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South Africa: Employment Equity Amendment Bill’s proposed sectoral numerical targets

26 February 2021
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On 21 July 2020 the Minister of Employment and Labour tabled the Employment Equity Amendment Bill (B14-2020) (Bill) at the National Assembly (NA).

The Bill proposes a number of changes to the Employment Equity Act, 1998, as amended (Act). Notably, the Bill contemplates that the Minister would have the power to determine sectoral numerical targets.

This newsflash considers the Bill’s status in terms of the law-making process; the contemplated parameters of the Minister’s power in setting sectoral numerical targets; and what the practical impact of these sectoral numerical targets may be on employers’ businesses.

The Bill’s status in the law-making process

The Bill is currently open for public comment* until 5 March 2021, having been extended from 19 February 2021.

The Bill has been tagged as a section 75 bill i.e. an ordinary bill not affecting the provinces. Following the completion of the public comment process, the Bill must be passed by the National Assembly whereafter it will be sent to the National Council of Provinces (NCOP).

The Bill can either be passed by i) a majority of votes in the NCOP or ii) if the NCOP does not pass the Bill, by the NA, with or without taking into account any proposed amendments from the NCOP. Once the Bill has been passed, the last step is for the President to sign it into law.

Minister’s power to set sectoral numerical targets

The Bill empowers the Minister to inter alia identify national economic sectors and to set numerical targets for any identified national economic sector, for the purpose of ensuring the equitable representation for suitably qualified people from designated groups at all occupational levels in the workforce.

The Bill also contemplates a consultation process in relation to the Minister identifying national economic sectors and setting sectoral numerical targets. The Bill contemplates that the Minister must publish a draft notice in the Government Gazette, allowing interested parties at least 30 days to comment.

Notably, notwithstanding the premature engagement processes that took place between the Minister and certain proposed sectors prior to the tabling of the Bill, the Minister is not yet empowered in law to identify any specific sectors or set any sectoral numerical targets and as such has not yet done so.

In any event, the practical steps contemplated by the Bill prior to identifying national economic sectors or setting numerical targets are that the Minister:

  • will publish a notice identifying specific national economic sectors, after consultation with interested parties;
  • will issue regulations prescribing the criteria to be taken into account in determining numerical employment equity targets;
  • will consult with each sector;
  • will take advice from the National Minimum Wage Commission; and
  • may then set numerical employment equity targets for any national economic sector or part of a sector.

Impact of sectoral numerical targets

The Bill proposes to include the requirement that any numerical goals set by a designated employer in terms of its employment equity plan must comply with any sectoral numerical target that applies to that employer.

The Bill also proposes to include the requirement that sectoral numerical targets are taken into account by the Director-General (DG)(or any person or body applying the Act) in determining whether a designated employer is implementing employment equity compliance in terms of the Act.

One critical consideration is the extent to which the proposed imposition (albeit after consultation with national economic sectors and the National Minimum Wage Commission) of sectoral numerical targets may undermine the significance of the requirement to consult with employees and/ or representative trade unions in terms of section 16 and 17 of the Act on inter alia numerical targets for an employer’s employment equity plan. If designated employers must consider the sectoral numerical targets when setting their own numerical targets notwithstanding the input from employees and/ or representative trade unions, that consultation may be rendered meaningless, albeit still compulsory.

Compliance certificate required for state contracts

Section 53 of the Act (which itself is not yet in force) requires that, in order to conclude an agreement with any organ of state for the furnishing of supplies or services or for the hiring or letting of anything (state contracts), employers must:

  • comply with the Act (chapter 2 and both chapters 2 and 3 for designated employers); and
  • attach either a certificate obtained from the Minister confirming its compliance with the Act or a declaration by the employer that it complies with the Act, which constitutes conclusive compliance when verified by the DG.

The Bill proposes to add further requirements to this section, which include whether the Minister is satisfied that the employer has complied with any sectoral numerical targets and, if not whether the employer has raised a reasonable ground to justify its failure to comply.

Significantly, failure to comply with the requirements of section 53 of the Act is sufficient ground for rejection of any offer to conclude, or for cancellation of, any state contract. This means that the failure to comply with sectoral numerical targets absent a reasonable ground to justify such non-compliance to the satisfaction of the Minister, may preclude a business from concluding state contracts. That said, the commencement date of section 53 remains to be proclaimed.

What about fines? Can an employer be fined if it does not comply with the sectoral numerical targets?

In its unamended state, the Act does provide that in essence fines may be imposed on employers who fail to comply with the numerical goals set out in their employment equity plans. This is not new.

The imposition of a fine is preceded by specific enforcement procedures, which include a review and recommendation to the employer by the DG in relation to compliance and where such recommendation is not followed, the DG may approach the Labour Court for relief (including a fine).

What the Bill proposes is to also require compliance with sectoral numerical targets, failing which a fine may be imposed; however, it does not propose any change to the enforcement mechanisms that must be followed before the imposition of any fine.

*Comments on the Bill can be sent to: Attention: Mr Zolani Sakasa, Committee Secretary, Portfolio Committee on Employment and Labour; Email: [email protected].