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Wage discrimination: A time bomb in the employer’s pocket

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Wage discrimination happens when employees with substantially equal or similar work are paid disproportionately because of their age, race, colour, sex/gender, disability, religion, and national origin.

The fundamental law against wage discrimination is found in Section 31(3) of the Constitution of the Republic of Malawi which provides for every person’s entitlement to fair wages and equal remuneration for work of equal value. This law encompasses all payments made to or on behalf of employees as remuneration for employment, such as salary, overtime pay, bonuses, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, accommodation, reimbursement for travel expenses and other benefits.

However, the jobs need not be identical, but they must be substantially equal. It is job content, not job titles, that determines whether jobs are substantially equal. Some of the factors that determine the substantial equality of a particular job include: (i) Skill – this entails experience, ability, education, and training required to perform the job. A right question to be asked in this regard would be, what skills are required for the job, not what skills the individual employees may have. For example, two bookkeeping jobs could be considered equal under the law even if one of the job holders has a master’s degree in physics, since that degree would not be required for the job; (ii) Effort – The amount of physical or mental exertion needed to perform the job. For example, suppose that men and women work side by side on a line assembling machine parts. The person at the end of the line must also lift the assembled product as he or she completes the work, and place it on a board. That job requires more effort than the other assembly line jobs if the extra effort of lifting the assembled product off the line is substantial and is a regular part of the job. As a result, it would not be a violation of the law to pay that person more, regardless of whether the job is held by a man or a woman; (iii) Responsibility—The degree of accountability required in performing the job. A minor difference in responsibility, such as assignment of the task of locking up at the end of the day, would not justify a pay differential.

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Some practices that increase the risk of an equal pay claim include: (i) Lack of transparency in your pay and grading system. Transparency in a pay system means providing enough information for employees and managers to understand how it operates; (iii) Discretionary pay systems. A discretionary pay system, for example performance-related pay and bonus schemes, is lawful provided any factors used to justify differences in pay are not discriminatory. However, the risk of pay discrimination will increase if performance is not linked to quantifiable and easily explained criteria: (iv) having more than one grading and pay system within an organisation. A pay system with more than one grading structures can become confusing and create opportunities for inequality to creep in unnoticed; (v) Managerial discretion over starting salaries. Individuals joining, transferring or being promoted may receive different starting salaries for lawful reasons, but the greater the degree of discretion, the greater the risk of discrepancies.

Nevertheless, pay differentials are permitted when they are based on seniority, merit, quantity or quality of production or a factor other than sex. These are known as “affirmative defenses” and it is the employer’s burden to prove that they apply – a clear timing bomb in the employer’s pocket.

The author is a Human Resources Practitioner and writes on Labour Relations issues.

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