SOUTH AFRICA: AMENDED EMPLOYMENT EQUITY ACT TO BECOME OPERATIVE ON 1 SEPTEMBER 2023
According to a media statement released by the Department of Employment and Labour (DoEL) yesterday, the long-anticipated amendments to the Employment Equity Act, 1998 (EEA) will come into operation one year from today, i.e. with effect from 1 September 2023.
The Employment Equity Amendment Bill (Bill) was originally introduced in Parliament in July 2020. It was subsequently passed by the National Assembly in November 2021 and more recently, by the National Council of Provinces on 17 May 2022. It is currently awaiting the President’s signature. The DoEL’s statement indicates that such signing is imminent, and that President Ramaphosa will affix his signature between now and the beginning of next year.
The most notable amendments to be introduced by the Bill include:
- The deletion of part of the current definition of a ‘designated employer’. This will mean that, with effect from 1 September 2023, an employer (other than a municipality, organ of state or an employer appointed as a designated employer in terms of a collective agreement) will only be considered a designated employer for purposes of the affirmative action provisions of the EEA if it employs 50 or more employees. There will no longer be any consideration given to an employer’s total annual turnover.
- The ability of the Minister of Employment and Labour (Minister) to identify national economic sectors and set numerical targets for any such sectors. In this regard, the DoEL has indicated that engagements with relevant stakeholders on the setting of sector-specific targets commenced in June 2019, with sectors such as education, agriculture, finance and insurance. The remaining sectors still to be consulted are mining and quarrying, public administration and defence, manufacturing, information and communication, construction and real estate. The DoEL will publish the list of sector targets for public comment in due course.
- The introduction of criteria to be met by an employer in order for a certificate of compliance to be issued by the DoEL. Such certificate will be required in order for employers to conclude agreements with the State. Interestingly, this certificate requirement (contained in section 53 of the EEA), was introduced some time ago, but it has not yet come into force. Section 53 will, it seems, become operational following the amendments. In terms of section 53, ‘every employer’ (designated or non-designated) that makes an offer to conclude an agreement with any organ of state for the furnishing of supplies or services to that organ of state, or for the hiring or letting of anything must, if it is a designated employer, comply with Chapters II and III of the EEA; and if it is not a designated employer, comply with Chapter II of the EEA. The employer’s offer should be accompanied by a certificate issued by the Minister. In terms of the amendments, a compliance certificate may only be issued if the Minister is satisfied that:
- the employer has complied with any sectoral numerical targets applicable to the employer, or has raised a reasonable ground justifying its failure to comply;
- the employer has submitted its annual employment equity report;
- there have been no findings by the CCMA or a court that the employer breached the unfair discrimination provisions of the EEA in the previous 12 months; and
- the CCMA has not issued an award against the employer in the previous 12 months for failing to pay the national minimum wage.
The removal of the turnover requirement in order to determine whether an employer is a designated employer is welcomed.
We point out that the amendments may have significant implications for larger, designated employers, or designated or non-designated employers who seek to do business with the State. Among other things, designated employers will need to review their employment equity plans to ensure that their numerical targets and goals align with any sectoral targets that may be published by the Minister, and where they do not, that there is reasonable justification. It is advisable that such justification is set out in the employer’s employment equity plan.
The DoEL has indicated that it will implement a new online assessment system to monitor employers’ implementation of sector targets, which system will be able to flag whether employers are achieving their targets.
The issue of sector specific targets has been particularly contentious. Trade union, Solidarity, reportedly addressed a letter to the President last week cautioning the President not to sign the Bill into law and to refer it back to Parliament for review, on the basis that it is unconstitutional. If the President does sign the Bill into law, Solidarity has indicated that it will approach the courts for relief. Notwithstanding this, it appears from the DoEL’s statement that the President intends to go ahead and pass the Bill into law and employers are encouraged to familiarise themselves with the amendments and the effect that they may have on their businesses.