New ‘pay transparency’ rules before year-end

The long-awaited overhaul of South Africa’s remuneration rules – which will oblige firms to provide details of the gap between the best and worst paid, among other things – is expected before the end of this year.

“We have been advised that the new regulations required to [give effect to the change] will be finalised this year,” said Lindiwe Sebesho, the head of Old Mutual’s Remchannel, at an event in Sandton last week. “This is going to be a major adjustment. Some companies have proactively started preparing for this change, and they’ll be better placed when this happens.”

Sebesho is right that this is the most revolutionary revamp of South Africa’s pay transparency regime yet – but it shouldn’t be any surprise.

The Companies Amendment Act governing pay disclosure in public and state-owned entities (SOEs) has been in the works since 2021. In part, this was a response to concerns about South Africa’s high inequality level, while also aiming to ensure better governance by improving disclosure of executive remuneration.

Last July, President Cyril Ramaphosa signed the amendment, but the regulations have yet to be implemented – though, finally, this now seems just a matter of months away. 

The implications are immense. Companies now have to disclose the total pay of their highest- and lowest-paid worker, the gap between the best- and worst-paid 5% of staff, and the average pay for all staff.

Other provisions that have caused consternation at some JSE-listed companies oblige public companies and SOEs to present a remuneration report to shareholders at their AGM for a binding vote.

In a new “two-strike rule” aimed at bolstering accountability, if most shareholders vote against a company’s remuneration report for two consecutive years, non-executive directors on its remuneration committee will not be allowed to serve on that committee for the next two years.

It’s a fundamental overhaul – but how ready are South African companies for this change?

A snap survey of 25 of Remchannel’s key clients shows a mixed picture. 

About 44% said they only “slightly understood” or did “not understand” the new changes. An even higher amount – 56% – had not begun discussions in their organisations about the revamp, suggesting there may be an 11^th-hour scramble. 

And yet the stakes couldn’t be higher: 68% of the respondents to the Remchannel survey said these new rules would have either a “moderate” or “significant” impact on their companies.

The good news is that in 92% of cases, the companies have at least done internal analysis to identify pay gaps; the bad news is that very few have opted to publicly disclose this yet – which suggests a discomfort with their findings. 

Innocent Zungu, a senior manager in Old Mutual’s rewards team, said this isn’t just about implementing new rules; it’s about a cultural shift. 

“This is about responding to a market and societal expectation of disclosure and fairness. There’s a very clear push to hold companies accountable for the role they play, and can play, in creating a more fair and responsible society when it comes to pay and benefits,” he said.

Cultural shift

With the rules imminent, it is clear that some companies have left themselves a vanishingly slim window to recalibrate their pay practices. Others, however, are further ahead. 

Banking group Absa was one of the first to bolster its disclosure to align with the new laws. For instance, in its latest remuneration report, the bank revealed the total pay of its top 5% of staff (an average of R4,069,945) and the lowest 5% (R247,081), as well as median total pay of staff at the bank (R584,219)

Chemicals company AECI took it a step further, by disclosing all of this detail, as well as breaking down pay scales by gender. Mining company Sibanye-Stillwater, in its annual report, also charts how it has moved its staff towards the R250,000 annual salary it considers to be the minimum for a “dignified pay level”. 

Old Mutual was the first insurance company to introduce a minimum “fair pay” level of R180,000 in 2023 – a level which moved to R192,000 a year from April 2025, said Rob Spiers, the company’s executive for remuneration and group benefits. 

“It boils down to the point that if your staff are earning a fair and appropriate salary, they can lead a dignified life and effectively contribute to long-term value creation,” he said. “This also helps eradicate any historical discriminatory practices which may have crept in over time, where some people get paid less because of unfair pay practices or due to their race or gender.” 

Inevitably, this new pay regime will lead to unflattering public criticism, where some will bluntly compare pay trends in one company to another without providing the proper context. For example, average pay at a company with relatively lowly-paid cashiers like Shoprite will typically compare unfavourably with a bank like Investec, where people typically earn far more.

But Spiers said this is where companies need to be forthright about explaining their particular context. 

“Of course there will be big differences. So it will really be about comparing yourself against yourself, and assessing whether your company is doing better in terms of fair pay than the year before,” he said.

Sebesho said this is about a cultural shift in the way executives will need to think about what fair remuneration should look like for all staff, rather than focusing on explaining their own, or rigidly complying with new rules.

“Culture starts from the top. The executives have to really buy in and think about the mandate they hold with regards to fair and responsible pay not just for the benefit of their organisation but for society as a whole,” she said. “This is about demonstrating leadership where it really matters.”