In South African labour law, disputes over pay disparities often lead to claims of unfair discrimination. A recent case, AMCU obo Members v Aberdare Cables, illustrates how courts evaluate these claims, particularly when differences in wages are tied to collective agreements and not to protected grounds.

The Dispute: New Hires on Lower Wages

Following a retrenchment process, Aberdare Cables entered into a collective agreement that placed new employees on a lower minimum wage, while retaining higher pay for existing workers. The Association of Mineworkers and Construction Union (AMCU) challenged this arrangement, arguing that the differentiation amounted to unfair discrimination on the basis of “arbitrary grounds” under the Labour Relations Act and the Employment Equity Act.

Court’s Ruling: “Newness” Is Not a Protected Ground

The court dismissed the union’s claim, holding that time of hire (or “newness”) does not qualify as a prohibited ground of discrimination. The judges emphasised that grandfathering pay scales, where current staff keep existing benefits while newcomers work under revised terms, is generally lawful.

Importantly, the court noted that unless a wage structure impairs human dignity or is linked to a recognised protected characteristic such as race, gender, age, or religion, it will not amount to unfair discrimination.

Key Takeaways for Employers

This decision provides valuable guidance for employers navigating wage structures and collective bargaining:

• ✅ Grandfather agreements are permissible: Employers may maintain different pay structures for old and new employees, provided the differentiation is rooted in operational or financial considerations.
• ✅ Document the rationale: Employers should record the reasons for adopting new pay scales to defend against future claims.
• ✅ Avoid dignity violations: If the new system undermines respect, fairness, or equal treatment in a way that impacts dignity, it may cross the line into discrimination.
• ✅ Engage unions constructively: Transparent communication during collective bargaining reduces the risk of disputes escalating into litigation.

Why This Case Matters

The AMCU v Aberdare Cables ruling underscores that not every difference in treatment amounts to discrimination. Employers retain flexibility to adjust wage structures in response to economic realities, as long as they do not target employees based on protected categories or erode fundamental rights.

For businesses, this means that grandfathering wage terms in retrenchment or restructuring exercises can be a legitimate strategy—so long as decisions are operationally justified, carefully documented, and implemented in good faith.