Fair Pay

In South Africa's evolving corporate landscape, fair pay has moved beyond being a “regulatory checkbox”. It is a strategic imperative shaping—organisational culture, retaining top talent and influencing market perceptions.

As remuneration governance takes centre stage—amid evolving legislative demands—forward-thinking organisations are seeking solutions that go beyond compliance to drive meaningful, lasting change.

When implemented, the Companies Amendment Act 16 of 2024¹ will fundamentally change the paying field. In fact, for many companies, this shift has already begun. 

For listed companies and state-owned entities, the Act introduces mandatory remuneration policies and reports requiring shareholder approval, alongside comprehensive pay gap disclosures. But these aren't just administrative hurdles; they're mechanisms designed to foster transparency and accountability in an area that impacts every employee. 
 
The Act introduces mandatory pay ratio disclosures that display:

• The [gap between] highest and lowest-paid employees
• Average and median remuneration across the organisation
• The "5/5 ratio" comparing the top 5% to bottom 5% of earners

For Remuneration Committees (RemCos), these requirements mark a decisive shift—from the era of periodic oversight to active, ongoing stewardship of fair pay. Remuneration governance can no longer be delegated or downplayed: it demands board-level attention and expertise. Yet, board time is always scarce and agendas are already packed—driving the need for deliberate strategic prioritisation.

Raw metrics and numbers on a page tell an incomplete story. Without proper context, pay ratios can be misinterpreted by shareholders, employees and the public. Many companies have chosen to wait until it is absolutely necessary to disclose fair pay information, fearing that without peer comparisons, the numbers might be taken out of context. 

Consider two companies with identical workforce strategies. One outsources entry-level positions while the other maintains an extensive apprenticeship programme. Their pay ratios will differ significantly, and not because one values fairness more than the other, but because their workforce compositions reflect different business models and social commitments. This complexity explains why many organisations are considering going beyond the strict regulatory requirements to present a fuller story about fair pay—one that articulates their remuneration philosophy with nuance and context.

The real challenge facing RemCos and reward professionals isn’t simply ticking the “disclosure box” but rather developing a comprehensive understanding of the organisation’s pay structure. This in turn allows for disclosures within the remuneration report to go beyond the bare minimum and tell the true story of fair pay within the organisation. However, to do this, comprehensive data points are required.

In our view, a true understanding of fair pay requires:

• Regular analysis of pay distribution across different employee segments
• Identifying trends and patterns that might indicate structural inequities
• Understanding how the incentive structures affect pay equity
• Identifying the key drivers of pay differentials as well as any underlying bias that indirectly leads to pay differentials
• Comparative analysis against peers externally as well as within the organisation

The challenges around fair pay are complex. We have developed a web-based application designed specifically for South African companies navigating these new requirements. 

Using our platform, organisations can view pay fairness through a number of lenses, starting with the minimum disclosure requirements. Beyond these minimum requirements, which represent the high-level overview, detailed pay distribution and differential analysis provide deeper insights. These insights lead to clear actionable steps that can meaningfully improve fair pay and the employee value proposition. These include:

• Looking at the distribution of fair pay not only from top to bottom, but across all employee levels within the organisation, strengthening your understanding, sharpening your disclosure narrative and supporting your sustainability agenda.
• Using pay differential analysis to identify patterns that help indicate possible pay inequity, isolating ‘permissible’ and ‘non-permissible’ differentiation factors.
• Market-aligned wage gap metrics including the Gini coefficient and the Palma ratio.

Unlike generic HR tools, our platform was built from the ground up to address the specific requirements of the Companies Amendment Act and King IV, as well as other ‘best-in-class’ fair pay measurement tools which we have tried and tested over the course of years with our clients, while providing the flexibility to adapt as regulations evolve.

The organisations that will thrive in this new era of transparency aren't those that simply meet the minimum requirement, but the ones that embrace transparency as an opportunity to:

• Strengthen trust with employees through honest communication about pay practices
• Demonstrate ethical leadership to shareholders and stakeholders
• Proactively identify and address structural inequities and interventions before they become liabilities
• Use fair pay as a differentiator in talent acquisition and retention

By transforming remuneration data from a compliance obligation into a strategic asset, RemCos can lead their organisations toward a more equitable, transparent and ultimately successful future. 

Fair pay is no longer a peripheral issue—it’s central to how organisations build trust, attract talent and demonstrate accountability. Understanding where value is shifting is just the start; knowing why and how to respond is what enables progress. While technology is part of the solution, lasting impact comes from combining tools with deep expertise. Our platform supports RemCos in navigating complex pay requirements with clarity and purpose, helping you meet today's obligations while laying the groundwork for a more transparent and equitable future.