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COVID-19’S IMPACT ON THE EMPLOYER-EMPLOYEE RELATIONSHIP The pandemic has wrought profound changes in how employees work and how they are remunerated, write DR MARK BUSSIN and YOLANDA SEDLMAIER
BEFORE Covid-19 hit the world, the approach to reward was well defined. Organisations paid their employees a fixed basic salary plus a set of additional benefits that effectively sweetened the pot. The fixed portion served to ensure workers received an equitable market-related income. The variable portion, on the other hand, extended into performancerelated rewards such as sales commissions, annual bonuses and share plans. Variable pay itself is categorised into two components. Short-term incentives are attached to annual performance. Long-term incentives, like company shares, are often contingent on employees and companies meeting negotiated performance criteria. At the same time, employers were embracing experiential rewards, like wellness programmes, workplace comfort, flexitime, outstanding performance
recognition and other non-financial benefits. The pandemic has turned this model on its head, forcing employers to consider different ways to attract, retain and motivate talented workers, and this without the resources previously at their disposal due to the wide ranging economic impact of the pandemic. HOW FIXED PAY HAS CHANGED With many staff being retrenched and businesses closing down over the past two years, employees were more willing to accept the pay cuts their employers were forced to implement. It is obviously better to have less income than no income at all. What has changed is that employers are offering more options. These could include flexible working hours, paid or unpaid sabbaticals, or reduced hours for reduced pay.
Working from anywhere has challenged the way we set fixed pay, and some companies have decided to pay according to the cost of living index in the area that you live in and work from. This has created interesting tax challenges. For example, if I have moved to the Maldives and “work” remotely in 10 different countries, how will I be taxed. Something we are seeing, however, is a global trend towards lower variable pay in exchange for a small increase in monthly fixed pay. This is to provide the security employees need in the short term, and the adoption has started to happen in South Africa. HOW VARIABLE PAY HAS CHANGED Variable pay is generally accepted to be that part of the reward package more readily tweaked to motivate employees and encourage better performance from them.
