Resolution of class action equal pay disputes

Provided by Cowan-Harper-Madikizela

By Rod Harper & James Horn

Topics Labour Law

15 Aug 2018

Introduction

The insertion of the equal pay provisions into the Employment Equity Act in 2014 and the subsequent amendment of the Labour Relations Act in 2015 in respect of equal pay for labour broker employees, part-time employees and fixed-term employees have resulted in a litany of disputes being referred to the CCMA in respect of these issues.

It goes without saying that such disputes are often brought by way of class action rather than by individual employees. This has also been the experience internationally where, in England for example, a recent equal pay dispute involving three female employees of the ASDA supermarket chain was subsequently joined by over a thousand additional applicants. That dispute, in turn, resulted in a further dispute being referred by some fifteen thousand female ASDA employees.

In South Africa, a number of class action lawsuits regarding equal pay have recently been referred by employees of Labour Brokers who are seeking to be treated “on the whole not less favourably” than their permanent counterparts in terms of the new section 198A(5) of the LRA.

The Casual Workers Advice Office (CWAO), an externally funded non-profit organisation, has also entered the fray in respect of these issues and it has partnered with the Strategic Litigation Unit of Lawyers for Human Rights in order to institute those claims. In our experience, the CWAO lacks administrative capacity and this could lead to the legal proceedings becoming unnecessarily protracted.

With that in mind, the purpose of this article is to briefly set out some of the practical issues that arise when instituting/defending equal pay claims and to offer some suggestions as to how these matters can be dealt with so as to avoid unnecessary delays and to resolve disputes at the earliest possible opportunity.

Comparators

At the outset, it is important to remember that it is the applicants in equal pay disputes who are required to identify a comparator (i.e. the person or persons who perform the same or similar work and who are paid more).

Should Applicants proceed in the absence of identifying a comparator, that is fatal to the claim and employers may seek absolution from the instance on that basis.

Identifying a comparator may be easy where the alleged comparator performs the exact same job (i.e. an identical/interchangeable job) but it is far more onerous where a comparator is alleged to perform ‘work of equal value’.

In ‘work of equal value’ disputes, the focus is on (1) the responsibility of the work, (2) the skills, qualifications and experience required to perform the work, (3) the physical mental and emotional effort required to perform the work and (4) the conditions under which the work is performed. The equal pay regulations published in terms of the Employment Equity Act provide useful guidance in this regard but any assessment is likely to involve some degree of subjectivity.

Further complexity may result from disputes where there are a large number of applicants who perform a variety of different roles, who perform different functions on different days, who work variable hours and/or have interrupted service. In those circumstances, multiple comparators might be relevant to determine an appropriate hourly wage (i.e. depending on what role is being performed at any given time).

Collection of Data

Given the above, parties to equal pay disputes should aim to cooperate in respect of obtaining data relevant to the comparators as well as determining the common cause facts and the facts in dispute.

It is advisable to establish sub-committees with representatives from the employer and the employees with the aim of identifying: –

the details pertaining to each applicant (i.e. the role(s) performed, length of service, hours worked, skills, qualifications, etc.);
the alleged comparators for each applicant and the information referred to above in respect of the comparators;
whether, on the face of it, there are justifiable reasons for the different treatment of certain persons (this may serve to reduce the number of applicants); and
the documents relevant to the dispute (i.e. collective agreements concerning wage rates, contracts of employment, job grading assessments, etc.).

The collection of data can lead to the parties agreeing that some of the applicants do not have a cause of action and accordingly their claims can be withdrawn.

In the absence of taking such steps, the legal proceedings are likely to be protracted and may be occasioned by significant delays including in respect of a variety of legal points being raised in relation to whether the Applicants have provided sufficient information to establish a prima facie

While employees may consider such an approach to be overly technical and designed to frustrate their cause, it should be remembered that the potential liability for the employer increases each month that an equal pay dispute is not resolved and it is therefore not in the interest of employers to stall the proceedings.

Where a large group of employees are involved, it is also not in the interests of employers to engage in arbitration proceedings that take place over months given the associated legal costs.

Finally, where Labour Brokers are involved as either the former or the joint employer, difficulties can arise in respect of the collection of data because records may be inadequate. The convening of a sub-committee may assist in rectifying this.

Justifiable Reasons

Both the EEA and the LRA contain a list of justifiable reasons which warrant pay disparities. By way of example, length of service, the quality or quantity of work performed and merit all constitute justifiable reasons for different pay.

Critically, the list of justifiable reasons in the EEA and LRA do not constitute a closed list and there may be other justifiable reasons which warrant pay differentials.

By way of example, where an employer has identified a group of employees who are overpaid and has instituted a mechanism to correct that issue (i.e. by freezing salary increases) that correction would constitute a defence to a claim that another employee should be remunerated on the same basis.

What appears from the above is that a lateral and wide-ranging approach should be adopted when assessing the reasons for pay disparities rather than simply a checklist approach focused on the justifiable reasons listed in the LRA and EEA.

Means of Shortening Proceedings

Once the relevant data has been collected, there are a number of options to consider in respect of shortening the legal proceedings. These include: –

conducting job-grading assessments in order to determine the appropriate grading for the roles in dispute and the commensurate salary (this may include conducting an industry-wide comparison);
with reference to the data collected, agreeing on the elimination of certain applicants who are unable to establish a prima facie case (i.e. persons who have been unable to identify a comparator who performs the same or similar work);
concluding a detailed pre-arbitration minute in terms of which the parties agree to common cause facts pertaining to each applicant and each alleged comparator (i.e. so that evidence does not have to be led in respect of every applicant); and
in circumstances where there is no factual dispute, proceeding by way of a stated case rather than by way of evidence.

In circumstances where employees refuse to engage constructively with the aim of narrowing the issues in dispute, employers may also consider requesting the presiding officer to issue a Ruling regarding how the matter is to be conducted to avoid a lengthy arbitration.

Negotiations

Where appropriate, it is important that negotiations should be pursued with the applicants in order to resolve the dispute timeously.

It is quite possible that once the relevant data has been collected it becomes apparent that there is an unjustifiable pay disparity in respect of certain of the applicants while other applicants have no case whatsoever.

It would be counter-productive and unnecessary to attempt to defend a dispute in circumstances where certain of the applicants have a legitimate claim and accordingly the aim should be to settle with those applicants and only litigate the dispute where the employer has a bona fide defence to the claims.

It is worth mentioning that the Code of Good Practice on Equal Pay Disputes anticipates equal pay audits in terms of which pay disparities are identified and removed proactively. Employers should attempt to comply with the Code to avoid disputes in the first place.

Reputational Issues

As is so often the case with employment disputes, employers must be alive to reputational issues that may arise when equal pay disputes are referred.

It goes without saying that disgruntled employees who, for example, allege that they are being paid less as a result of racial discrimination may approach the media with the aim of airing their grievances in public and disparaging their employers.

Employers must be alive to this possibility and prepared to respond in a timeously and appropriate fashion should false allegations be made.

Conclusion

With the amendments to the EEA and the LRA class action lawsuits concerning equal pay for equal work or work of equal value have become a reality.

Where such disputes are lodged, it is critical for all parties to engage constructively with each other with a view to resolving the dispute or alternatively ensuring that the litigation is conducted expeditiously.

Where either party refuses to engage constructively, legal steps should be taken to compel the other party to take the steps necessary to render the matter ripe for hearing before the matter is enrolled on the merits and an unnecessarily lengthy and complex arbitration ensues.