South Africa will soon mandate pay transparency across all job postings and ban salary history enquiries, compelling businesses to overhaul compensation strategies and recruitment practices.
8c48.jpg)
Shutterstock.com/pogonici
The Fair Pay Bill introduces sweeping pay transparency reforms that will fundamentally change recruitment and compensation in South Africa. If passed, employers must disclose salary ranges in all job adverts, eliminate confidentiality clauses preventing employees from talking to each other about pay, and stop asking candidates about their previous salaries during recruitment.
The proposed new legislation was formally introduced to parliament on 16 June 2025 by the BOSA party and is currently under consideration. It proposes amending the Employment Equity Act 1998, which already requires employers to report on pay differentials and take steps to reduce unfair discrimination in compensation.
It coincides with a wider push to advance equal opportunity in South Africa, as employers prepare to implement five year employment equity plans (EEP) from 1 September 2025. These are designed to achieve equitable workplace representation for designated groups – including African, coloured and Indian people, women, and people with disabilities – and are now a prerequisite for doing business with the state.
Lucinda Hinxman, head of employment at CMS South Africa, says both the Fair Pay Bill and new EEPs will require employers to systematically examine their remuneration practices by "reinforcing employers' existing obligation to ensure equal pay for work of equal value." This will make pay disparities more visible and increase accountability for compensation decisions.
Although it may be some time before the Fair Pay Bill becomes law, partner at Cliffe Dekker Hofmeyr Yvonne Mkefa says “advance preparation could become a competitive advantage for employers."
Lexology PRO outlines the key proposed changes and practical steps employers can take to prepare.
What key reforms are proposed?
“The Fair Pay Bill is set to reshape the landscape for South African employers,” says Norma Mazibuko, partner at Bowmans. “Employers would be required to disclose wage gaps, perform pay audits, and provide justification for disparities, which will intensify governance and reporting obligations.”
Here are the key changes employers need to know:
Ban on salary history questions
Employers will no longer be able to ask candidates about their current or past salary during recruitment, unless they have made an offer and the candidate has made a written request to disclose their previous pay.
Mandatory pay range disclosure
Employers must be upfront about what they are willing to pay for a role. They must disclose specific pay or salary ranges in all job postings, transfers and promotion opportunities, and ambiguous 'market-related' descriptions will no longer be permitted.
Right to discuss remuneration
Employees will be able to freely discuss and share remuneration details with colleagues. Employers will no longer be allowed to enforce confidentiality clauses preventing such discussions.
Remuneration transparency
Employers must document pay structures and ranges for each position to make it easier to justify pay decisions and identify unfair disparities.
As of now, it has not yet been clarified which employers will be in scope of the bill.
Global pay transparency trends
The reform aligns South Africa with major legislative efforts supporting pay transparency internationally, including the EU Pay Transparency Directive 2023 and US state-level pay transparency laws in California, Illinois and Massachusetts.
In the UK, companies with 250 or more employees must report gender-based pay differences annually under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. The UK is also considering introducing mandatory ethnicity and disability pay gap reporting for large employers.
Closer to home, Namibia's Ministry of Labour and Social Welfare is currently reviewing similar reforms to Labour Act 11 2007, which would introduce salary disclosure requirements and change the framework for tackling sectoral pay gaps.
In Rwanda, existing frameworks support wage equity, though no specific pay transparency legislation is in place. The National Gender Policy 2010 and Labour Law No. 66/2018 mandate equal compensation for work of equal value and promote integrating gender equity principles into workplaces.
How can employers prepare?
Given the worldwide shift toward pay transparency, South African employers may consider adopting global best practices to demonstrate to both employees and stakeholders that they value workplace equity and transparency.
Build bulletproof pay structures
Employers should review pay structures and conduct regular pay equity audits comparing remuneration across roles, race, genders and backgrounds to identify whether pay gaps exist before scrutiny increases.
Developing a transparent remuneration policy that establishes clear, justifiable pay ranges and grading systems is important. These frameworks should be sufficiently detailed to withstand scrutiny. To mitigate potential challenges, employers should ensure pay differentiators, salary increases and bonuses are based on objective criteria such as skills, experience and performance, and communicate these policies openly to staff.
For example, software company SAP launched a global compensation framework to ensure internal equity and market competitiveness, providing all employees with a consistent and transparent job structure.
“By implementing defensible grading and pay structures, employers could reduce risk and position themselves as leaders in promoting fair and equitable remuneration,” says Mazibuko.
Strengthen record-keeping
Employers should enhance record-keeping and administrative oversight to ensure readiness for annual EEP reporting and compliance reviews. Upgrading internal processes is key to supporting accurate data collection, timely reporting and effective monitoring of pay structures.
Review recruitment processes
If enacted, employers must update their recruitment and compensation practices. Job adverts must include transparent pay ranges, and application forms and interview protocols must be revised to eliminate salary history enquiries from all recruitment processes.
Businesses may consider using compensation planning tools and market data analytics to establish equitable salary structures independent of candidates' previous earnings history.
Train HR and managers
Training on remuneration structures will be essential to ensure compliance and fairness while strengthening employer competitiveness. Businesses can consider proactively upskilling line managers and HR teams to ensure personnel involved in hiring and pay decisions fully understand the pay structures they are implementing. For example, healthcare company Novo Nordisk supports its pay transparency efforts by engaging with senior leaders.
“Preparing the workforce for these changes is crucial. Poor management of this transition could negatively impact organisations. Effective communication and change management plans are essential to help employees understand the impacts of the change, including impacts on a personal level,” says Mkefa.