What does “on the whole not less favourable” mean?

labour-guideBy Aadil Patel Director, Employment Law, Cliffe Dekker Hofmeyr

The wave of amendments to employment legislation has seen a codification of the case law relating to the principle of ‘equal pay for equal work’. The principle has been codified by s198 of the amendments to the Labour Relations Act, No 66 of 1995 (LRA) and by the amendments to s6 of the Employment Equity Act, No 55 of 1998 (EEA).

Section 198A(5) of the LRA provides that an employee of a temporary employment service (TES) placed at a client, must be treated on the whole not less favourably than an employee of the client performing the same or similar work unless justifiable treatment exists for the differentiation. In the context of s197 of the LRA the term ‘on the whole less favourable’ has been interpreted to mean that terms and conditions other than the fundamental terms and conditions of employment may differ from the old employer to the new employer. It therefore requires that the package offered to the employee by the new employer remains the same and does not require the terms and conditions to be identical to those offered by the old employer.

Section 198B(8)(a) of the LRA states that a fixed term employee must be treated no less favourably than a permanent employee of the employer performing the same or similar work unless justifiable treatment exists for the differentiation.

Section 6(4) of the EEA states that 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 the Act amounts to unfair discrimination. This section appears to require the same terms and conditions for employees performing the same or similar work. The EEA regulations further impose a duty on employer’s to ensure that employees are not paid different remuneration for the same or similar or equal work.

The standards regarding equal pay for equal work appear to differ. The LRA seems to indicate for TES employees that the equal pay analysis must be conducted on the remuneration package as a whole, for example, it may be justifiable under the LRA to provide employees of the client benefits which the TES employees do not receive, so long as the TES employees are compensated monetarily. In relation to fixed term contracts the phrase ‘on the whole’ has been omitted and fixed term employees are required to be treated no less favourably than their permanent counterparts. This provision suggests that the terms and conditions must be equal. Furthermore, the EEA then requires an employer to ensure that there is no difference between the terms and conditions of two employees performing the same or similar work.

It appears that there are two approaches to equal pay claims; the one requires an equalisation of the complete package received by the employees while the other requires a line by line equalisation of the pay and benefits received by employees. The equalisation provision relating to TES employees may be interpreted in light of the meaning given to the phrase ‘on the whole not less favourably’ in the context of s197. It is unclear how the courts will interpret the equalisation provision in terms of fixed term employees given the omission of the phrase ‘on the whole’. In addition, no reasons have been provided for the differentiation between the equal pay provisions. Employers are therefore left with a fair amount of uncertainty as to how to conduct the equal pay analysis. Do employers conform to the standard of an equalisation of the package or the higher standard of a line by line equalisation? The answer remains unclear.

For more information please contact Aadil Patel at aadil.patel@dlacdh.com

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