Equal Pay for Equal Work – Can You Differentiate Without Unfairly Discriminating?

Equal Pay for Equal Work – Can You Differentiate Without Unfairly Discriminating?

“Prohibition of unfair discrimination: No person may unfairly discriminate, directly or indirectly, against an 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, birth or on any other arbitrary ground” (from the Employment Equity Act)

Our employment laws and labour courts come down heavily on any unfair discrimination in the workplace, but it’s not always easy to decide whether “differentiation” between employees is or is not “unfair discrimination”.

Take for instance a recent Labour Court case where a black female employee complained to the CCMA (Commission for Conciliation, Mediation and Arbitration) about the higher salary paid to her white male colleague.

They were both employed as “surveillance auditors” in a casino with the same job descriptions, doing the same work on a daily basis, graded at the same level, and reporting to the same surveillance shift manager. Nevertheless her remuneration package was nearly half of her colleague’s – unfair discrimination, she said, on the grounds of race and gender. 

The CCMA agreed with her and ordered her employer to (1) place her in the same salary bracket as her colleague and (2) pay her a once-off amount of the annual difference in their packages.

Requirements and defences 

The Labour Court however set aside the CCMA’s award and ordered a re-hearing before a different commissioner. Its decision, although based on “reviewable irregularities” in the CCMA (in itself a topic of interest to labour lawyers more than to their clients) neatly summarises the legal principles as they applied in this case. Principles important to both employers and employees – 

  1. Where unfair discrimination is alleged, the onus is on the employer to prove that the discrimination did not take place or that any discrimination that did take place was rational and not unfair, or is otherwise justifiable.
  2. There is a general requirement on employers to “ensure that employees are not paid different remuneration for work of equal value based on race, gender or disability”. 

    “Work of equal value” means work that – 

  1. Is the same as the work of another employee of the same employer, if their work is identical or interchangeable;
  2. Is substantially the same as the work of another employee employed by that employer, if the work performed by the employees is sufficiently similar that they can reasonably be considered to be performing the same job, even if their work is not identical or interchangeable;  
  3. Is of the same value as the work of another employee of the same employer in a different job, if their respective occupations are accorded the same value …”. 

    (In this case of course there was no dispute that the first category – same work – applied, so the other categories were not analysed by the Court, but in many workplaces they will be highly relevant.)  

  1. Where there is differentiation, an employer can raise various defences to justify it – seniority, length of service, qualifications and the like. In this case the employer relied on the male employee’s superior (30 years’ worth) relevant experience in security, much better qualifications and “market forces” which it said forced it to match his existing package in order to recruit him.

    The commissioner’s failure to adequately address these defences was central to the Court’s decision here, but the practical issue is that as an employer, whatever defence/s you raise, you will have to prove “rationality, fairness or other justifiability”.

As always, our labour laws being as complex as they are (the above is of necessity just a brief summary of a particular case), and the penalties for getting them wrong potentially so costly, take specific legal advice in any doubt!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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Expats and Employers: Plan Now For the New Expat Tax Changes

Expats and Employers: Plan Now For the New Expat Tax Changes

“An income tax form is like a laundry list – either way you lose your shirt” (Comedian Fred Allen)

This article is important to you if you are either a South African working abroad or an employer of one. If you don’t fall into either of those categories, but know someone who does, please think of passing this on.

As an employee earning foreign remuneration (salary, leave pay, bonuses, allowances, commission etc), you currently enjoy an uncapped tax exemption (on that remuneration only, not on other foreign income) provided that you work overseas –

  • For more than a total of 183 days during any 12 month period, and
  • More than 60 of those days are consecutive.

That however is set to change from 1 March 2020, when only the first R1m p.a. of your earnings will be exempt – you will pay tax on anything over that. With the Rand’s weakness showing little sign of abating, a lot of expats and their employers are going to be affected. 

Are you a “tax resident”? 

Only “tax residents” are affected, so the first thing you should establish is whether you are still a tax resident or not. That’s not always easy, so take professional advice in any doubt.

To illustrate some of the complexities involved, both physical emigration/relocation and “financial emigration” are different concepts to “tax emigration”. Moreover the Income Tax Act’s tests for tax residency are hardly a model of clarity – you are a “resident for tax purposes” if you are either an “ordinary resident” or a resident in terms of the “physical presence test” –

  1. You are, says SARS, an “ordinary resident” if South Africa is the country to which you “will naturally and as a matter of course return after [your] wanderings’, your “usual or principal residence”, or your “real home”.
  2. Even if you aren’t an “ordinary resident”, you will still be a resident under the “physical presence test” if you are physically present in South Africa for more than –
    1. “91 days in total during the year of assessment under consideration; and
    2. 91 days in total during each of the five years of assessment preceding the year of assessment under consideration; and
    3. 915 days in total during those five preceding years of assessment.”       

      Under the physical presence test however if you are outside the country for a continuous period of at least 330 days you are not regarded as a tax resident.

Should you “tax emigrate”?

If you are indeed a tax resident, don’t think of changing that status without taking full advice. “Tax emigration” and “financial emigration” are complicated processes and full of pitfalls. For example you could be entitled to foreign tax rebates or other relief on your taxable (i.e. +R1m) foreign earnings, or there may be other benefits to remaining a tax resident. So it is important to have an expert look at your specific situation and determine what is best for you overall.

The big thing is to be aware that change is coming. Some long-range planning is the only way to be certain that there are no unpleasant surprises waiting to spring out on you down the line.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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Losing Your Licence with AARTO Demerits: More Danger than You Thought, and The Wheels are Turning

Losing Your Licence with AARTO Demerits: More Danger than You Thought, and The Wheels are Turning

“The one thing that unites all human beings, regardless of age, gender, religion, economic status, or ethnic background, is that, deep down inside, we all believe that we are above-average drivers” (humourist Dave Barry) 

AARTO (the Administrative Adjudication of Road Traffic Offences Act) has been partially in force for years, but its demerit provisions have been on ice for so long now that many of us have lost sight of just how seriously it will impact both ourselves as individuals, and our businesses. 

Every individual and every business is at risk

Law-abiding motorists will no doubt welcome the crackdown on serial traffic offenders, but we also need to manage the risks.  

Every motorist, every vehicle owner, every professional driver and every transport operator will be at serious risk of losing their licences/permits/operator cards.  Even businesses outside the transport sector will need to manage this – what happens if your sales people are grounded or your office staff can’t drive to work?

The wheels are turning fast now, with amendments to the Act at long last passed by Parliament, and set to come into law when signed by the President. 

Will it be delayed yet again?

The demerit proposal has been bouncing around for a decade, with several false starts and there is talk of court challenges, plus the commencement date may or may not be delayed.

But at long last the wheels are definitely turning, and turning fast. 

Be prepared! 

Unlucky 13 – easier to reach than you thought

The demerit system is complicated, but in a nutshell you will in addition to paying a fine incur demerit points for a whole range of offences. 

And anyone with 13 or more demerits will have their driver’s licence/professional driving permit/operator card automatically suspended (3 months’ suspension for every point over 12).  And 3 suspensions will result in full cancellation.  

Don’t think that 13 demerits will necessarily take the average driver a long time to accumulate. Consider the demerit points applicable to some sample offences (there are many thousands of them – the table below gives just a few examples).

Sample offences and demerit points
Reducing demerit points, and discounts on fines 

You are also rewarded for obeying the law –
Any demerit points you have picked up are reduced by one point per 3 month period you remain offence-free. 

Early payment of fines will earn you a 50% discount. Set up a payment control system so you don’t miss payment deadlines.

Businesses and employers – manage your risks

Think now about how you will manage the risk of your employees (especially those employed as drivers) repeatedly offending –
How will you monitor your drivers’ demerit points?  Although for many offences both driver and operator will incur demerits, some driver offences will apply to the driver only.  

Are your employment contracts correctly structured to ensure you have access to your employees’ demerit points’ status? And to deal with the consequences if they have their licences suspended or cancelled? 

Check your insurance policies – must you disclose any changes in your employees’ demerit status?  Are you at risk of losing cover? 

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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Employers: When Should You Sue Rogue Employees? A R33m Example

Employers: When Should You Sue Rogue Employees? A R33m Example

“It is the duty of an employee when rendering his or her services always to act exclusively in the interest of the employer … an employee is not entitled to use his or her employment relationship with the employer without the employer’s permission to make a profit or earn commission for his or her own account” (Extracts from judgment below)

Employees have very strong rights in our law, but employers also have effective remedies when employees “go rogue”.

A recent case, in which an employee was ordered to repay his employer R33m in “secret profits” including R9m in damages, provides a good example.

Diverted sales opportunities and secret profits
  • A manufacturer employed a “Key Accounts Manager” as its agent in dealing with customers. He was trusted with an “almost unlimited discretion” and minimal management oversight to act in his employer’s interests.
  • His employer sued him in the High Court on allegations that he breached both his employment contract and his duty to his employer, firstly by selling product to customers at below-minimum prices, and secondly by selling through his own companies to secretly profit thereby. 
  • The employee’s denials of wrongdoing cut no ice with the Court, which held that he “was clearly under a general obligation to do his best for his employer and to conduct the plaintiff’s business in good faith and for its benefit” but “was in breach of his fundamental obligation of loyalty and good faith which he owed to … his employer”.
  • The secret profits claim. Ordering the employee to “disgorge” his secret profits of R33,291,599.24 (less any “amounts paid in making such profits” which the employee is able to prove), the Court held that the employer had proved the three elements needed to succeed in such a claim –
    • The employee owed it a “fiduciary obligation” (a duty to act honestly and in utmost good faith),
    • In breach of that obligation he placed himself in a position where his duty and his personal interest were in conflict, and
    • He made a secret profit out of corporate opportunities belonging to the employer.
  • The damages claim was for losses on product sold to customers at prices well below the employer’s base price “in order to further [the employee’s] secret profit-making activities.” Finding that but for the employee’s wrongdoing the customers would have bought product at no less than the base price, the Court awarded the employer R9,407,651.05 in damages (to be credited, when paid, to the R33m claim). 
Rubbing salt in…

To really rub salt into the employee’s wounds, he was ordered to pay costs, and the bill will be a big one, including –

  • Costs on the punitive “attorney and client” scale, an appropriate order said the Court “given the secret and unlawful nature of the scheme which the defendant ran for four years at the expense of his employer”, 
  • The cost of audio visual equipment used in the trial, and
  • The (no doubt substantial) travel and subsistence costs of both the employer’s legal team and its six witnesses, all of whom travelled from Gauteng to Cape Town for the trial.  

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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Paternity Leave and Minimum Wages – How Will The New Laws Affect You?

Paternity Leave and Minimum Wages – How Will The New Laws Affect You?

Employers and employees need to know about four new Acts which will usher in  important changes to our labour laws.

The summary below is a short one of only those changes likely to affect a significant number of people and businesses, so take advice on your specific circumstances. 

In a nutshell –

Parental leave extended

Until now, mothers have been entitled to unpaid leave when welcoming a new child into the world, in the form of 4 consecutive months’ “maternity leave”. Plus they can claim maternity benefits from the UIF if they are contributors. New fathers however have been limited to at most 3 days’ family responsibility leave.

That will now be extended to – 

  • “Parental leave”: “Parents” (i.e. including fathers and same-sex partners) – 10 consecutive days’ parental leave.
  • “Adoption leave”: Adoptive parents of a child under 2 years old – either 10 consecutive weeks’ adoption leave or 10 consecutive days’ parental leave (where there are two adoptive parents, they decide between them who gets 10 weeks and who gets 10 days).
  • Commissioning parent leave”: Commissioning parents in a surrogacy agreement – same provisions as for adoptive parents. 

Parents taking unpaid leave as above also become eligible for UIF benefits.

Employers with maternity leave policies, and those who offer paid as opposed to unpaid maternity leave, should take advice on reviewing these policies.

Minimum wages introduced

The new national minimum wage is set as follows – 

  • Farm workers – R18 per hour
  • Domestic workers – R15 per hour
  • Workers in an ‘expanded public works programme’ – R11 per hour
  • Other employees – R20 per hour.

Separate allowances apply to those in learnership agreements.

Employers who cannot pay the minimum wage will be able to apply for exemption for up to a year, but draft (at time of writing) regulations allow for only a 10% exemption.

Failure to pay the minimum wage will expose employers to fines of the greater of 2x the value of the underpayment, or 2x the employee’s monthly wage (going up to 3x for second or further non-compliances).

Strikes, lockouts and picketing

An “advisory arbitration panel” can be (and presumably will be) appointed to help resolve protracted or violent strikes or lockouts, and those causing or exacerbating an acute national or local crisis. 

New picketing regulations are also in the wind.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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Reporting Crime and the Defamation Danger: Lessons from the Workplace

Reporting Crime and the Defamation Danger: Lessons from the Workplace

Believing someone to be guilty of a crime you call the police and have the suspect arrested, only to have the charges dropped. Can you be sued for defamation?

A recent High Court case provides some answers.

 

A fraudulent iPad order, an arrest and a R1.6m claim
  • A government employee was, at the instigation of officials in his department, arrested and taken in for questioning by police on suspicion of fraudulently ordering R138,000 worth of 14 iPads on departmental letterheads.
  • The police released him after taking a statement and his employers did not pursue disciplinary charges against him. They also withdrew an accusation of unlawful conduct in the workplace, with however an indication that the matter might be revisited if further information came to light.
  • The employee accused his employers of defamation and sued them for R1.6m in damages for his tarnished dignity and reputation at work, trauma, post-traumatic stress, medical expenses and loss of earnings

Holding that the publication or allegation of a suspicion of a criminal offence is defamatory and the onus is upon the accuser “to prove justification”, the Court concluded, on the facts of this particular case, that there was indeed a “reasonable suspicion” that the employee had been involved in the fraudulent order. The employer had therefore been justified in its conduct.

The employee’s claim for damages accordingly failed and he is lumbered with a (no doubt substantial) legal bill.

 

The acid test – 3 things an accuser must prove

An accuser relying on reasonableness of the publication as a defence must prove, held the Court, that he or she –

  • Had reason to believe in the truth of the statement,
  • Took reasonable steps to verify its correctness, and
  • Acted reasonably when reporting the matter to the police, or that publication of the statement was reasonable in all the circumstances of the case.

What that all boils down to is this – whether in the workplace or out of it, you aren’t automatically guilty of defamation just because no prosecution ensues.

What is vital is that you have enough evidence to prove all three legs of the reasonableness test if it comes to justifying your actions in court.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

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