Why salaries are not a matter of "throwing money at the problem" - HR Future helps people prepare for the Future of Work and is South Africa's leading print, digital and online Human Resources magazine.

Why salaries are not a matter of "throwing money at the problem"

Picture this: one of your valued employees resigns at a time when it will be difficult and expensive to replace her. You offer her a raise to stay with the company, which she accepts. Crisis averted! Until her colleagues allege unfair discrimination …

The employment tribunal recently had an opportunity to consider this situation in the matter of Independent Municipal & Allied Trade Union obo Mphela v Aganang Local Municipality.

The Aganang Municipality had commenced a disestablishment process when certain traffic officers resigned to join another municipality. After the municipality offered the traffic officers increases and car allowances, they chose to remain. However, the other traffic officers employed by the municipality complained that the municipality unfairly discriminated against them on an arbitrary ground.

Unfair discrimination

Section 6(4) of the Employment Equity Act provides that a difference in terms and conditions of employment between employees who perform the same or substantially the same work or work of equal value, which is based on a listed or arbitrary ground, is unfair discrimination.
 
In terms of section 11(2) of the EEA, where a complainant alleges unfair discrimination on an arbitrary ground (as in this case), he is required to prove, on a balance of probabilities, that:
• The conduct complained of is not rational;
• The conduct complained of amounts to discrimination; and
• The discrimination is unfair.

In the above dispute, the Commissioner was satisfied that the traffic officers and comparators were doing the same job and there was a differentiation. The key question was therefore whether the differentiation was irrational and unfair.
 
The municipality denied that it had acted irrationally and unfairly for the following reasons:
• It complied with its retention policy by offering higher salaries to employees with so-called "valued skills" as per the terms of the policy; and
• Operational reasons underpinned the conduct, namely:
- It would be difficult to recruit new traffic officers due to the disestablishment process; and
- Failure to retain the traffic officers would negatively affect law enforcement, revenue within the municipality, and the community.

The Commissioner was of the opinion that the municipality may have painted itself into a corner - employees resigning under similar circumstances as in this case may expect the same counter offers. However, the tribunal found that there was no unfair discrimination as the municipality's conduct was not arbitrary but justified. The commissioner stated that the municipality's decision was informed by operational reasons. The loss of the employees would have adversely affected the operation of the municipality.

Throwing money at the problem

Employment tribunal awards do not set legal precedent but can be persuasive in subsequent cases. This award suggests that it is permissible to offer an employee a raise if he/she resigns if there are genuine operational reasons to justify differentiation. Employers who do so could implement a retention policy to guide decisions to offer salary raises in these circumstances, and ensure that any such decisions are taken rationally and fairly.
 
Nikita Shaw is a Senior Associate of Employment & Compensation at Baker McKenzie in Johannesburg.

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