The Implications of the Employment Equity Amendment Bill – Sectoral Targets & Compliance Certificates

The purpose of the Employment Equity Act 55 of 1998 (EEA) is to (1) achieve equity in the workplace by promoting equal opportunity and fair treatment in employment through the elimination of unfair discrimination and (2) to implement affirmative action measures to redress the disadvantages in employment experienced by designated groups in order to ensure their equitable representation in all occupational levels in the workplace.

Written By of Cowan-Harper-Madikizela Attorneys

In March 2022 the Department of Employment and Labour (“DoEL”) gazetted the Employment Equity Amendment Bill to implement certain amendments to the EEA. These amendments empower the Minister of Labour to determine sectoral numerical targets for the purpose of ensuring the equitable representation of suitably qualified people from designated groups at all occupational levels in the workforce.

These sectoral targets will be published in the Government Gazette for comment, after consultation with the respective sectors. The targets set for each specific sector may differentiate between occupational levels, sub-sectors, regions, or other relevant factors in accordance with the memorandum on the objects of the Bill published in 2020. The words “other relevant factors” cast the net very wide and suggest that industry-specific factors, as well as the economically active population both regionally and nationally, may still be considered.

Eighteen sectors have been identified namely, Agriculture Forestry & Fishing, Mining and Quarrying, Manufacturing, Construction, Financial and Insurance Activities, Transportation and storage, Information and Communication, Water Supply, Sewerage, Waste Management and Remediation Activities, Electricity, Gas, Steam and Air Conditioning Supply, Human Health and Social Work Activities, Arts, Entertainment and Recreation, Real Estate Activities, Professional, Scientific and Technical Activities, Wholesale and Retail, Repair of Motor Vehicles and Motorcycles and Accommodation and Food Service Activities.

The numerical targets set for specific sectors are intended to be flexible and goal-oriented, rather than strictly time-bound and quota-oriented goals that create absolute barriers to employment of non-designated groups.

In accordance with the EEA, employers are able to submit justifiable reasons for failure to comply with sectoral targets. These justifiable reasons would include inter alia, insufficient recruitment opportunities, insufficient promotion opportunities, insufficient suitably qualified available individuals from the designated groups, or economic circumstances.

There is of course an argument to be made that such targets should be set according to the group’s representation in the available applicant pool rather than the group’s representation in the general population.

The International principles, conventions, and limitations of affirmative action in achieving employment equity, in short, essentially point to five main principles i.e.

  1. it has to be a necessary means to achieve and aim towards an end goal;
  2. it requires positive action;
  3. it is temporary action (time limits);
  4. it is flexible; and
  5. it may not unduly trample on the rights of those not designated.

The envisaged sector targets proposed by the DoEL appear to be alive to the international law affirmative action principles as they appear to envisage scope for flexibility (albeit limited) in how business is to achieve its overall target of five years per level, and may allow for deviation in defined circumstances. For example it provides employers with an opportunity to submit justifiable reasons for non-compliance for consideration and the envisaged sector targets do not appear to amount to absolute job “reservation’’.

Furthermore, in accordance with the amendment employers who employ fewer than 50 employees are no longer classified as ‘designated employers’. The current turnover thresholds will fall away. This means that Small Micro and Medium Enterprises (SMMEs), will not be required to comply with chapter three of the EEA, in that they would not be required to submit an employment equity plan. All employers are however covered in terms of chapter two of the EEA in the prevention and elimination of discrimination. Once implemented the amendment in exempting small employers from submitting a plan will significantly reduce the regulatory burden on small businesses. These employers will thus not be required to comply with the aforementioned sectoral targets.

The Bill also amended section 53 of the EEA, dealing with the issuing of a certificate of compliance as a prerequisite for access to State contracts. In accordance with this amendment, a designated employer will only be eligible to obtain compliance certificates if they inter alia comply with the sectoral numerical targets, submit an annual EE report, comply with the National Minimum Wage Act and have no adverse unfair discrimination awards in the previous 12 months. For employers who are reliant on contracts with the State, this amendment may be potentially fatal and lead to either a loss of State contracts or claims for breach of contract. In this regard, an employer’s certificate of compliance may be revoked in circumstances where it fails to comply with this provision.

Employers will be able to obtain a compliance certificate by way of an automated process. On-site audits by the Inspectorate will however be conducted to verify compliance. The Bill has also increased the powers of labour inspectors by empowering them to obtain a written undertaking from designated employers to prepare an employment equity plan as required by the EEA.

Unfair discrimination cases which result in an adverse award may have devastating consequences on designated employers’ businesses and continued viability. These employers would need to ensure that they implement practicable actions to prevent and eliminate any form of discrimination and harassment to avoid any finding of discrimination.

The Bill has also sought to augment the definition of people with disability in order to align it with the definition in the UN Convention on the Rights of Persons with Disabilities, 2007.

Although some may argue that the amendments to the EEA in setting specific targets appear to be restrictive in nature in a very challenging socio-economic business environment, the amendment to the definition of designated employer is bound to be a relief for small businesses.

Tanya Mulligan

Tanya Mulligan
Director of Employment

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