By Dawie Brink: BBBEE consultant at Cores

According to the Employment Equity Amended Act of 2013 – Section 20 (gazetted on the 16th of January, 2014), designated employers are required to prepare and implement an Employment Equity Plan and submit an Employment Equity Report on the Department of Labour website. Failing to do so can lead to fines from R1.5 million or a percentage of company turnover.

The Chief Director of the Department of Labour recently confirmed that South African companies can expect more reviews from the Director-General in the coming months, as their analysis of compliance has shown that 60% of employers are not complying with the current Employment Equity regulations, let alone the new regulations in draft.

Arguably the most significant implication of these draft amendments to the Employment Equity Act wis that the Minister of Employment and Labour will be able to determine numerical targets for all sectors, based on criteria which the Minister may determine. The following amendments are set to have the most substantial consequences for employers:

  • Section 15A – Minister enabled to prescribe numerical targets for sectors across all occupational levels.
  • Section 42 – Assessment of compliance.
  • Section 53(6) – A list of criteria that needs to be met before an employer can obtain a compliance certificate. This section has been in legislation but has not been implemented as yet. It will however now be taken into consideration for any company that tenders for State contracts.

The red flags that we see with these amendments is that the sector targets will apply to ‘all’ companies, and will not be determined by the size of the company, which may make it difficult for smaller companies to comply. Especially if these sectoral targets are not determined via proper consultation with each of the sectors.

In reality, we will only understand the total implications of these amendments once it has been promulgated. Until then, it is critical for companies to ensure due diligence and make sure they are fully compliant with the Employment Equity Act, before the inspectors come knocking.

Point of departure to minimise the chances of paying such exorbitant fines, is to determine whether the company is a “Designated Employer” or not. If they are, they must ensure that their Employment Equity Plan is in place, and submit an Employment Equity Report between 1 September and 15 January every year.