommendations to management surrounding suitable remedial action to be taken that will see these ‘out of line’ instances of inequity being rectified.

Moreover, when the payroll professional identifies forms of discrimination taking place in an organisation (which may in all likelihood lead to a loss of staff motivation) he/she ought to be raising this flag by bringing it to the attention the management team.

The payroll professional should be on the constant lookout — for example, checking that salaries and wages of new employees, employee transfers and employee promotions comply with sector legislation and internal company guidelines.

With a constant focus on minimum wages and fair pay, the payroll professional must remember that it’s their responsibility (and accountability) to assist line-management with the maintenance and upkeep of high levels of (positive) employee motivation.