Employment equity changes enacted: sector targets coming soon

Post shared courtesy of: ENSafrica

On 12 April 2023, the Department of Employment and Labour (“Department”) confirmed that the President signed into law the Employment Equity Amendment Bill, 2020 (“the Bill”).

To recap, the Employment Equity Amendment Act introduces various amendments to the affirmative action provisions of the Employment Equity Act, 1998 (“the Act”), which aim to achieve more rapid transformation in the workplaces of designated employers. The need for this more rapid transformation is against the background of the slow progress of transformation since the introduction of the Act in 1998.

The most significant of the amendments relate to the Minister of Employment and Labour’s (“the Minister”) power to set sector-specific employment equity targets to which designated employers will held to account.

Setting of sectoral targets by the Minister

The Bill empowers the Minister to identify national economic sectors for the purposes of the administration of the Act and to determine numerical targets for such sectors. These sectoral targets may differentiate between occupational levels, sub-sectors, regions or any other relevant factor. Before determining the targets, the Minister is required to consult relevant stakeholders and the Employment Equity Commission on the proposed sectors and sectoral targets and to publish any proposals for public comment.

In its media release in September 2022, the Department stated that engagements on the setting of sector-specific equity targets would be completed by the end of September 2022. This means that it is likely that, fairly soon, the sector-specific targets will be circulated for public comment and thereafter, amended if deemed necessary, and implemented. Employers concerned about the targets should keep an eye out for the circulation of the proposed targets and make any submissions they deem necessary prior to the finalisation thereof. According to the Department, the first year in which the sector-specific targets will apply is 2024.

Issuance of compliance certificates

In order to “incentivise” employers to meet targets, certificates of compliance will now be issued by the Minister if:

• the employer has complied with any applicable sectoral targets or has raised a reasonable ground for non-compliance;
• the employer has submitted its most recent employment equity report; and
• within the previous 12 months, the employer has not been found to have breached the prohibition on unfair discrimination, or paid wages below the level of the minimum wage.

The importance of obtaining this certificate is that state contracts may only be offered and issued to employers who have been certified as being compliant with their obligations under the Act. Furthermore, a failure to comply with these requirements is a sufficient ground for the cancellation of any state contract (should no reasonable ground exist to justify such non-compliance).

Definition of designed employer

In addition to the above, the definition of a “designated employer” is now amended by the deletion of the paragraph which classifies employers with fewer than 50 employees, but who meet the required turnover threshold, as “designated employers.” Consequently, employers who employ fewer than 50 employees, irrespective of their turnover, will no longer fall within the definition of a “designated employer” and will therefore no longer be required to comply with the employment equity requirements in the Act.

Employers should analyse their existing transformation measures and plan for the future imposition of sector targets in the coming reporting year. The consequences of non-compliance have become more serious. Not only can fines of up to 10% of annual turnover be imposed, but there is also the threat of being denied a certificate of compliance.

Lauren Salt
Executive | Employment | ENSafrica