Employment Equity | 1 September 2026: The Clock Starts Ticking

The first employment equity assessment begins on 1 September 2026. Is your business ready?

A date is approaching that changes the character of employment equity compliance in South Africa. When the 2026 reporting period opens on 1 September 2026 and runs to 15 January 2027, designated employers will for the first time be assessed on their progress against the annual targets set out in their own employment equity plans, measured on the path toward the five-year sectoral targets gazetted in April 2025.

Every reporting cycle before this one was, in effect, preparation. The 2025 baseline cycle, which closed on 15 January 2026, required designated employers to submit their reports and align their plans without being measured against their targets. That grace has now been used up. From September, the question the Department of Employment and Labour will ask is no longer whether you have a plan. It is whether you are delivering on it, and if not, whether you can justify why.

Who is assessed: Designated employers, meaning all employers with 50 or more employees

Assessment window: 2026 reporting period, 1 September 2026 to 15 January 2027

What is assessed: Progress against the employer’s own annual targets, set in its EE plan, toward the five-year sectoral targets for its economic sector

Legal framework: EE Amendment Act 4 of 2022 (in effect 1 January 2025); EE Regulations and five-year sectoral numerical targets for 18 economic sectors (in effect 15 April 2025)

Consequence of compliance: EE certificate of compliance, valid 12 months, required for doing business with the state

Consequence of unjustified non-compliance: Referral to the Labour Court; fines under Schedule 1 of the EEA starting at the greater of R1.5 million or 2% of annual turnover, escalating to the greater of R2.7 million or 10% of turnover for repeated contraventions

Source: Department of Employment and Labour implementation roadmap for the amended EEA; Cliffe Dekker Hofmeyr, Update on the Introduction of Sectoral Targets under the Employment Equity Act Amendments; Webber Wentzel, The next phase of Employment Equity Compliance, October 2025

How the new system works

The Employment Equity Amendment Act came into effect on 1 January 2025, and its accompanying regulations, including five-year sectoral numerical targets for 18 economic sectors, took effect on 15 April 2025. Two structural changes matter most for members.

The first is the definition of a designated employer. Designation is now determined by headcount alone: 50 or more employees. The previous turnover-based designation has fallen away, which means smaller employers who were previously designated by turnover are no longer required to comply with the affirmative action chapter of the Act, while every employer at or above 50 employees is.

The second is how targets work. When a designated employer submits its report on the online system and selects its economic sector, the system reflects the gazetted sectoral targets for 2030. The employer does not adopt those endpoint figures as its own annual obligation. It sets its own annual numerical targets in its five-year employment equity plan, structured to show credible progress toward the sectoral endpoint. The Minister of Employment and Labour, Nomakhosazana Meth, has confirmed this design point publicly: the numerical goals are set by the designated employers themselves, and companies are assessed against their own set annual targets in their EE plans.

That design cuts both ways. It gives employers genuine control over the pace of their plan. It also removes the most common excuse, because an employer that misses a target it set for itself is in a materially weaker position than one measured against a figure imposed from outside.

Source: Employment Equity Amendment Act 4 of 2022; Employment Equity Regulations, 2025; Minister of Employment and Labour, media statements, May and June 2026

The court challenges have not stopped the clock

Many employers have watched the litigation against the amended framework and concluded that compliance could wait for legal certainty. The record now speaks clearly against that position.

The urgent application by Sakeliga to interdict and suspend the implementation of the sectoral targets was dismissed by the Gauteng High Court on 28 August 2025. On 10 March 2026, the Constitutional Court refused the applicants leave to appeal directly. On 22 May 2026, the Constitutional Court dismissed a further application for leave to appeal, with costs, finding that no case had been made out for urgency and that the appeal bore no reasonable prospects of success.

The substantive challenges are not over. Part B of the Sakeliga application, which seeks to have section 15A and related provisions declared unconstitutional and the sectoral targets and regulations set aside, remains pending before the High Court. A separate review application by Solidarity is pending in the Labour Court. The Department is opposing both, and the Minister has stated that, in the absence of any interdict, the Department is proceeding with implementation and that designated employers are legally obligated to comply.

The practical position for employers is therefore this: the obligations are in force, the assessment cycle is proceeding, and no court has suspended either. A pending review is not an interdict, and it is not a compliance strategy. If the substantive challenges eventually succeed, the framework will change at that point. Until then, it binds.

Source: 26th Commission for Employment Equity Annual Report 2025/26 (labour.gov.za), litigation status update; Constitutional Court order of 22 May 2026 as reported therein; Minister of Employment and Labour, statements of May 2026

What is at stake

The certificate of compliance.

An EE certificate of compliance, issued under section 53 of the Act and valid for 12 months, is now a prerequisite for doing business with the state. For a designated employer, issuing conditions include submission of the annual report, achievement of annual targets or reasonable grounds justifying non-achievement, no finding of unfair discrimination against the employer in the preceding 12 months, and compliance with the National Minimum Wage Act. Employers with fewer than 50 employees who seek state work also require the certificate, assessed against the narrower criteria that apply to non-designated employers.

Fines through the Labour Court.

A designated employer that fails to achieve its annual targets without justifiable reasons may be referred to the Labour Court. Schedule 1 of the EEA sets fines starting at the greater of R1.5 million or 2% of annual turnover for a first contravention, escalating through repeated contraventions to the greater of R2.7 million or 10% of turnover. Two features of this mechanism deserve emphasis. The fine is imposed by the Labour Court, not administratively, and the employer has a full opportunity to present justifiable reasons before any fine is considered. The protection, in other words, is the quality of your records and your justification.

An enforcement environment with momentum.

The 26th Commission for Employment Equity Annual Report, released in early July 2026, is the first covering the new framework in operation. It records 15 090 reports submitted in the 2025 cycle, covering 6 896 041 employees, and finds that the top and senior management levels of the workforce remain, in the Commission’s words, racialised and gendered. The report leaves little doubt about the direction of enforcement attention in the assessment cycle now beginning.

Source: Employment Equity Act 55 of 1998, section 53 and Schedule 1; 26th CEE Annual Report 2025/26 (labour.gov.za)

Justifiable reasons: the defence the law provides, and what it demands

The framework is built around targets, not rigid quotas, and the regulations recognise that a designated employer may fall short of an annual target for legitimate reasons. Grounds contemplated in the regulations include insufficient opportunities to recruit or promote, an insufficient pool of suitably qualified candidates from designated groups, the effect of mergers, acquisitions or transfers of a business, and the impact of prevailing economic circumstances on the business.

The critical point is that a justifiable reason is not an assertion. It is a documented case. An employer relying on limited recruitment opportunity must be able to show its actual vacancies, its actual recruitment efforts and its actual outcomes. An employer citing economic conditions must be able to show the operational record behind that claim. The employers who navigate the assessment cycle without difficulty will be those whose files already contain that evidence when the reporting window opens, not those assembling it in December.

What to do between now and 1 September 2026

Confirm your designation status against the headcount test of 50 or more employees, and re-confirm it if your workforce has changed during the year
Retrieve the employment equity plan and annual targets submitted in the baseline cycle, and measure your current workforce profile against them honestly, before the Department does
Where a target will be missed, begin building the justification file now: vacancy records, recruitment and promotion records, offers made and declined, and the economic circumstances affecting the business
Verify the hygiene factors that affect certificate eligibility, including National Minimum Wage compliance and any unfair discrimination findings in the preceding 12 months
Ensure the consultation record is in order, since affirmative action measures must be contained in a plan on which employees and their representatives were consulted
Diarise the reporting window of 1 September 2026 to 15 January 2027, and do not plan around the final weeks of it

Final consideration

Employment equity has moved from a reporting obligation to a measured one, and the first measurement begins in weeks, not months. The employers at risk in this cycle are not primarily those who miss their targets. They are those who miss their targets without a documented, credible account of why. The time to build that account is now, while the reporting window is still ahead.

(SA)UEO is able to assist members in reviewing their employment equity readiness, and members requiring guidance on their designation status, their plans or their justification records are encouraged to engage with their organiser or to contact info@saueo.co.za.

Sources:

Employment Equity Amendment Act 4 of 2022; Employment Equity Regulations, 2025, and five-year sectoral numerical targets (Government Gazette, 15 April 2025); Employment Equity Act 55 of 1998, section 53 and Schedule 1; 26th Commission for Employment Equity Annual Report 2025/26, Department of Employment and Labour (labour.gov.za); Cliffe Dekker Hofmeyr, Update on the Introduction of Sectoral Targets under the Employment Equity Act Amendments; Webber Wentzel, The next phase of Employment Equity Compliance: Preparing for January 2026, October 2025; Minister of Employment and Labour, media statements, May and June 2026.