NEWSFLASH! Employment Equity Amendment Act and Sectoral Targets. Effective 1 January 2025!

After a lengthy wait, the much-anticipated Employment Equity Amendment Act and its associated Regulations are set to be effective from 1 January 2025.

This legislation has been in development for some time, with considerable speculation surrounding its implementation timeline.

What’s New

Affirmative Action requirement falls away for companies with less than 50 employees

The new Amendment Act does away with Schedule 4 – Earnings Threshold which means that companies with less than 50 employees will no longer have to comply with the Affirmative Action consulting, planning and reporting requirements detailed in Chapter III of the Act. (They must still obviously comply with Chapter II – Unfair Discrimination prohibition). They will therefore no longer be considered as “Designated Employers”. They can however still comply voluntarily.

Sector Targets for companies with more than 50 employees

The Amendment Act sees the introduction of specific numerical targets across 18 different economic sectors for the top four occupational levels, i.e. Top, Senior, Middle and Junior Management – to be achieved over a 5-year period.
The Economically Active Population (EAP) statistics remain in play and designated employers should continue to benchmark their actual headcount to either the National or Provincial EAP. The priority though, is to achieve the prescribed sector targets.

New Employment Equity 5-Year Plans

Designated employers will be required to compile new year-on-year, incremental numerical targets to ultimately achieve equitable representation of the designated groups in compliance with the sectoral targets by the 5th year of a 5-year plan.

Are these Quota’s or Targets?

The Department of Employment and Labour has pointed out in a statement in May 2023 that the sector targets are not rigid quotas which amount to job reservation but rather they are targets which are a flexible based on the actual available opportunities in the workplace to achieve the targets. Employers still maintain the power to determine their own annual (year-on-year) employment equity targets towards achieving the regulated 5-year sector EE targets.

Quotas are prohibited in s15 of the Act because they constitute an absolute barrier to the employment or promotion of people who are not from designated groups. Likewise, s15 states that a designated employer is not required to take any decision concerning an employment policy or practice that would establish an absolute barrier to the prospective or continued employment or advancement of people who are not from designated groups.

In the Draft Regulations published on 1 February 2024, the Minister of Employment and Labour stated that affirmative action should be implemented in a nuanced way and that the economically active population statistics are only one of many factors that will be considered when assessing compliance with affirmative action. Other factors are:

• Inherent requirements of the job.
• Pool of suitable qualified people.
• The ability to acquire the skills to do the job within a reasonable timeframe.
• The staff turnover within the workplace.
• Recruitment and promotional trends within the workplace.

What are justifiable reasons for not achieving the targets?

The regulations set out a list of reasonable grounds for non-compliance with the sector targets. These 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.

In the event of a Director-General (DG) review by the Dept of Employment and Labour, evidence of the above would need to be provided to justify the reason for non-compliance. Keeping accurate records is therefore imperative.

Compliance Certificates

Once the Act is in effect, any organisation wishing to contract with an organ of state, will require an annual certificate confirming their compliance with the provisions of the Employment Equity Amendment Act. (The section was in fact always a provision within the Act – it had just not been implemented.)

To qualify for a compliance certificate, designated employers will have to comply with Chapter II (Prohibition on Unfair Discrimination) and Chapter III (Affirmative Action). Specifically, they must have:

1. Complied with any numerical targets applicable to the employer, or if it has failed to do so, has a reasonable ground to justify such non-compliance.
2. Submitted EEA2 and EEA4 reports
3. No finding by the CCMA/Labour Court that the employer breached the prohibition on unfair discrimination or failed to pay the minimum wage

Non-designated employers (ie less than 50 employees) will also be able to apply for an Employment Equity compliance certificate, so they are not excluded from any tender process. These non-designated employers will have to comply with Chapter II (Prohibition on Unfair Discrimination) of the Act.

Employment Equity Compliance Certificates will need to be applied for on an annual basis.

Reminder: Who are the Designated Groups

Designated groups refers to Black people (African, Coloured and Indian), Women and People with Disabilities who are South African citizens by birth or descent or who were naturalised before 27 April 1994 or would have been entitled to acquire citizenship by naturalisation prior to that date but who were precluded by apartheid policies.

The new amendment extends the definition of People with Disabilities to 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”.

Download Proclamation here.

Contact Human Alliance for more information. Our team of experts can help you implement the new legislation seamlessly.

Thea Marais – thea@humanalliance.co.za
Nola Erasmus – nola@humanalliance.co.za
Menet Hamel – menet@humanalliance.co.za

While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither writers of articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes.