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South Africa: ‘Ground-breaking’ settlement agreement on employment equity signed

29 June 2023
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Overview

  • On 28 June 2023, what the South African Minister of Employment and Labour has called a ‘ground-breaking’ settlement agreement on employment equity, was signed by the South African Government and trade union, Solidarity.
  • The agreement not only settles the complaint that Solidarity referred to the International Labour Organisation (ILO) in which it alleged that the Government was applying affirmative action too rigidly in South Africa contrary to ILO Convention 111 but will also be gazetted as part of the planned Employment Equity Regulations.

On 28 June 2023, what the Minister of Employment and Labour (Minister) has called a ‘ground-breaking’ settlement agreement on employment equity, was signed by the South African government and trade union, Solidarity.

The agreement arises as a result of a nine-month mediation process initiated by the International Labour Organisation (ILO) following a complaint it received from Solidarity in 2021. In its complaint to the ILO, Solidarity alleged that the South African Government failed to observe ILO Discrimination (Employment and Occupation) Convention, No 111 by applying affirmative action too rigidly in South Africa. In particular, Solidarity argued that affirmative action should be implemented in a more nuanced manner.

The settlement agreement confirms, among other things, the following:

  • affirmative action must be applied in a nuanced way;
  • no absolute barrier may be imposed affecting any persons from any group;
  • no terminations may be effected as a consequence of affirmative action.

It also sets out the criteria that must be taken into account for purposes of preparing and implementing an employer’s employment equity plan and, in particular, the numerical and non-numerical affirmative action measures that may be appropriate in the employer’s workplace. These criteria include the inherent requirements of the job, the pool of suitably qualified persons, qualifications, skills, experience and the capacity to acquire, within a reasonable timeframe, the ability to do the job, the rate of turnover and attrition within the workplace, and recruitment and promotional trends.

Further, the agreement indicates the kinds of reasonable grounds that may be used by designated employers to justify their non-compliance with targets set by the employer or any other party. These grounds include:

  • insufficient recruitment opportunities;
  • insufficient promotion opportunities;
  • insufficient available individuals from the designated groups with the relevant qualifications, skills and experience;
  • CCMA awards/court orders;
  • transfer of business;
  • mergers/acquisitions; and
  • impact on business economic circumstances.

The agreement provides that it will be gazetted as part of the planned Employment Equity Regulations. It follows the recent promulgation of the Employment Equity Amendment Act, 2023 and the publication of the draft sectoral targets on 12 May 2023 (May 2023 Regulations), which have been the source of much controversy and legal challenge. In this regard, the parties to the settlement agreement have also agreed that the agreement will be made an order of court and according to the chair of Solidarity, it will settle the matter that was referred to the Gauteng High Court (Pretoria) by the Democratic Alliance, which was supported by Solidarity and other stakeholders.

In our view, the agreement does not introduce new requirements, but rather reaffirms certain of the principles for lawful affirmative action as set out in the Employment Equity Act and as interpreted by our courts. It should nevertheless come as a comfort to designated employers, who will be able to rely on these provisions, once gazetted, in preparing and implementing their employment equity plans and justifying an inability to meet sectoral numerical targets ultimately prescribed by the Minister.

This agreement does not, however, address or resolve the procedural challenges that might still be brought against the May 2023 Regulations, and it remains to be seen how the Department will react to comments made along these lines by many stakeholders in response to the May 2023 Regulations.