It is well established within the Employment Equity Act (EEA) that employees should not be unfairly discriminated against within the employment relationship. However, an important question arises: does the EEA apply in a blanket manner to all instances of pay differentiation, or can certain operational realities justify differences in remuneration?
The Facts
In Association of Mineworkers and Construction Union obo Members v Aberdare Cables (Pty) Ltd and Others [2025] 7 BLLR 698 (LAC), the employer implemented different wage structures following a retrenchment process.
New employees were appointed on lower wages, while existing employees retained their higher remuneration. The union challenged this differentiation, arguing that employees performing the same work were being paid differently, which amounted to unfair discrimination.
The matter ultimately came before the Labour Appeal Court of South Africa.
Legal Framework
Under the EEA, unfair discrimination requires more than mere differentiation.
An employee alleging discrimination must establish:
- That differentiation exists.
- That it is based on a prohibited or arbitrary ground.
- That it impairs dignity or has a comparably serious effect.
Without satisfying these elements, a claim of unfair discrimination cannot succeed.
Case Law
The Labour Appeal Court did not overturn the earlier findings and confirmed that the union had failed to prove unfair discrimination.
Importantly, the Court held that:
- Differentiation based on time of hire is not a prohibited ground of discrimination.
- The burden rests on the alleging party to prove both the ground and the impact on dignity.
- Not all unequal pay amounts to unfair discrimination.
The Court further recognised that the EEA permits differentiation where it is:
- Based on legitimate operational requirements.
- Applied in good faith (bona fide).
The judgment also highlighted the role of:
- Red-circle provisions (protecting higher-paid employees).
- Grandfather clauses (retaining existing conditions while applying new ones to new employees).
These mechanisms are common in business restructuring and are not inherently discriminatory.
Application to Employers
This judgment provides important clarity for employers navigating wage structures.
- First, it confirms that pay differentiation is not automatically unlawful.
- Second, employers may justify differences where there are legitimate operational reasons, such as restructuring, business transfers, or collective agreements.
- Third, employers must ensure that such differentiation is rational, documented, and applied consistently.
- Finally, the presence of a union and collective bargaining process, conducted in good faith, can strengthen an employer’s position in defending such claims.
Practical Steps for Employers
- Justify pay differences clearly:
Ensure there is a legitimate operational reason for any wage disparity.
- Document decisions:
Keep records supporting the rationale for differentiation.
- Engage in good faith bargaining:
Where unions are involved, ensure meaningful engagement.
- Understand permissible mechanisms:
Use tools such as grandfather clauses and red-circle provisions appropriately.
- Assess risk before implementation:
Seek legal advice before introducing differentiated pay structures.
Key Takeaways / Conclusion
The Aberdare Cables judgment reinforces that fairness in pay is not about uniformity, but justification.
Employers are not required to pay all employees equally in all circumstances, but they must be able to explain why differences exist. The EEA does not prohibit differentiation; it prohibits unfair discrimination.
Where employers can demonstrate legitimate operational reasons and apply them in good faith, pay differentiation can withstand legal scrutiny.
Article By Wesley Lazarus
Dispute Resolution Official at Consolidated Employers Organisation (CEO SA)