IMG Event. Challenges in Mobility Management in Africa. Presented By Barbara Parry. 7 May 2015, CCJ Woodmead. 21 April 2015, Protea Hotel Tyger Valley

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1 7 May 2015, CCJ Woodmead IMG Event Challenges in Mobility Management in Africa Presented By Barbara Parry 21 April 2015, Protea Hotel Tyger Valley Proudly Sponsored By Promoting and Developing the Reward Profession and Practices

2 Welcome Welcome to today s Reward Awards Launch event A special welcome to our Professional members (green name tags) SARA committee members (yellow name tags) Your feedback is important to SARA, so please take the time to complete the evaluation form at the end of today s event A special word of thanks to our 2015/2016 Reward Award sponsors

3 Important Information Already Accredited as a Professional member? If not, consider applying for your reward designation and join our growing fraternity of professional members For further information, and to submit your application before the next accreditation committee meeting, visit the SARA website (Professionalisation tab)

4 Important Information The SARA online Minimum Reward Standards (MRS) course, available free of charge to members on the SARA website, has been enhanced to include a module on International Mobility The modules now include

5 Upcoming Events Professionalisation breakfast event Minimum Reward Standards workshop WorldatWork feedback event 4 June CCJ, Woodmead 8&9 June CCJ, Woodmead 23 June CCJ, Woodmead

6 IMG Event Challenges in Mobility Management in Africa Presented By Barbara Parry 21 April 2015, Protea Hotel Tyger Valley Proudly Sponsored By Promoting and Developing the Reward Profession and Practices

7 SARA Reward Awards 2015 We will be hosting the 13 th year of the SARA Reward Awards together with our valued sponsors The three award categories are: Reward Project of the year award Remuneration Report of the year award President s award

8 Reward Project Award Individual or team nominations accepted Development and implementation of a new reward project Procedural/operational or strategic nature Impact horizon 2 months to more than 12 months Novel and relevant reward practices Contribute towards organisation s objectives 1 st prize R30,000, 2 nd prize R20,000, 3 rd prize R10,000

9 Remuneration Report Award Organisations are recognised based on Demonstrating King III remuneration reporting and disclosure compliance Clear and concise disclosure of company s remuneration philosophy and application Compliance with legislative requirements and good corporate governance principles and a commitment to best practice Communication of how the company s approach to remuneration supports its business strategy and aligns expectations of its executives and shareholders

10 Remuneration Report Award Remuneration reports published prior to 30 June 2015 and in respect of financial years ending on or before 31 March 2015 will be eligible for nomination

11 The President s Award Recognition of an individual who has been responsible For the design of complex reward interventions or programmes that have set the standard for best practice in South Africa or internationally For initiatives that have shaped the reward profession or have contributed to the profession as a whole, thereby uplifting the profession in general

12 Our 2014 Winners Reward Project of the year award (Woolworths) Remuneration report of the year award (Nedbank) President s award (Prof. Mervyn King)

13 Our 2015 Winners The 2015 winners will be announced at the SARA Reward Award Banquet and Gala Dinner on 7 November 2015 at Vodacom World, Midrand Nominations close on 17 August 2015, but we would encourage you to start thinking about your nominations as soon as possible

14 Introducing our Speakers Peet Kruger Dr. Laurentia Truter

15 + Equal pay for work of equal value: Legislative framework Presented by Dr Laurentia Truter Truter & Associates 7 May 2015

16 + THE EMPLOYMENT EQUITY ACT Purpose Achieve equity in the workplace Eliminate unfair discrimination Creating fair treatment in employment Promote equal opportunity Implement affirmative measures Equitable representation in all occupational levels as per the economically active population Remove barriers and implement affirmation action measures Truter & Associates

17 + EEA AMENDMENTS Definitions of designated groups/ turnover; designated employer thresholds increased Discrimination prohibited on any other arbitrary ground vs. listed ground Equal pay provisions Reporting cycles Increased fines Dispute resolution Template plan and barrier analysis Truter & Associates

18 + EE PROCESS Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Assign responsibility Awareness raising Analysis EE Plan Implement & evaluate Report to DoL Report directly to Exec Empower employees Qualitative and Quantitative Statutory terms Continuous process EEA2 and EEA4 Consultation Change management Truter & Associates

19 + INCOME DIFFERENTIAL REPORT So-called EEA 4 report form submitted to DoL as part of EE reporting Must report on remuneration and benefits received by employees in each occupational level of their workforce per race and gender Where disproportionate income differentials employer obliged to take steps to progressively reduce these differentials Link to equal pay provisions Truter & Associates

20 + EEA - SECTION 6(1) AS AMENDED An employer is not allowed to unfairly discriminate, directly or indirectly; against an applicant for employment or a current employee in any employment policy or practice on one or more grounds, including race, gender, sex, pregnancy, marital status, family responsibility, ethnic or social origin, colour, sexual orientation, age, disability, religion, HIV status, conscience, belief, political opinion, culture, language, and birth or on any other arbitrary ground. Truter & Associates

21 + FAIR DISCRIMINATION Differentiation based on any of the grounds are fair if: it links to the ability of the person to fulfill the inherent requirements of the job; or it is in line with structured affirmative action measures taken in compliance with the EEA. Truter & Associates

22 + NEWLY INTRODUCED SECTION 6(4) 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. Truter & Associates Effective 1 August 2015 Supported by (draft) Code of Good Practice and EE Regulations.

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24 + INTERNATIONAL FRAMEWORK ILO Convention 100 Equal Remuneration (ratified by SA in 2000) Each member state shall promote and ensure the principle of equal remuneration for men and women workers for work of equal value. ILO Convention 111 Discrimination (ratified by SA in 1997) Each member state shall pursue national policy to promote equality of treatment and eliminating discrimination. Universal Declaration of Human Rights (1948) Everyone, without discrimination, has the right to equal pay for equal work. European Social Charter (1996) & European Equal Pay Directive (1975) The parties undertake to recognise the right of men and women workers to equal pay for work of equal value. Must abolish all forms of unfair discrimination. Countries such as USA, Canada, UK all have national legislation governing pay equity based on gender. Truter & Associates

25 + SECTION 6(4) UNPACKED o Any difference may form the basis for a claim o Terms and conditions of employment thus not only remuneration. Remuneration includes money and payment in kind as well as all forms of variable compensation. o Same employer Different legal entities in same corporate group piercing the corporate veil Different geographic locations o Performing same work / substantially the same / equal value What does it mean? o Directly or indirectly o Listed ground or arbitrary ground Truter & Associates

26 + NO SUBSTANTIVE CHANGE IN SA LAW Past principles established in local case law that will most probably continue to be applied: Pay equity claim - Unfair labour practice in terms of the Labour Relations Act: Schedule 7 or Section 6(1) prohibition of unfair discrimination incorporates claims of unequal pay; Will now be dealt with in terms of Section 6(4); Not necessary to prove discriminatory intent; Claimant must identify a comparator; Truter & Associates

27 + SA LAW (CONTINUE) Claimant must prove that the work is the same/similar/equal value; Establish prima facie case that differentiation is based on a prohibited/listed ground and then employer must prove not listed ground or fairness/justification. In case of any other arbitrary ground burden of proof on claimant; Pay differentials can be justified by different levels of responsibility, expertise, experience and skills, past performance based increases, and seniority. The purpose of amending the EE Act is to eliminate unfair pay discrimination, comply with the International Labour Organisation's conventions and improve access for lower income workers to challenge unfairness. - Department of Labour Truter & Associates

28 + INTERNATIONAL GUIDING PRINCIPLES Past principles established in international case law that may well be followed by South African courts/ccma: Must have proper job evaluation and grading systems in place to determine the value of work which is consistently applied; Cannot justify continued discrimination solely on the basis of cost to the employer; Should not/ may not reduce employees remuneration to bring about equal remuneration; Performance can be used provided that: Employees are equally subject to the employer s performance evaluation system; and The performance evaluation system is consistently applied. Truter & Associates

29 + GUIDING PRINCIPLES (CONTINUE) An employer cannot avoid its obligations by saying: I paid him more because he asked for more ; Cannot continue paying a demoted employee at previous rate where the demoted employee s new role does not require of him/her to exercise the skills that previously justified a higher salary; Protecting employees indefinitely by paying at a previous higher grade after a restructuring exercise is not acceptable: Should have a defined transition period after which position revert to correct pay scale OR fix higher paid employee s salary until the remuneration of the other employees reach the same level; Where an individual is temporarily in a position for purposes of experience and training, different remuneration or benefits may be justifiable. Truter & Associates

30 + GUIDING PRINCIPLES (CONTINUE) There may be instances where the employer may need to pay a premium for scarce skills or experience that justify differentiation, but must be based on credible sources and updated market information; Could be indirectly discriminatory in nature if differences are based on tenure /years of service: For example, women who interrupted careers to raise children or Black people and persons with disabilities entering work market late due to previous lack of education opportunities or past discriminatory practices; However, rising market premiums for new candidates becoming a factor often based on designated status of employee. Truter & Associates

31 + EE REGULATIONS (2 7) Employer must take steps to eliminate differences in terms and conditions of employment including remuneration of employees who perform work of equal value if those differences are based on listed/arbitrary ground May not pay different remuneration based on race, gender or disability Work may be identical/interchangeable/ substantially the same/ of equal value Jobs must be objectively assessed to determine whether of equal value Factors listed that may justify differentiation

32 + CONSEQUENCES OF NON- COMPLIANCE Having an aggrieved, unproductive or disengaged workforce in your business; Becoming embroiled in unfair discrimination litigation with its resultant costs, inconvenience and risks; Becoming involved in possible class actions, for example, where a union acts on behalf of a group of its members; Fines issued by Department of Labour; Having the organisation s social reputation tarnished; Not attracting the right talent to your business. Truter & Associates

33 + DISPUTE PROCESS Referral to CCMA for conciliation 6 months after act/omission If conciliation unsuccessful: Refer for arbitration at CCMA Employee earning below threshold Parties agree Refer for adjudication to Labour Court Labour court/labour appeal court/constitutional court Possibility of appeal process Truter & Associates

34 EQUAL PAY FOR WORK OF EQUAL VALUE

35 Draft Code of Good Practice Employment Equity Act (55/1998): Draft Code of Good Practice on Equal Pay for Equal Work or Work of Equal Value Published on 1 August Final Code to be published over the next two to three weeks. The objective of the Code is to provide practical guidance to employers and employees on how to apply the principle of equal remuneration for work of equal value in their workplaces. The Code, in itself, does not impose additional legal obligations on an employer, but provides guidance when interpreting the Act and the regulations. 2

36 Equal Pay Unpacking the Draft Code Remuneration - any payment in money or kind, also includes deferred remuneration, commission and other forms of variable compensation and pay (Draft Code 2.3)..conditions of employment (Draft Code 3.2)...remuneration and benefits (Draft Code 3.4) Equal work or work of equal value Objective assessment of jobs in accordance with relevant and appropriate criteria The Draft Code emphasise internal equity how organisations are managing their own internal remuneration, benefits and conditions of employment The Draft Code Helps with the interpretation of the Act but it does not provide specific standards or norms 3

37 Inputs provided on the Draft Code by SARA Further clarity to be provided on the definition of Pay Proposed a framework that defines the elements of Reward and criteria to be included in the Code to ensure employers have practical guidelines in applying the Act See next slide Challenges that smaller designated employers might face with the implementation of the Act The Code to include developing and adopting a well-defined Remuneration philosophy and policy that are applied effectively and consistently, free from any form of unfair discrimination, and regularly audited/checked to ensure consistency of application. The philosophy and policy should be properly communicated to employees, and corrective action taken to pro-actively correct any anomalies identified.

38 Elements of Reward Total Guaranteed Package Definition: Total value of the remuneration package including company contributions and excluding variable remuneration and circumstantial allowances Variable Remuneration Incentives Bonuses Recognition Definition: "Pay at risk" Definition: Once off normally based on payments after the fact and performance criteria and linked to defined criteria contracted upfront with scheme participants Definition: Programs that give special recognition to employees through tangible or non tangible awards Circumstantial Allowances Definition: Payments due to circumstantial requirements and only if/when the circumstance apply. Typical Elements of the Total Guaranteed Package: Typical Incentive Programs: Typical Bonus Programs: Typical Recognition Programs: Typical Circumstantial Allowances: Base Pay Short Term Incentives Sign On Bonuses "Pay in kind" Geographic Allowances Cost of employee benefits Long Term Incentives Referral Bonuses Recognition Awards Overtime Housing Commission Project Completion Bonuses Shift Allowances Lump sum/ex gratia Car Benefits payments Standby Allowances 13th Cheque Expatriate Allowances Total value forms basis for equity requirements Eligibility and qualifying criteria clear and free from unfair discrimination 5 Criteria and policy clearly defined and free from unfair discrimination

39 DRAFT CODE OF GOOD PRACTICE 6

40 Draft Code of good practice When examining whether the obligation to apply remuneration equity in the workplace is being complied with, three key issues require scrutiny Are the jobs that are being compared the same, substantially the same or of equal value in terms of an objective assessment? Is there a difference in the terms and conditions of employment, including remuneration, of the employees in the jobs that are being compared? If there are differences in the terms and conditions of employment, can these be justified on fair and rational grounds (Not arbitrary grounds) 7

41 EXAMINING THE THREE KEY ISSUES FROM A REWARD MANAGEMENT PERSPECTIVE 8

42 Examining the three key issues from a Reward Management perspective (issue 1) Are the jobs that are being compared the same, substantially the same or of equal value in terms of an objective assessment? 9

43 Examining the three key issues from a Reward Management perspective (issue 2) Is there a difference in the terms and conditions of employment, including remuneration, of the employees in the jobs that are being compared? Pay Structures Scheme rules and eligibility Reward Philosophy and Policy Rem & Ben Policies Determinants of pay 10

44 xamples of determinants of Pay and how this can be applied equitably Element paying for Minimum Between the Minimum and the Midpoint Around the Midpoint Between the Midpoint and the Maximum Experience None/ very little experience Some relevant experience Experience required for the job Experience required for the job Qualification Not yet qualified Approaching qualification Fully qualified Expert Performance Poor, or not yet assessed Meeting performance requirements Exceeding performance requirements Outstanding performance Tenure New, less than 1 year Less than 2-3 years Competence New in the role Approaching full competence 2-3 years More than 3 years Fully Competent Coaching others 11

45 Examining the three key issues from a Reward Management perspective (issue 3) If there are differences in the terms and conditions of employment, can these be justified on fair and rational grounds - What is fair and rational? Fair and rational: According to a relevant Remuneration Philosophy developed, approved and applied consistently to support the nature and strategy of the organisation At risk when: Inappropriate or lack of sound and robust reward practices and programmes Discretionary inclusions or exclusions in programs Inconsistent application of criteria/principles 12

46 Checklist to ensure compliance Defined and approved reward philosophy and policy Consistent application of the reward philosophy and policy across the organisation Do regular assessments Analyse equity not just at a Basic Salary level but at a Cost to Company level (Remuneration and benefits) Review eligibility criteria (Inclusion and/or exclusion of employees from programs doing the same work or performing work of equal value) Ensure appropriate job analysis, evaluation and benchmarking is done 13

47 Checklist to ensure compliance Appropriate pay structures and scales applied consistently and effectively Consistent application of performance management if performance is used to differentiate Ensure compliance with the established policies and procedures Communicate and educate employees Conduct annual reward audits Put corrective actions in place with timelines to pro-actively correct and manage anomalies 14

48 7 May 2015, CCJ Woodmead IMG Event Challenges in Mobility Management in Africa Presented By Barbara Parry 21 April 2015, Protea Hotel Tyger Valley Proudly Sponsored By Promoting and Developing the Reward Profession and Practices