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Amendments to the Employment Equity Act

Amendments to the Employment Equity Act

Background

On 14 April 2023, President Cyril Ramaphosa signed into law the Employment Equity Act (EEA) Amendment Bill of 2020. This Bill was originally published for public comment on 21 September 2018 and has now been gazetted. The amendments will take effect in September 2023 if not delayed in court by the promised challenges to its constitutionality by the Democratic Alliance, Solidarity Trade Union and Sakeliga.

Contents of the Amendments

The amendments aim to address the slow implementation of Employment Equity and Affirmative Action measures in organisations and to simplify compliance for small businesses. Previously, organisations determined their own demographic goals and targets depending on their workforce and staffing needs. This allowed them to be compliant but not compelled to meet external targets. The new amendments, however, will impose sector-specific targets on all designated employers. These targets will be determined and gazetted by the Minister.

The qualifications for being designated have also changed and are now confined to a business’s workforce size, not turnover. Any organisation with more than 50 employees will be a designated employer and must comply with Chapter 3 of the EEA. However, organisations with fewer than 50 staff members will only need to comply if they choose to do so on a voluntary basis.

A notable difference in the amendments is that the National Minimum Wages Commission (NMWC) will now be responsible for monitoring Wage Equity. Previously, the Department of Labour (DoL) would review the income differentials submitted in the company’s annual Employment Equity Reports. Now, this information will need to be reported to the NMWC.

Additionally, any designated companies wanting to tender for state contracts will have to obtain a Certificate of Compliance from the Minister of Employment and Labour to do so. Certain requirements, including compliance with the numerical targets, will have to be met for the certificate to be issued, which can be found in more detail in the Gazette (link below this article).

Lastly, a relatively small amendment is that psychological and other assessments no longer need to be registered with the Health Professional’s Council of South Africa, widening the range of assessments available for employers to use, as long as they still abide by the other assessment guidelines.

Concerns

The main reason that the amendments are being challenged in court is due to the sector targets. There is concern that these will lead to the exclusion of certain races, which would be unconstitutional.  Although clause 15(3) of the EEA is still in place and states, “The measures referred to in subsection (2)(d) include preferential treatment and numerical goals but exclude quotas,” the new sectoral targets could contravene this clause.

There are also concerns regarding the issuance of Certificates of Compliance where companies requiring one cannot have a CCMA or Labour Court ruling against them for unfair discrimination in the last 12 months. In this case, a double penalty would be imposed since such a company will already have received a penalty at the CCMA or Labour Court itself. Additionally, it is unclear whether a Certificate would be withheld if a company took a CCMA ruling to the Labour Court in the hopes that it would be overruled, the proceedings of which could take an extended period of time.

Bibliography and Further Reading

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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