Editor’s note: please be very wary of the new Employment Equity Bill. In our view it gives excessive powers to the Department of Labour which could make employers’ lives very difficult.
On the 20th July 2020, the latest draft of the Employment Equity Bill was published and will be on its way to Parliament.
This Bill gives the Minister far greater powers to intervene and has increased the requirements for the employer to comply. One of the amendments includes Section 53 which requires that an annual certificate of compliance is issued and failure to receive this certificate will affect your ability to do business with the State and its Organs.
One of the biggest changes taking place, which I believe will hugely impact employers’ ability to comply, is the introduction of sectoral targets. The Minister will now establish numerical targets for employers in specific economic sectors and employers must comply with these targets. It is not clear whether these targets will be further drilled down to include other factors such as business type; location; size business and turnover of business which could largely affect employer’s ability to meet the targets.
In August 2019 the Employment and Labour Minister reiterated that those that did not comply would be punished and that the need for Sectoral Targets was due to the continued non-compliance of Employers.
These amendments clearly indicate “unhappiness” at the slow rate of transformation of business in South Africa and seem to be trying to force employers to transform at a faster rate. Whether this is feasible remains to be seen but feasible or not it is still coming, and business needs to start preparing.
Our biggest concern is that while the intention is for this to impact employers who supply services to public entities, it will be rolled out through the BEE legislation and impact all employers wishing to get a valid BEE rating e.g. the DTI may require a certificate of employment equity compliance before a rating is given. This would be extremely problematic in our eyes particularly where the Minister is setting targets. Imagine a scenario where the Minister sets targets for an industry in JHB where an employer might have access to a wide labour pool yet the same targets might apply for an organization in the Western Cape where the labour demographics are different…and how long might all employers have to comply…there are just too many variables and unknowns here for a Ministry that has shown little pragmatism in the past.
What to do in the short term…?
It is clear from the proposed amendments and the many inspections that the expectations for employers to transform and to comply is high.
Many employers partially comply either because they don’t fully understand the requirements OR they don’t have time to get it all done.
The consequence for not complying are serious with hefty fines of R1,5 million and above. Even more worrying is that in the case of non-compliance for the Employment Equity Plan the Director-General can apply directly to Labour Court for the fine to be issued to the employer without having to first issue written undertakings or compliance orders.
For more information on the requirements of a designated employer please join our free webinar on 30th September 2020 at 09h00. To register please click on the link Employment Equity Webinar Registration
In the meantime please feel free to complete our EE Compliance Questionnaire. This questionnaire takes less than 5 minutes and will give you an immediate snapshot of possible areas of concern.