South Africa may be on the brink of a major shift in how employers handle remuneration matters in recruitment. The recently introduced Fair Pay Bill (Bill) aims to end salary discrimination and promote equal opportunity in the workplace. At its core, the Bill seeks to ban employers from asking about a candidate’s previous salary history and requires employers to be upfront about what they are willing to pay for a role.
This is a game changer for both employers and job seekers and – if passed – is set to reshape recruitment, pay practices and workplace culture across the country.
How does pay transparency tackle inequality and discrimination?
Globally, the practice of asking for salary history has come under scrutiny. The European Union has introduced the Pay Transparency Directive, set to be implemented across member states by June 2026, with the express purpose of standardising pay transparency measures to eradicate causes of pay inequality and close the gender pay gap. Similarly, several US states and cities have enacted laws banning employees from asking candidates about salary history.
The Bill is in line with this growing movement towards increased pay transparency. One of the most powerful aspects of the Bill is its direct attack on the root causes of wage inequality and workplace discrimination. Historically, requiring candidates to disclose their previous salaries has locked many – especially women, youth and those from disadvantaged backgrounds – into cycles of underpayment. For example, if someone starts their career on a lower salary due to personal or professional circumstances or lack of opportunity, every subsequent job offer based on that salary simply perpetuates the gap.
Whilst there are good business reasons for seeking pay disclosures in recruitment processes, the impact of this practice is counter intuitive to what the Employment Equity Act, 1998 (EEA) seeks to achieve, and does little to close the gender pay gap. Further, salary history disclosures undermine merit-based pay, as it shifts the focus from the value of the role and the candidate’s qualifications to arbitrary past figures.
Moreover, the Bill and the recently proposed pay disclosure provisions of the Companies Act, 2008, as amended, are largely complementary in their aims — both seek to promote transparency, accountability, and fairness.
Dr Salomé Teuteberg 16 Feb 2023 Key changes proposed in the Bill: What employers need to know
No more asking about salary history: If the Bill is passed into law, employers will no longer be permitted to require disclosure of, or even ask candidates about, their current or past pay during recruitment, selection or appointment. The only exception is if an offer has already been made and the candidate themselves requests that their past pay be considered.
Mandatory pay range disclosure: When advertising a job, and during recruitment, promotion or transfer processes, employers will need to disclose the salary or salary range they expect to pay for the position. This means no more vague 'market-related' offers, as candidates will know upfront what is on the table.
Open conversations about pay: Employees will have the right to discuss job offers and pay ranges with one another. This is designed to break down the secrecy that often surrounds pay and to empower employees to advocate for fair treatment.
Remuneration transparency: Employers will be required to determine and document pay structures and ranges for each position, making it easier to justify pay decisions and spot any unfair disparities.
Why this matters: The commercial impact
For employers, the proposed changes are not only about compliance but also contribute to staying competitive and building a reputation as a fair and attractive place to work. Here is why:
Attracting top talent: By being transparent about pay, employers can attract candidates who are genuinely interested and qualified, saving time and resources in the hiring process. No more wasted interviews with candidates who walk away because the offer does not meet their expectations.
Reducing legal and reputational risk: The days of underpaying employees based on their previous salaries may soon be over. This helps employers avoid claims of unfair labour practices and discrimination, which can be costly and damaging to brand reputation.
Boosting employee engagement and retention: When employees know that pay is determined fairly and transparently, trust in management increases. This can lead to higher engagement, better retention and a more positive workplace culture.
Aligning with global best practice: South Africa is joining a global movement. Irrespective of whether the Bill is ultimately enacted, adopting the practices it proposes reflects a proactive approach to fostering an equitable workplace, and signals to employees and stakeholders that the organisation values transparency and non-discrimination.
What can employers do now to implement the proposed practices?
To get ahead of the curve, employers can:
Conduct pay equity audits: Regularly review pay structures to identify unjustified disparities, benchmark salaries across roles, genders and demographics, and document legitimate pay differentiators such as skills, experience and performance. Consider using technology to automate EEA reporting requirements, simulate the impact of pay adjustments and monitor compliance with sector targets.
Develop a transparent remuneration policy: Set out clear pay structures and grading systems, and objective criteria for salary increases and bonuses. Communicate these policies openly with staff.
Review and update recruitment policies: Remove any requests for salary history from application forms and interview scripts. Make sure job advertisements include clear pay ranges.
Train managers and HR teams: Ensure everyone involved in hiring and pay decisions understands the new practices and the reasons behind them.
The bottom line
If passed into law, the Bill will be more than merely a legal requirement. It will provide an opportunity for employers to modernise their approaches to pay, attract the best talent and build fairer and more inclusive workplaces. By embracing pay transparency, South African employers can set themselves apart in a competitive market and help dismantle structural barriers to fairness.
Additionally, the Bill contributes to the discussion about the difference between minimum wage and living wage by bringing greater attention to the adequacy of current wage standards. By proposing sustainable improvements to pay structures, the Bill encourages policymakers, employers and the public to consider whether the minimum wage is sufficient to meet basic living costs, or if a living wage covers essential expenses such as housing, food, education and transportation.
