A landmark ruling in Passenger Rail Agency of South Africa (PRASA) v Hoyo (6 November 2024) has clarified the legal standard for proving pay discrimination in South Africa. The decision provides much-needed certainty on how employees must prove unfair wage disparities—and what employers must do to defend pay differences.
In a labour market increasingly focused on equity and transparency, this ruling has major implications for salary structures, employment equity compliance, and HR practices.
The Case: When Does Unequal Pay Amount to Discrimination?
The dispute arose when an employee at PRASA alleged that their pay was lower than that of colleagues in similar positions, arguing that this amounted to unfair wage discrimination under the Employment Equity Act (EEA).
PRASA defended its pay structure, claiming that salary differentials were based on:
- Market-related factors
- Experience and qualifications
- Differences in performance ratings
The Labour Appeal Court was tasked with deciding:
- What burden of proof must an employee meet to show unfair pay discrimination?
- What justifications can employers use to defend pay differences?
Key Takeaways from the Ruling
1️. Employees Must Prove Pay Discrimination on Prohibited Grounds
The court ruled that pay discrimination claims require evidence that wage disparities are based on:
- Race, gender, disability, or another prohibited ground under the EEA
- A direct comparison between employees in substantially similar roles
- Proof that the difference is not based on lawful, justifiable factors
Without clear evidence that a protected characteristic was the basis of the pay gap, the claim cannot succeed.
2️. Employers Must Justify Pay Gaps With Objective, Lawful Reasons
The ruling confirms that not all pay differences are discriminatory—but employers must provide clear, rational justifications for salary disparities.
Legitimate reasons for different salaries may include:
- Job tenure and experience
- Performance-based incentives
- Skills shortages in certain roles
- Market-related salary benchmarks
Risk Alert: Employers cannot rely on vague or subjective reasons—pay structures must be transparent, documented, and based on fair criteria.
3️. Implications for Employers: Equity Audits Are Now a Must
The ruling places a greater burden on employers to ensure their pay structures are compliant with the EEA. Companies should:
- Conduct regular pay equity audits to identify and correct unjustified pay gaps
- Document salary decisions clearly to justify differences in remuneration
- Ensure job evaluations and grading systems are standardised
- Train HR teams on employment equity compliance
Failure to comply could result in legal challenges, CCMA disputes, and reputational damage.
Final Thoughts: A Warning for Employers
The PRASA ruling is a wake-up call for businesses—pay structures must be justifiable, transparent, and legally defensible. Employers who fail to take proactive steps to review and align salaries could find themselves facing wage discrimination claims in the near future.
Need help ensuring compliance? (SA)UEO offers expert guidance on employment equity and pay audits.
Three-Line Intro for the Newsletter Front Page
Pay Gaps Under Scrutiny: What the PRASA Ruling Means for Employers
The Labour Appeal Court has clarified how employees must prove pay discrimination—and how employers must justify salary differences. Are your pay structures legally defensible? Time to review and comply!