New employment equity reporting will expose wage gaps

Government has made significant changes to employment equity reporting requirements with the goal to improve the accuracy and efficiency of collecting data about wage disparities between the highest- and lowest-paid employees.

It hopes that this will enable the department of employment and labour to identify wage gaps and set benchmarks for different sectors.

In practice, this means that the old EEA4 statement of income differentials form has been replaced with a new form.

Here are the major changes you need to be aware of:

REPORTING INDIVIDUALREMUNERATION

In the past, you only needed to report the total remuneration of all employees within an occupational level, population group and gender.

The new form requires that you 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, you must report the total remuneration for the lowest-paid individual employee in the lowest occupational level in your business by population group and gender.

Only active employees should be included in EEA4 reporting, unlike previous years, when terminated employees were included.

Reporting remuneration of individuals will simplify the detection of wage gaps.

For example, one will be able to easily compare the total remuneration a company provides to the highest-paid African woman in senior management with the remuneration of the highest-paid coloured, Indian or white man in the same occupational level.

FIXED/GUARANTEED VERSUS VARIABLE REMUNERATION

The report must differentiate between variable remuneration (bonuses, commission and so on) and fixed remuneration (guaranteed wages, salaries and benefits).

Certain remuneration items that were previously excluded must now be reported, and vice versa.

Examples of remuneration that were previously excluded are certain types of shares and dividends.

TOP AND BOTTOM 10%

You need to report the average remuneration received by the top 10% and bottom 10% of your employees.

In addition, you must declare the median earners’ total remuneration.

You will have to indicate the vertical gap between the highest-paid and lowest-paid employee, and whether the remuneration gap in your organisation is aligned with your policy.

CONCLUSION

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 that are not justifiable, you need to take measures to progressively reduce such differences or face possible consequences in the years to come.

If you have not yet done so, now is the time to revise your remuneration policies to ensure that equal pay for equal work principles are applied.

And if you have not yet submitted your revised EEA4, you have until January 15 to file it electronically.

Esterhuizen is the compliance manager at Sage for Africa and the Middle East

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