Amendments to the Employment Equity Act (EEA) will change the definition of a “designated employer” to restrict the application of sections of the Act to a reduced group of employers and relieve some of the administrative burden on smaller employers.
This is the view of Gillian Lumb and Nadeem Mahomed of Cliffe Dekker Hofmeyr, who unpacked the implications of the Employment Equity Amendment Bill.
The Department of Employment and Labour announced that the amendments should come into effect on 1 September 2023.
The EEA applies to all employees and employers, except the South African National Defence Force, National Intelligence Agency and the South African Secret Services.
Sections 12 to 27 of the Act apply only to “designated employers”, who are defined as employers who employ 50 or more employees, or who employ fewer than 50 employees but have a total annual turnover that is equal to or above the applicable annual turnover set out in Schedule 4 of the Act.
The amendment to the EEA will result in employers who employ fewer than 50 employees no longer being classified designated employers. The annual turnover test has been removed.
As a result of the amendment, smaller employers will not be required to comply with the obligations of a designated employer relating to affirmative action, including the development and implementation of employment equity plans and reporting to and submission of employment equity reports to the Department of Employment and Labour.
This will significantly relieve the administrative burden on these employers.
The amendment bill also repeals the “voluntary compliance provision” in section 14, which allows for non-designated employers voluntarily to notify the director-general of its intention to comply with the affirmative action provisions of the EEA as if it were a designated employer.
The change to the definition of a designated employer will not deprive small businesses of the ability to secure a certificate of compliance, as required by section 53, to do business with state entities.
More stringent equity targets for designated employers
Although the amendment bill excludes certain employers from complying with the provisions of the EEA, it will bring more stringent employment equity targets for larger businesses.
In terms of the new section 15A, the Minister of Employment and Labour, after identifying a “national economic sector”, may set numerical targets to ensure the equitable representation of suitably qualified people from designated groups (historically disadvantaged groups of people based on race, gender and disability) at all occupational levels in the workforce.
The sectoral numerical targets will be determined by the minister in consultation with the Employment Equity Commission. All proposals in relation to identifying sectors (an industry or service or part of any industry or service) and setting numerical targets for sectors will have to be published to give interested parties at least 30 days to comment on the proposal.
Section 15A should be read with the new section 20(2A), which states that any employment equity plan, prepared in terms of section 20(2) of the EEA, must comply with the “sectoral numerical targets” as set in section 15A.
A designated employer will have to set numerical targets in line with the applicable sectoral targets set by the minister. An amendment to section 42 will align the assessment of compliance with employment equity with the new requirements relating to the sectoral numerical targets.
The sectoral numerical targets could affect an employer’s eligibility to be awarded state contracts. An amendment to section 53 provides that the minister may only issue a compliance certificate if the employer has complied with the sectoral numerical targets for the relevant sector or has demonstrated a reasonable ground for non-compliance.
Employer’s obligation to consult with a trade union
An amendment to section 16 of the EEA clarifies the consultation process between a designated employer and its employees in respect of:
- The implementation of an employment equity plan;
- The analysis conducted by a designated employer to identify employment barriers that adversely affect people from the designated groups; and
- The content and submission of the employment equity report.
Where a workplace has a representative trade union, the designated employer must consult only with that trade union and not with its employees.
Expanded definition of ‘people with disabilities’
The definition of “people with disabilities” will be substituted to align with the definition in the United Nations Convention on the Rights of Persons with Disabilities, 2007.
The amended definition includes “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”.
HPCSA certification not required for psychological testing
The EEA was amended in 2014 to make it a requirement that psychological testing and similar assessments be certified by the Health Professionals Council of South Africa (HPCSA).
The amendment was aimed at addressing a concern that without the relevant and formal certification, such tests were essentially partial and could result in exclusionary practices, particularly in a country as culturally diverse as South Africa.
Subsequent to the amendment, the capacity of the HPCSA to fulfil the requirement was legally challenged. The latest amendment will remove the requirement of certification by the HPCSA of psychological testing and similar assessments.
Other amendments:
- An amendment to section 21 of the EEA dealing with employment equity reports and annual submission of reports by a designated employer removes a specific date for annual submissions. The amendment empowers the minister to make regulations with regard to the requirements of employers in submitting their employment equity reports.
- An amendment to section 36 revives the power of a labour inspector to secure an undertaking to comply from a designated employer. This power had been removed in an earlier amendment.
- An amendment to section 37 will empower the minister to make regulations regarding the manner of service of compliance orders, in relation to the affirmative action aspects of the EEA, on designated employers.
