In the past twelve months we have repeatedly warned clients about the aggressive audits and fines being implemented by the Department of Labour for non-compliance with the Employment Equity Act. The minimum fine is R1.5 million and the department has issued Notices of Motion to get the fines imposed by the courts.
The fines have generally been levied where companies have not complied with material aspects of the Act e.g. not filing their returns or not having an operating Employment Equity Committee. However, this has now changed and fines are now being levied for less material items and in some instances for subjective views on the success of the employer’s plan as the examples below show:
- An employer was recently fined for not constituting their Employment Equity Committee in the prescribed manner. Instead of having open elections the employer approached employees to become members of the committee and obtained consensus from the workforce. The members met the diversity requirements, but the Department of Labour fined the employer because of the process followed;
- An employer was issued a fine for not making “reasonable progress” on their submitted plan despite showing an 18% improvement on previously reported numbers;
In addition, employers face a bit of a lottery depending on the inspector running the audit:
- An employer was informed they were not compliant because they had said in their plan they would have 592 staff members, but in reality now had an extra 9 at 601 (Editor: don’t ask what the response was when it was asked whether they should terminate the employment of the extra 9 to get the numbers exact)
- One inspector known to us has a recorded >90% incidence of fining companies they audit
We can only stress to employers to please get their ducks in a row and make sure their employment equity files are in good order. We have had good experiences with the HRTorQue’s product where there is clear documentation of all steps taken, communication and analysis.