On 12 April 2023, President Cyril Ramaphosa signed into law the Employment Equity Amendment Bill of 2020. This bill amends the Employment Equity Act 55 of 1998 which aims to promote a more diverse and equitable workforce. The bill was initially passed by Parliament on 17 May 2022 and is set to be effective as of 1 September 2023. However, the proposed regulations may not come into effect due to disapproval from key stakeholders and large corporates. In the meantime, South African business owners should reassess their compliance and Employment Equity (EE) targets. Here’s what you need to know about the amendments.
How the amended Employment Equity Act impacts your business
Most notably, businesses with more than 50 employees will be required to comply with the act, regardless of annual revenue. If you meet this criteria, you are considered a “designated employer” and you must submit Employment Equity plans that outline how you aim to achieve your equity targets.
The act also enables the Minister of Employment and Labour, Thulas Nxesi, to set employment equity targets for specific economic sectors and geographical regions — setting the foundation for affirmative transformation plans. All decisions shall be made after consulting relevant stakeholders across all national economic sectors.
The 2018-2019 Employment Equity report indicated that black people constitute 23.2% and 40.2% of senior and middle management employees respectively. In alignment with the new bill, there should be a 2% annual increase in the representation of black people at senior and middle-manager levels. The Department of Labour hopes to bring the overall percentage of black senior and middle-manager employees to at least 50% by 2024.
The new Employment Equity Act and B-BBEE compliance
The Employment Equity Amendment Act (EEA) forms part of the many initiatives driven by Broad-Based Black Economic Empowerment (B-BBEE). This means that you must adhere to the new EE policies to qualify as a BEE-compliant business in South Africa.
If submission and acceptance of EEA reports cannot be proven, no points will be allocated for management control/employment equity on your upcoming B-BBEE scorecard.
Ultimately, B-BBEE and Employment Equity are at the forefront of current affairs due to the lack of substantial advancement in both spheres. The amendment might be a chance for the state and employers to address this head-on.
However, some stakeholders are concerned about whether the government has the capacity to implement and oversee these new processes. There will be different targets and enforcement mechanisms for each sector, which means managing the new system might become difficult and impractical. In addition, growing businesses might choose to limit their staff to under 50 employees in order to comply. As a result, this could potentially limit job opportunities for people of all demographics.
Honeycomb is committed to following legislation and not its interpretation as we believe in fair and honest practice for all. However, as an organisation, we believe that the most recent amendment to the Employment Equity Act is unconstitutional and not inclusive of our ever-changing country. We foresee that the proposed regulations will not come into effect as Large Corporate is objecting to this.
How does Employment Equity affect your BEE Score?
Employment Equity falls under the management control element of your B-BBEE scorecard. It contributes to 19 out of 118 points when calculating your score. This weighting highlights the significance of EE when it comes to your company’s B-BBEE compliance.
Within this context, management control refers to the percentage of executive boards, senior, middle and junior management positions held by black employees. There should be black representation when it comes to key decision-making within your company.
Guidelines for developing your Employment Equity Plan
There is no strict format for developing an Employment Equity plan, meaning that employers can customise it to suit their own objectives. When drafting your plan, you should consider the following:
- Consult employees and relevant trade unions to receive approval from all parties
- Analyse your employment policies and practices to identify possible issues
- Implement initiatives within your business that promote Employment Equity and are overseen by a senior manager
In addition, annual reports must be submitted to the Department of Employment and Labour. According to the acting deputy director-general of Labour Policy and Industrial Relations, Thembinkosi Mkalipi, there are plans to have a new online assessment system to help employers submit their reports and monitor equity targets.
On the other hand, businesses with less than 50 employees no longer need to submit Employment Equity plans, regardless of annual turnover. This places less burden on smaller businesses that typically have limited administrative resources.
The General Landscape: What is Employment Equity in South Africa?
In order to further understand how Employment Equity might impact your business, it helps to understand the policy since its introduction in 1998. Then, affirmative action was operationalised in order to address the under-representation of black people and disadvantaged groups within the workforce.
South Africa is one of the most culturally, racially and economically diverse countries in the world. To ensure that everyone enjoys equal opportunity and fair treatment in the workplace, Employment Equity has become one of the main objectives of the state.
Breaking down the Employment Equity Act (EEA)
The Employment Equity Act addresses the disadvantages in employment experienced by designated groups in all industries and at varied occupational levels. According to the act, “designated groups” include black people, women and people with disabilities. The law states that your employers cannot discriminate through employment policies or practices based on:
|Ethnic or social origin
Several amendments have been made to the act since 2002 to adapt to the ever-changing socio-economic circumstances in South Africa. The most notable amendments over the years include:
- 2002: Employment Equity Reports became a requirement. You must submit them to the Department of Labour
- 2003: The Commission of Employment Equity (CEE) is introduced to oversee and promote the acquisition of compliance certificates
- 2006: The act included foreign employers in South Africa and began to emphasise equal pay for work of equal value
- 2013: Provisions were made to improve compliance assessment and enforce proactive measures to eliminate unfair discrimination
- 2014: Designated groups under the act specifically included black people, women and people with disabilities to solidify equitable representation of diverse demographics
- 2018: Enhanced transparency in the Employment Equity reporting process formed part of compliance orders
- 2019: Several changes were made to promote fair and equitable employment practices
- 2020: Businesses with more than 50 employees now need to comply, irrespective of annual turnover
The ongoing amendments over the years tell us that Employment Equity is not one singular goal that can be achieved overnight. Rather, it is a long-term process that requires efforts from both private and public sector stakeholders.
In Conclusion: Advantages and disadvantages of the Employment Equity Act
If actioned effectively, businesses across all industries will be held accountable in terms of their Employment Equity targets. This could be advantageous for South Africa because the equity targets will serve as measurable indicators of both EE and BEE compliance. Businesses can do their part in sustaining equitable employment by adhering to a concrete EE framework.
On the other hand, there are some potential disadvantages to consider regarding the new bill. Most notably, businesses might stunt their growth to avoid becoming “designated employers” that must follow these EE regulations. In time, we could start to see a substantial loss of job opportunities for people of all demographics which ultimately goes against the objectives of transformation.
At this time, businesses are encouraged to follow legislation by assessing their EE plans and targets.
Frequently asked questions
What is the purpose of the Employment Equity Act?
The main purpose of the Employment Equity Act is to promote workplace equality by eradicating unfair discrimination and facilitating equal opportunities. This ensures that all individuals are treated fairly and without bias.
Why was the Employment Equity Act introduced?
The Employment Equity Act was introduced to address discrimination and inequality in the workplace, specifically within the context of post-Apartheid South Africa.
Why is the Employment Equity Act important?
The Employment Equity Act is important because it puts into place measurable employment equity targets, meaning that businesses have a concrete framework for adopting these values and policies. The law protects employees from unfair treatment and any form of discrimination.
What is an Employment Equity plan?
An Employment Equity plan outlines how employers will go about creating a fair and non-discriminatory work environment. It explains the steps a designated employer must take to achieve affirmative action in the workplace.
What is Employment Equity status?
Employment Equity status refers to the equity conditions within a workplace. This entails the available protection measures an employee has from discrimination or unfair treatment. It also includes the solutions in place if there is an instance of non-compliance.
Are you an Employment Equity candidate?
All employers and workers in South Africa are technically Employment Equity candidates, meaning that they will have to comply if their business meets the criteria now or at any point in the future. The only exception is workers and employers from the National Intelligence Agency, the South African National Defence Force and the South African Secret Service.
How does Employment Equity work?
Employment Equity works by rewarding employers who meet the targets of black/previously disadvantaged people in middle and senior management with greater B-BBEE scores. The total B-BBEE score determines your company’s B-BBEE level.