The South African employment landscape is undergoing significant changes with the recent amendments to the Employment Equity Act (EEA). These amendments aim to strengthen the country’s commitment to equity and diversity in the workplace. For transformation managers and HR professionals, understanding and adapting to these changes is crucial.
This article delves into the key implications of the EE Amendment Act, including:
- The delayed implementation and the effective date of 1 January 2025
- New criteria for designated employers
- The significance of sectoral targets and their potential impact on businesses
- Recommendations on compliance and risk management
- Information on obtaining compliance certification
- Other notable changes, such as the revised definition of disability, changes to psychological testing, and consultation obligations
Delayed Implementation and Effective Date
One of the most significant aspects of the EE Amendment Act is the delayed implementation and the subsequent effective date. While the Act was signed into law in April 2023, its full implementation has been pending the president’s sign off.
The most recent proclamation by President Cyril Ramaphosa has set the effective date for specific sections of the Act as 1 January 2025 (sections included are 1, 8, 14, 15A, 16, 20, 21, 27, 36, 37, 42, 53, and 64A). This means that the new provisions, including the revised criteria for designated employers and the introduction of sectoral targets, will come into effect from this date.
The delayed implementation has raised questions about the practical implications for businesses, particularly in terms of reporting cycles and planning. However, it’s crucial to stay updated on any further clarifications on whether there will be a transition period.
New Criteria for Designated Employers
One of the key changes introduced by the EE Amendment Act is the revised criteria for determining designated employers. Previously, employers were designated if they had more than 50 employees or based on their annual turnover if their number of employees was below 50.
Under the new regulations, an employer will be considered a designated employer only if:
- It employs 50 or more employees.
This change means that many smaller businesses may no longer be classified as designated employers based on turnover, which could significantly impact their employment equity obligations. However, it’s important to note that this change will only take effect from 1 January 2025. As we are so far in the 2024 reporting period, it can be reasonably assumed that the practical implications for transitioning are that the anticipated regulations will guide the 2025 reporting period from 1 September 2025. Designated employers are urged to look out for publication of the anticipated regulations for the clarity which is required to inform implementation and practice.
Sectoral Targets: Awaiting Finalisation
A controversial aspect of the EE Amendment Act is the introduction of sectoral targets. The Minister of Employment and Labour will have the power to identify specific sectors of the economy and set numerical targets for the representation of designated groups within those sectors.
The implications of sectoral targets are significant:
- Increased Compliance Burden: Designated employers will need to carefully analyse their workforce demographics and develop strategies to meet the specific targets for their sector. The Department of Employment and Labour is expected to engage with industries and consider feedback before publishing the final sectoral targets. It remains unclear whether there will be an additional opportunity for public input after the February 2024 commentary period. Once finalised, designated employers must revise their employment equity plans to align with these targets or provide reasonable justifications for non-compliance.
- Enhanced Monitoring and Enforcement: The Department of Employment and Labour will likely increase its monitoring and enforcement activities to ensure compliance with sectoral targets.
- Potential for Litigation: Non-compliance with sectoral targets could lead to legal action, including potential fines and penalties.
It is crucial for businesses to stay informed about the specific sectoral targets that will be implemented and to develop strategies to achieve these targets in a sustainable and equitable manner.
Compliance and Risk Management
Designated employers should avoid rushing to amend their employment equity plans prematurely. Instead, they should await the publication of the final sectoral targets and accompanying regulations. At that stage, employers must analyse their workforce, consult with employee representatives, and update their plans to reflect the targets. Employers must also be prepared to justify any legitimate barriers to achieving sectoral alignment.
Certification of Compliance
The amendments introduce stricter requirements for obtaining a compliance certificate from the Minister of Employment and Labour. From 1 January 2025, all employers—whether designated or not—must hold such a certificate when entering agreements with the State. The certificate will only be issued if the employer:
- Has complied with applicable sectoral numerical targets or provided a reasonable justification for non-compliance.
- Has submitted the annual employment equity report.
- Has not been found guilty of unfair discrimination under the EEA by the CCMA or courts in the previous 12 months.
- Has no CCMA award against them for failing to pay the national minimum wage in the past 12 months.
It’s essential for designated employers to stay updated on the specific reporting requirements and deadlines. Failure to comply with these obligations could result in penalties and legal action.
Other Notable Changes
In addition to the key changes discussed above, the EE Amendment Act also includes several other notable amendments:
- Definition of Disabilities: Now aligned with the UN Convention on the Rights of Persons with Disabilities, the definition includes individuals with intellectual or sensory impairments that significantly limit employment opportunities.
- Psychological Testing: The role of the Health Professions Council in certifying psychological assessments has been removed.
- Consultation Requirements: Employers need only consult with representative trade unions, not individual union members.
- Numerical Goals: Employment equity plans must comply with sectoral targets, which will influence compliance assessments.
- Reporting Deadlines: The reference to a 1 October deadline for reporting has been removed. Reports will now be submitted as prescribed by future regulations.
- Income Differentials: These will be submitted to the National Minimum Wage Commission instead of the Employment Conditions Commission.
- Labour Inspector Powers: Inspectors now have enhanced authority, including the ability to request written undertakings to comply with employment equity obligations and to “serve” compliance orders.
It’s important for HR professionals and transformation managers to stay informed about these changes and to ensure that their organisation’s employment equity practices are aligned with the new requirements.
Preparing for the New Era of Employment Equity
While the initial announcement of these amendments caused confusion, it is now clear that their full impact will only materialise as the final sectoral targets and related regulations are published. HR practitioners and employers should monitor developments closely and prepare to align their employment equity plans accordingly. The emphasis should be on compliance readiness, risk management, and ensuring that company plans are updated within the legal framework by September 2025.