The Employment Equity Amendment Act has been signed into law, which paves the way for setting enforceable numerical targets for employment equity for economic sectors and fining employers who are non-compliant.
On 12 April 2023, the President signed the Employment Equity Amendment Bill of 2020 into law. The Employment Equity Amendment Act (Amendment Act), which empowers the Minister of Employment and Labour to set employment equity targets for economic sectors and geographical regions, shifts away from the aspirational goals of the past to create enforceable targets. The admirable purpose of the Amendment Act is to ensure the equitable representation of suitably-qualified people from designated groups at all occupational levels in the workforce.
Swift action is required by employers and their employment equity committees to achieve sector targets to avoid the consequences of non-compliance. However, a measured approach is just as important, because policies implemented too hastily may give rise to discrimination claims. We discuss below the crucial aspects of these changes that employers need to know.
The Minister is empowered to identify national economic sectors and impose numerical targets to ensure the equitable representation of suitably-qualified people from designated groups at all levels in the workplace in terms of section 15A. The Minister has identified 18 sectors in this regard. A one-size-fits-all approach to targets in an entire sector may not always work and could even be prejudicial to employees. With the Amendment Act in place, it remains to be seen if targets will be set for sub-sectors within a sector, as was suggested during the public participation process. The sector targets will be hard-coded with punitive measures attached to non-compliance. An employer's employment equity targets must comply with the sector targets set by the Minister. This means that the goals set by employment equity committees will become irrelevant.
An argument was presented to the president that the numerical target will amount to quotas and may be unconstitutional in light of the Constitutional Court’s ruling in South African Police Service v Solidarity obo Barnard.1
The amendments also deal with the consequences of non-compliance with the numerical sector targets. Non-compliance must be considered in the context of general non-compliance in terms of section 42 of the EEA, as well as in relation to the issuing of certificates of compliance by the Minister. Amended section 42 provides that, in determining whether an employer is implementing employment equity in compliance with the EEA, compliance with sectoral targets may be considered.
In determining compliance with the EEA, the steps taken by an employer to comply or any other degree of compliance is not considered. Instead, there is an “all or nothing approach”. This means that an employer who is 90% compliant will be penalised in the same way as an employer for 70% compliance, or 5% compliance.
The amendment to section 53 of the EEA provides that employers will only be able to contract with the State if they have complied with the numerical target set out in section 15A or raised a reasonable ground to justify their non-compliance. The draft Employment Equity Regulations set out justifiable reasons for non-compliance, including:
- insufficient recruitment opportunities;
- insufficient promotion opportunities; and
- insufficient target individuals from designated groups with the relevant qualifications, skill and expertise.
Interestingly, the examples in the draft regulations did not find their way into the Amendment Act itself, which may have given employers more comfort.
The EEA contains a fines schedule which remains unchanged. It is important to know that the fines and penalties set out in the schedule were negotiated at NEDLAC, when targets were aspirational and not hard coded. In the context of hard-coded targets such as those proposed by section 15A, it is arguable that the fines are no longer appropriate, especially where degrees of compliance are not considered.
The enactment of the Amendment Act requires employers to take immediate practical steps to comply. Employers are encouraged to:
- evaluate their current employment equity policies and practices, with a view to taking steps to comply with new requirements;
- review the Amendment Act and assess the organisation's current standing in respect of compliance or non-compliance;
- identify any hurdles that may prevent compliance;
- develop a strategy to meet the draft sectoral targets in anticipation of such targets being published in final form;
- provide training and support to employment equity committees, human resources and management on the content of the Amendment Act, necessary changes to existing employment equity policies and plans, and the risks associated with the hasty implementation of policies;
- monitor announcements by the Department of Employment and Labour on sector targets. Webber Wentzel will be monitoring reporting requirements and communicate them to clients, as employers will have 30 days to comment once these regulations are issued; and
- foster a culture of inclusivity and diversity within the organisation.
The Employment Equity Amendment Act is a significant piece of legislation that shifts away from aspirational goals to enforceable targets to ensure the equitable representation of suitably-qualified people from designated groups at all levels in the workforce. Employers need to take a measured approach to ensure compliance with these new requirements and avoid the consequences of non-compliance. Webber Wentzel's involvement in the public consultations on the Bill on behalf of various employers puts it in a good position to assist employers to take steps to address any difficulties in the implementation of the Amendment Act.
*The effective date of the Employment Equity Amendment Act was not confirmed at the date of drafting this alert.