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Can we use standard pay scales in the form of a regressed market for remuneration management?

We do not recommend this approach. When implementing pay-scales/ranges the company needs to ensure that the pay-scales fits the company’s operational requirements as well as ensure alignment to the company’s remuneration policy, philosophy and positioning in the market. The following should be considered –

A. Pay Element

  • Basic vs Total Guaranteed Package.

B. Position in market

  • Lead vs match vs lead-match approach – How competitive the company would like to be bearing in mind the cost implications.
  • Projection of the market data and age correction of market data.

C. Reference point

  • Market Positioning/Pay policy line – Market 50th Percentile as reference point

D. How many pay scales?

  • Different target markets – National or Industry Specific;
  • Diversity of jobs – Functional areas or Job levels;
  • Diversity of grading procedure – Bargaining Unit levels;
  • Internal equity vs external competitiveness – Separate pay scales developed for certain skills, professions, key skills, core, critical skills, specialised etc.; and
  • Organisational Structure – Pay scales or holding company vs per business units

E. Type of pay scales

  • Grade-Based;
  • Job-Based; or
  • Job Family Grade Based.

F. Range Spread

  • Range spread (minimum to maximum);
  • Midpoint-to-midpoint differential;
  • Slope / Gradient; and
  • Midpoint-to-midpoint differential (slope/gradient)

G. Range overlap

  • It is common practice to have range overlap to provide sufficient progression within a range.

For more information or expert opinion visit:

Market Positioning and Pay Scale Design

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What are the key considerations when attempting to comply with “Equal Pay for work of equal value”?

The principle of “Equal pay” is rooted in the avoidance and alleviation of unfair discrimination as stipulated in Section 6(1) of the Employment Equity Act No 55 of 1998.

To ensure compliance with the principle “Equal pay for Work of Equal Value”, employers should consider the following:

  1. Implement a sound job evaluation process and adopt an objective system to ensure proper evaluation of jobs on the basis of the work to be performed in accordance with relevant and appropriate criteria/factors. The basic criteria/factors commonly used to evaluate the relative worth of a jobs are responsibility, skills, qualifications, experience, effort and working conditions;
  2. Ensure HR and Remuneration policies and practices are fair, objective, transparent and can be consistently applied for all employees. Any provisions in the Remuneration Policy which excludes an employee group, may illicit scrutiny from an Equal Pay perspective. It is important that eligibility for the receipt of certain allowances or benefits be fairly determined and is clearly defined in company policy.
  3. The same holds true for the standard terms and conditions of employment. 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 subsection (1) or on any other arbitrary ground, is unfair discrimination.

Below we provide a practical example of how policy and standard terms and conditions may be scrutinized for compliance purposes with the principle of “Equal Pay”.

  1. A company pays a Cellphone Allowance to specific employees due to the nature of their role, in order to perform their duties. Is there an exposure with regards to unfair discrimination? On face value it would appear not, as the provision of the allowance supports operational requirements, however, this is not correct.
  2. The term “remuneration” as defined in the Basic Conditions of Employment Act3, 1997 (Act No. 75 of 1997), as amended and other labour legislation includes any payment in money or in kind, or both, made or owing to any person in return for working for another person, including the State.
  3. The provision of a Cellphone Allowance, where the employee receives the actual cash thereof, will constitute as part of remuneration as per the definition in the BCEA. This definition is referred to in the Code of Good Practice on Equal Pay/Remuneration.
  4. It may therefore create an “Equal Pay” exposure if there are employees receiving a Cellphone Allowance (remuneration) and other employees who do not receive the same allowance. There is no defensible justification (see section 7 in the Code) from an Equal Pay perspective and it creates, whether direct or indirect, a perceived ground for unfair discrimination.
  5. The only scenario pertaining to the provision of a Cellphone Allowance, which will not create an Equal Pay exposure, is if a Cellphone Allowance is offered to all employees, where the amount may vary according to grade/level, and where it is provided on a use-it-or-loose-it basis, as it then becomes elective and those who use it and those who do not, is based on employee choice and not company policy.

For more information or expert opinion visit:

Equal Pay for Work of Equal Value

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How do I optimally structure travel allowances for employees?

A company can optimally structure travel allowance by implementing a Travel Allowance Calculator to ensure that when travel allowances are elected and built into a remuneration package, that the travel allowance is structured in a tax compliant yet optimal manner.

The purpose of using a Travel Allowance Calculator is to compute a suggested tax “break-even” travel allowance amount for the ensuing fiscal year. SARS has confirmed that the break-even method of computing the travel allowance is acceptable.

The Travel Allowance Calculator only has optimal use, for employee and employer, if it forms part of the overall risk management on employee travel. The travel calculator will have less value if it is not supported by the necessary policy, processes and supporting documentation.

The following should be established and maintained in order to solidify the governance of the travel policy and travel allowance calculator –

A detailed logbook in the SARS accepted format. Note that the logbook must be kept and made available for inspection for up to 5 years.

A Travel Allowance Declaration, which the employee must sign to confirm the validity of information provided to arrive at a suggested break-even amount and that the employee accepts the consequences thereof if false information was submitted.

For more information or expert opinion visit:

Travel Allowances

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How does a Total Reward Statement (TRS) enhance my company’s Employee Value Proposition (EVP)?

TRS enhances a company’s EVP by ensuring effective communication of the total reward offering to employees in a way that promotes the employees’ understanding and appreciation of the value derived at a personal level which in turn increases employee satisfaction and engagement.

The implementation of a TRS will enables optimal attraction, motivation and retention of high calibre and required skills, furthermore assisting the company in achieving objectives and increasing the company’s return on investment in their employees.

For more information or expert opinion visit:

Remuneration and Total Reward Statements

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What advantages does CTC with flexible benefits have for my staff and company?

Cost-to-Company (CTC) Structure, commonly known as Total Guaranteed Package, can be defined as, all traditional compulsory and add-on benefits which are added to basic salary, or where appropriate converted to a cash value and added to basic salary. Employees are then at liberty to structure a portion of their guaranteed package from a selection of […]