Proposed salary changes for South African labour market
The new 'Fair Pay Bill' could change everything for employers and recruiters.
Have you ever felt awkward discussing your salary expectations during a job interview?
The good news is that South Africa is proposing a new bill that will change how employers and recruiters approach the uncomfortable topic of salaries.
According to Business Tech, the Fair Pay Bill was tabled before the National Assembly in June. "It aims to amend the Employment Equity Act of 1998 by prohibiting employers from using a candidate’s past salary history during recruitment," reports the news site.
The bill will also require employers to be transparent about salary range or fixed salary when advertising jobs.
The aim of the bill is to promote remuneration transparency to help address the pay gap, gender pay disparities, and the issues linked to South Africa’s Gini coefficient status. It aligns with global trends in pay transparency and encourages responsible business practices.
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Legal experts have said that the bill aims to encourage fairness, reduce inequality in workplace remuneration, and boost transparency in South Africa's labour market.
One of the bill's key features is the disallowance of asking candidates about their previous salary unless two conditions are met.
"These conditions are that the employer has already made a job offer, and the candidate voluntarily requests in writing that their previous remuneration be considered.
Additionally, employers will be expected to establish and share the salary or salary range for each role up front. Candidates can only discuss pay within the stated range," reports Business Tech.
Another major shift proposes that the confidentiality surrounding employee salaries no longer needs to be enforced. The Basic Conditions of Employment Act already allows employees the right to share this information; however, the bill is explicit in outlawing any confidentiality clauses that may still be in place.
Transparent compensation and upfront remuneration information can attract genuinely interested and qualified candidates, reducing wasted resources on mismatched applications. It may also help employers mitigate their exposure to claims of unfair labour practices and discrimination, which can be costly and damaging to their reputation. Transparent pay practices can enhance employee engagement and retention by fostering trust in management decisions.
Law experts from Cliffe Dekker Hofmeyr (CDH) advise that while the bill offers a host of benefits for employers and employees, it does present some challenges for small, medium, and micro enterprises (SMMEs).
They advised that the bill make provisions to protect smaller businesses. In addition, the changes may also create market competition now that salaries will be posted for specific jobs. This is why employers are encouraged to present broad salary ranges, which allow them to be more flexible in their job adverts.
The bill presents several positives for employees who don't have to disclose their previous salaries, giving them the upper hand in salary negotiation, and they get a clearer insight into the job salary before applying.
Several steps will have to be taken before the bill is passed into legislation.
"Should it be enacted, employers will face various compliance responsibilities. Employers must update their recruitment and pay practices, revise application forms and interview protocols, and adapt internal policies around salary setting," writes Business Tech.
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