The South African government has made significant changes to employment equity reporting requirements, according to Yolandi Esterhuizen, compliance manager at Sage Africa & Middle East.
She says the aim of the changes is to improve the accuracy and efficiency of collecting data about wage disparities between the highest and lowest paid employees. This could then enable the Department of Employment and Labour to identify wage gaps and to set benchmarks for different sectors.
“Employers must ensure that they have policies in place to deal with remuneration gaps and avoid unfair discrimination. If there are disproportionate differences in remuneration which are not justifiable, they need to take measures to progressively reduce such differences or face possible consequences in the years to come,” says Esterhuizen.
Major changes to be aware of:
Reporting individual remuneration
In the past, employers only needed to report the total remuneration of all employees within an occupational level, population group and gender.
The new form requires that employers report the total remuneration of the individual who is paid the highest remuneration in each of the occupational levels by gender and population group.
In addition, employers must report the total remuneration for the lowest-paid individual employee in the lowest occupational level in the business by population group and gender. Only active employees should be included.
Reporting remuneration of individuals will simplify the detection of wage gaps, according to Esterhuizen.
For example, one will be able to easily compare the total remuneration a company provides to the highest paid African female in senior management to the remuneration of the highest paid coloured, Indian or white males in the same occupational level.
The report must differentiate between variable remuneration – like bonuses and commission – and fixed remuneration, like guaranteed wages, salaries and benefits.
Examples of remuneration that would previously have been excluded might be certain types of shares and dividends.
Top and bottom 10%
Employers need to report the average remuneration received by the top 10% and bottom 10% of your employees. In addition, employers must declare the median earners’ total remuneration. The median is the “middle” value in a range of values and is different from merely calculating an average.
Employers will have to indicate the vertical gap between the highest paid and lowest paid employee, and whether the remuneration gap in the organisation is aligned with its policy.