Big salary change proposed for South Africa

South Africa’s proposed Fair Pay Bill aims to ban employers from requesting job seekers’ payslips to curb wage discrimination and promote fair pay, but critics warn it may limit negotiation power and complicate salary assessments.

Biron Madisa, Associate in the Employment Law practice at CDH, told Daily Investor that currently, prospective employers are not prohibited from asking job seekers for a current or historic payslip.

“It is not uncommon for prospective employers to ask a job seeker for their payslip as part of the recruitment and appointment process,” Madisa said.

There are a number of reasons why prospective employers may request a payslip. Notably, though, it places the prospective employer in a better negotiating position when it comes to salary negotiations.

For example, it allows the employer to make an offer that is lower than the budget allocated for the position or below market value.

“The Fair Pay Bill, in its current form, seeks to address, among other things, this issue, which has contributed to the pay disparities in workplaces and across sectors,” Madisa explained.

“The Bill seeks to prohibit employers from requesting and using a payslip from a jobseeker during the recruitment, selection or appointment process.”

There is no uniform standard regarding payslips globally. This is because, in certain jurisdictions, the law may prohibit the request of salary history due to discrimination or data privacy concerns.

However, Bowmans’ partner Norma Mazibuko and senior associate Amandla Makhongwana explained that the idea of mandating payslips has come under scrutiny worldwide.

“The European Union has introduced the Pay Transparency Directive, set to be implemented across member states by June 2026,” Mazibuko and Makhongwana said.

This directive expressly aims to standardise pay transparency measures to eradicate causes of pay inequality and close the gender pay gap.

Similarly, several states and cities in the United States have enacted laws banning employees from asking candidates about salary history.

“The Bill is in line with this growing movement towards increased pay transparency,” they said.

Advantages and drawbacks

Madisa explained that if passed, the Fair Pay Bill would have several advantages for job seekers. It promotes fair pay practices and encourages salary offers based on role value and market benchmarks rather than historical earnings.

Since employers will be prohibited from relying on job seekers’ past payslips, this will end salary discrimination based on past pay.

This Bill will result in employees receiving more equitable pay and reduce pay gaps, particularly in relation to previously disadvantaged groups.

Since every job advertisement will be legally required to disclose a salary range, job seekers will also be able to make informed decisions before applying for a job.

The Bill grants every employee the right to discuss a job offer or the remuneration, or remuneration range, for a position with another employee.

This promotes the principle of equal pay for equal work and creates a platform for more open conversations about pay.

Additionally, it is likely to reduce the number of unfair labour practice disputes relating to equal pay for equal work.

While there are benefits, the Fair Pay Bill also has downsides, Madisa explained. For job seekers, it may be harder to negotiate a better salary.

On the other hand, prospective employers may struggle to assess a jobseeker’s market worth, especially in sectors with wide salary ranges or specialised services.

While it may be challenging, Madisa said that there are ways employers can set fair salaries without using payslips as the benchmark.

“Employers can conduct internal audits in order to determine what their pay disparity levels are currently, then put measures in place to address the disparities,” he said.

“From the audits, they should be able to see what other employees in the same roles are paid.”

Companies can also conduct market research to determine what their competitors are offering. They can then use that information to determine where they stand compared to their market competitors.

“Employers can put remuneration policies in place, which will regulate pay grades within the different levels within the organisation, ensuring consistency,” Madisa said.