The Employment Equity Amendment Bill has been signed into law this week and is expected to come into operation on 1 September 2023.
The Amendment Act introduces various amendments, the most significant being changes to the affirmative action provisions of the Employment Equity Act, aimed at achieving more rapid transformation in the workplaces of designated employers.
Change to the definition of ‘designed employer’ – smaller employers excluded
The definition of a ‘designated employer’ is now amended to the effect that employers who employ fewer than 50 employees, irrespective of their annual turnover, will no longer be regarded as a “designated employer” in relation to the affirmative action provisions of the Act.
As a result of the amendment, such smaller employers will not be required to develop employment equity plans or submit employment equity reports to the Department of Employment and Labour.
It should be noted, however, that all employers are still required to observe the provisions of the Employment Equity Act relating to unfair discrimination – and in particular, the Code of Good Practice on the Prevention and Elimination of Workplace Harassment (March 2022).
Introducing sectoral numerical targets
The Amendment Act empowers the Minister to identify national economic sectors and to determine numerical targets for such sectors (including differentiated occupational levels, sub-sectors, regions, etc.). A proposed criteria for determining the numerical targets is contained in draft EE Regulations, as is a list of 18 national economic sectors and sub-sectors identified by the Minister. The purpose is to ensure the equitable representation of people from designated groups (previously disadvantaged groups based on race, gender, and disability) at all occupational levels in the workforce.
Before determining the numerical 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. This process is currently happening.
In terms of the law, there is a distinction between a a numerical target and a quota – the latter being rigid and reserving jobs, whilst a target is meant to be a more flexible guideline. Quotas can constitute an absolute barrier to employment for people who are not from designated groups, and is therefore prohibited. However, it remains to be seen to what extent this distinction will be evident (or not) in the practical implementation of the new numerical target system, as designated employers will be required to set numerical targets in line with the applicable sectoral targets set by the Minister, in their employment equity plan.
An employer’s employment equity compliance in this regard will then be assessed against the new requirements relating to sectoral numerical targets. Whilst labour inspectors will be able to issue compliance orders relating to sections 16, 17, 19, 22, 24, 25 and 26 of the Act, the assessment regarding achievement of numerical targets will be a separate process during which the employer will have an opportunity to justify its non-compliance. If, after such an assessment, it is however determined that the employer has failed to comply, the Director-General may apply to the Labour Court for an order directing the employer to comply or to impose a fine.
Justification grounds for non-compliance with sector numerical targets have not been set out in the Amendment Act, however some justifiable grounds have been proposed in the draft EE Regulations, such as: insufficient recruitment/promotion opportunities; a limited pool of people from designated groups who possess the desired qualifications, skills and expertise; non-compliance as a result of court orders, mergers/acquisitions, business transfers and/or for economic/financial reasons. Employers should potentially be able to utilise these grounds to devise progressive compliance strategies by way of their EE Plans, in order to achieve the sector numerical targets over a period of time, balanced against the operational and economic needs of the company.
Issuing of compliance certificates
In order to incentivise employers to meet targets, certificates of compliance will be issued by the Minister if the following conditions are met:
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
the employer has not been found to have breached the prohibition on unfair discrimination, or paid wages below the level of the minimum wage, within the previous 12 months.
This compliance certificate is important for employers who do business with the state, as state contracts may only be offered and issued to employers who have been certified as being compliant with their obligations under the Act; and non-certification could be grounds for cancellation of such a contract.
Smaller (non-designated) employers would also be entitled to obtain a certificate of compliance under section 53 of the EEA, even though they do not have to develop employment equity plans or submit reports.
Submission of employment equity reports
A specific statutory date for annual submissions appears not to be applicable under the amendments. The Minister will be empowered to make regulations with regard to the requirements of employers in submitting their employment equity reports and the timing of the submission.
Expanded definition for ‘people with disabilities’
The definition of ‘people with disabilities’ will be expanded to align with a broader international understanding of what constitute disabilities. The definition will include “people who have a long-term or recurring physical, mental, intellectual or sensory impairment which, in interaction with various barriers, may substantially limit their prospects of entry into, or advancement in, employment”.
Conclusion
Whilst there is some relief for smaller employers, designated employers should plan ahead for the sector targets which will be set by the Minister, and carefully consider the reasons they could present if they foresee that they may be unable to comply.
© Judith Griessel