Pioneer Foods (Pty) Ltd v Workers Against Regression (WAR) (C687/15) [2016] ZALCCT 14 [2016] 9 BLLR 942 ; (2016) ILJ 2872 (LC) (19 April 2016) per Anotn Steenkamp J at para [45].

Newly appointed employees do not have the right to demand the same remuneration as longer serving employees.  See also Du Toit et al Labour Relations Law: A Comprehensive Guide 6th ed (LexisNexis, 2015) particularly at pages 681, 683 and 705.

“Nothing in the EEA precludes an employer from adopting and applying a rule in terms of which newly appointed employees start at a rate lower than existing long-serving employees.  This applies whether or not the newly appointed employee had previous substantial experience, whether with the employer concerned or some other employer.   It also applies whether or not the employee had, in the past, rendered services to the employer concerned via a labour broker.   But first it is necessary to refer in a little more detail to the concrete facts of this matter”.

Excerpts without footnotes

Differential rates linked to periods of service

[49]      The arbitrator’s award, if correct, has the startling implication that it is impermissible in terms of the EEA for a South African employer to give effect to a collective agreement which prescribes differential rates for employees with different periods of service with it.    The award is simply wrong in this regard, and giving effect to such agreements does not constitute “discrimination” on an unlisted “arbitrary ground”, much less “unfair” discrimination.

[50]      Differential treatment is ubiquitous in modern life and in the workplace.   The EEA does not regulate such differential treatment at all unless and until it is established that it is both “not rational” and constitutes “discrimination”.   (To constitute “discrimination” the differentiation must take place on a listed ground or on any “other arbitrary ground”, as contemplated to in section 6(1).)   The following seminal passage from the Constitutional Court’s judgment [per L Ackermann J] in Prinsloo v Van der Linde is directly applicable, notwithstanding the different statutory context:

“If each and every differentiation made in terms of the law amounted to unequal treatment that had to be justified by resort to section 33, or else constituted discrimination which had to be shown not to be unfair, the courts could be called upon to review the justifiability or fairness of just about the whole legislative programme and almost all executive conduct…

The courts would be compelled to review the reasonableness or the fairness of every classification of rights, duties, privileges, immunities, benefits or disadvantages flowing from any law.

Accordingly, it is necessary to identify the criteria that separate legitimate differentiation from differentiation that has crossed the border of constitutional impermissibility and is unequal or discriminatory ‘in the constitutional sense’.”

[51]      The Constitutional Court accepted  that it is impossible to regulate a modern country without differentiation and without classifications which treat people differently and which impact on people differently.

The Court held:

“Differentiation which falls into this category very rarely constitutes unfair discrimination in respect of persons subject to such regulation, without the addition of a further element.   What this further element is will be considered later.”

[52]      The Court described the common differentiation to which it was referring as “mere differentiation” (as distinct from “discrimination”) and held  (at para 25) :

“In regard to mere differentiation the constitutional State is expected to act in a rational manner.   It should not regulate in an arbitrary manner or manifest ‘naked preferences’ that serve no legitimate governmental purpose…”

[53]      This approach is echoed in the EEA.

Section 6(1) prohibits unfair discrimination on any of the many listed grounds “or any other arbitrary ground”.

Section 11(1) places a burden of proof on the employer who is alleged to have discriminated on a listed ground to prove that such discrimination did not take place as alleged, or is rational and not unfair, or is otherwise justifiable.

But in relation to alleged discrimination on an unlisted ground, section 11(2) obliges the complainant to prove

  • that the conduct complained of “is not rational;” and
  • that it “amounts to discrimination”; and
  • that the discrimination is “unfair”.

Unless the complainant proves that the conduct complained of “is not rational” that is the end of the matter.

In this respect section 11(2)(a) mirrors the approach adopted by the Constitutional Court in paragraph 25 of Prinsloo.

It is only if the differentiation is arbitrary or manifests “naked preferences” that serve no legitimate purpose that one even moves on to consider whether there has been “discrimination” and, if so, whether the discrimination was unfair.

[54]      According to ILO Convention 111 the criterion used in respect of an impugned ‘distinction, exclusion or preference’ on an unlisted ground is whether that measure

‘has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation.”

[55]      Mention has already been made above of the test articulated in Harksen v Lane  as regards the test to be applied in determining whether a proffered unlisted ground actually constitutes an “other arbitrary ground”.

In short, if the differentiation is not on a specified ground, then whether or not there is discrimination will depend upon whether, objectively, the ground is based on attributes and characteristics which have the potential to impair the fundamental human dignity of persons as human beings or to affect them in a comparably serious manner.

[56]      Where a collective agreement stipulates different pay levels for employees with different periods of service with the employer concerned,

  • this is not arbitrary differentiation (as contemplated in para 25 of Prinsloo);
  • nor is “length of service” (or being a “new employee”) an unlisted ground meeting the test just referred to.

[57]      Differentiation in respect of terms and conditions of employment on the basis of length of service with the employer concerned is, on the contrary, a classic example of a ground for differentiation which is rational and legitimate and, indeed, exceedingly common.

That the lawgiver shares the view that this is rational and legitimate is apparent inter alia from:

57.1     Regulation 7(1)(a) of the Employment Equity Regulations 2014 , which includes “length of service” as one of the “factors justifying differentiation in terms and conditions of employment”;

57.2     Section 198D(2)(a) of the LRA, which includes “length of service” as a “justifiable reason” for differential treatment;

57.3     Clause 7.3.1 of the Code of Good Practice on Equal Pay / Remuneration for Work of Equal Value.

[58]      In WAR’s heads of argument to the Commissioner, the crux of the argument advanced was that it is not rational to pay new employees less than those who have been employed longer.    That was a wholly untenable legal proposition.  There is quite manifestly a rational connection between using length of service as a factor determining pay, and the objective of recognising long service and loyalty of existing employees.  The Commissioner ought to have dismissed the case on that basis alone.

[59]      Moreover, length of service with the employer concerned as a factor affecting pay levels is not an “other arbitrary ground”, as contemplated in section 6(1) or in the test laid down by the Constitutional Court.

Treating people differently in the workplace in accordance with their length of service with the employer does not impair their fundamental human dignity or affect them adversely in a comparably serious manner.   The unlisted ground proffered by the union in its heads of argument did not qualify.  

That too should have been the end of its case.

[60]      And even if the inclusion of an “arbitrary” ground is meant to widen the scope of discrimination in the context of equal pay for work of equal value, the distinction in this case – length of service – is not arbitrary.

This wider reading of the new subsection is discussed in these terms by Du Toit:

“[T]he reintroduction of the prohibition of discrimination on ‘arbitrary’ grounds cannot be understood as merely reiterating the existence of unlisted grounds, which would render it redundant.  To avoid redundancy, ‘arbitrary’ must add something to the meaning of ‘unfair discrimination’.

Giving it the meaning ascribed to it by Landman J in Kadiaka  [(1998) JOL 4069]– that is, ‘capricious’ or for no good reason – would broaden the scope of the prohibition of discrimination from grounds that undermine human dignity to include grounds that are merely irrational without confining it to the latter.”

[61]      But even on this broader interpretation, the differentiation between new entrants and longer serving employees is rational, sanctioned by collective agreement, and envisaged by the Code of Good Practice.