The Employment Equity Amendment Bill, 2018 (the “Bill”) and draft Employment Equity Regulations (the “EE Regulations”) are a direct consequence of the Department of Labour’s twenty-year review into the effectiveness of the Employment Equity Act, 55 of 1998 (the “EEA”).
Although the provisions introduced by the Bill are not yet fully enforceable, their implications for several essential employment issues are worth noting. Chief amongst these are amendments relating to an employer’s extended employment equity requirements under the EEA, and the conscious effort on the part of the legislature to align the provisions of the National Minimum Wage Act, 9 of 2018 (the “Minimum Wage Act”), with existing labour law jurisprudence.
This article will focus mainly on the impact of the Bill on the employment equity responsibilities borne by an employer going forward.
The most noteworthy amendments, repeals and additions introduced by the Bill are as follows:
A “designated employer”, as defined in the EEA, is one who is legally obligated to comply with the employment equity provisions and requirements of the Act. The amended definition proposed in the Bill limits the definition and now excludes employers who employ fewer than 50 employees and which meet the prescribed annual turnover threshold as determined by the Minister for Labour. As a consequence, an employer who employs less than 50 employees is automatically excluded from the definition, despite its annual turnover, is no longer considered a “designated employer” and is therefore not required to comply with the stringent employment equity standards imposed by the Act.
The reporting requirements for employers under the EE Regulations have also been lessened and an employer, employing less than 50 employees, is no longer required to report to the Department of Labour. It is, however, still required to apply for and be issued with the necessary compliance certificate.
The Bill further introduces a definition of the National Minimum Wage Commission which highlights the Department of Labour’s intention to ensure consistency between the definitions, policy provisions and the administration systems of the Minimum Wage Act and those created by the labour laws. The Bill reassigns the functions of the Employment Conditions Commission, specifically with regards to the reporting and monitoring of disproportionate income differentials, to the freshly minted National Minimum Wage Commission.
The Bill also introduces a definition of the term “sector” and defines it as an industry or service, or part of any industry or service.
Section 14 of the EEA, which dealt previously with voluntary compliance by an employer with the requirements of the EEA, has been considered surplus to requirements and has been repealed. This section allowed for an employer, who was not a designated employer under the pre-amendment definition, to notify the Director General that it intends to comply with employment equity provisions of the EEA despite not being required to do so, as if it was in fact a designated employer.
Chapter 3 of the EEA, which deals with Affirmative Action, will accordingly now be applicable solely to employers who employ more than 50 employees under the amended definition.
The Bill introduces section 15A which vests, in the Minister of Labour, the power to set numerical (employment equity) targets in respect of any sector, or part thereof, in order to identify the national economic sectors which the Minister believes requires the implementation of such numerical targets. These targets are intended to ensure that suitably qualified persons from all designated groups (defined in the EEA as “blacks, women and persons with disabilities”) are equally represented at all occupational levels in the workforce. As a result, employers are seemingly no longer at liberty to determine their own employment equity targets (unless these already comply with the Minister’s employment equity targets) and that this function now lies exclusively with the Department of Labour.
This section further requires the Minister to issue a notice calling on interested parties to comment before confirming numerical targets for a particular sector.
The new section 15A has also been joined with the existing section 20 – which regulates the creation and implementation of a designated employer’s employment equity plan. A designated employer must therefore read these sections together when deciding on how best to draft and implement its employment equity plan.
The new Section 20(2A):
The Bill creates section 20(2A) which ensures that the numerical targets set by a designated employer, and reflected in its employment equity plan, complies with any sectoral targets established by the Minister in terms of section 15A.
The amended Sections 36 and 42:
The Bill amends section 36 of the EEA in that the labour inspector is now granted the additional authority to request a designated employer to provide a written undertaking that it will comply with its obligations to prepare an employment equity plan in terms of section 20, if the inspector has cause to believe that the employer has failed to do so. The inspector, or any person acting on his or her behalf, may then, upon the employer’s failure to produce the requested undertaking, issue a compliance notice formally calling on the employer to comply with its required employment equity obligations.
The amended Section 42 allows for the extent of an employer’s compliance with its employment equity obligations to be assessed in accordance with the demographic profile of either the national, or regional economically active population, or the sectoral targets, as determined by the Minister.
Clearly, the Bill both lessens and escalates the employment equity responsibilities of designated and non-designated employers alike. It proposes significant changes and all employers are strongly advised to follow the development and practical implementation of the Bill closely.