Employment equity amendment bill: Implications for employers

The Employment Equity Amendment Bill (B14 -2020) has been sent to the National Council of Provinces for concurrence after it was passed by Parliament in November of last year.

The Bill proposes several changes to the Employment Equity Act of 1998, most notably, it empowers the Minister to inter alia identify national economic sectors and to set numerical targets for these sectors in order to ensure equitable representation for suitably qualified people from designated groups at all occupational levels. The Bill also aims to relieve the regulatory burden of small to medium business as well as implement further rules for commercial engagement with government.

   The Bill contemplates the following practical steps:

The Minister –

  • will publish a notice identifying specific national economic sectors, after consultation with interested parties;
  • will issue regulations prescribing the criteria to be taken into account in determining numerical employment equity targets;
  • will consult with each sector;
  • will take advice from the National Minimum Wage Commission; and
  • may then set numerical employment equity targets for any national economic sector or part of a sector.

With regards to the consultation process, the Bill contemplates that the Minister will have to publish a draft notice in the Government Gazette, allowing interested parties at least 30 days to comment. It will also require the Minister to consult with the Employment Equity Commission on what the proposed sector targets should be. Practically, the Bill proposes that numerical goals in terms of an employer’s employment equity plan must comply with sectoral targets. And further, that sectoral numbers will be taken into account in determining whether a designated employer is implementing employment equity in terms of the Act.

   Redefining designated employers and disability

The Bill redefines designated employers as employers employing less than 50 people, irrelevant of turnover, thereby possibly amending the current legal requirement that takes turnover into account. Essentially, many small and mediums enterprises will be exempt from certain provisions of the Act that provides for affirmative action measures. These employers will, however, still be required to undertake employment equity reporting.

The Bill also redefines the classification of people with disabilities in order to align employment equity legislation with international standards. The new proposed definition will include individuals who have long term or recurring physical, mental, intellectual or sensory impairments, which in the interaction with various barriers, may substantially limit their prospects of entry into employment or advancement in employment. The implication is that disabilities do not have to be ‘permanent’ in nature as is currently described in the Act, but that any recurring condition that limits a person’s movements, senses, or activities in executing their tasks will also be considered.

Another proposed amendment in the Bill revolves around psychological testing. Under the Act, professions that use psychological testing for the purposes of pre-screening to ensure that prospective employees can effectively deal with the duties associated with their roles, must have tests certified by the Health Practitioners Council of South Africa (HPCSA). The Bill contemplates doing away with requiring psychological testing or similar assessment of employees to be certified by the HPCSA.

 Promulgating section 53: Compliance certificates for doing business with organs of state

Importantly, the Bill contemplates the promulgating of section 53 of the Act that deals with the issuing of Employment Equity Compliance Certificates. Section 53 requires that in order to conclude an agreement with an organ of state for the provision of supplies or service, hire or letting as part of state contracts, employers must:

  • attach a certificate obtained from the Minister confirming its compliance with the Act 
  • or a declaration by the employer that it complies with the Act, which constitutes conclusive compliance when verified by the Director-General.

The Bill further proposes additional sections to section 53 to allow employers to raise reasonable grounds to justify its failure to comply and importantly, that failure to comply with section 53 is sufficient ground for rejection of any offer to conclude, or for cancellation of, any state contract. Thus, the failure to comply with sectoral numerical targets absent a reasonable ground to justify non-compliance to the satisfaction of the Minister, may preclude a business from concluding state contracts. 

Currently, in terms of the Act, employers that fail to comply with its provisions, which includes the preparation of an employment equity plan that meets the required sectoral numerical target, can be issued fines. However, the Act only provides for fines to be imposed once certain enforcement measures are adopted, which includes a review and recommendation to the employer by the Director-General in relation to compliance. Where such recommendation is not followed, the Director-General may approach the Labour Court for relief (including a fine). The Bill likewise proposes that fines may be imposed if employers fail to comply with sectoral numerical targets. However, the Bill does not propose any changes to the required enforcement mechanisms set out in the Act.

The Department of Labour indicated previously that it will introduce new sector-specific employment equity targets this year, stating that self-regulation has not been effective. Essentially, the Bill contemplates the elimination of all current employment equity plans by September of this year, thereby ensuring that new plans meet the new sectoral-specific five-year targets that will potentially be set out by the Minister of Employment and Labour, that is, if the Bill is enacted in its current form.

   Obstacles and challenges with employer implementation

It is widely accepted that some amendments may not make it into the final Bill, especially as most industries and sectors are still and will continue to deal with the devastating economic impact of Covid-19.  As such, meeting employment equity goals that were set before the onslaught of the pandemic, might be challenging for most organisations. It is also worth noting the contention that the proposed amendments cannot be a ‘one size fits all’ implementation scenario. Each industry operates in a unique socio-economic landscape with unique challenges and specific obstacles presented by the pandemic. As such, careful consideration must be given to specific circumstances of organisations, industries, and employers.