New law stops dragging of feet on transformation

The Employment Equity Amendment Bill will fast-track transformation in corporate South Africa

The Employment Equity Amendment Bill, which promotes equal opportunity and fair treatment in employment through the elimination of unfair discrimination, was approved by Cabinet in February and will now be tabled in Parliament.

The Bill is intended to fast-track transformation in corporate South Africa, particularly in the private sector, where transformation has been slow.

In summary, the Bill aims to regulate sector-specific Employment Equity (EE) targets and make an EE compliance certificate a prerequisite for accessing state contracts.

According to Tembinkosi Mkhalipi, the Chief Director of Labour Relations at the Department of Employment and Labour, when the Employment Equity Act was introduced into law 21 years ago, government thought companies would embrace it and accept that transformation and equity make business sense.

“The law moved from the premise that there should be no involvement of government, in terms of forcing transformation in terms of target setting. It left it to companies to set their own targets and goals and government only monitored them.

“Over the past 21 years, nothing has happened that should have happened, and no real significant change has taken place. It's clear that if we continue at the rate that we are going, it will take another 100 years before we really transform,” says Mkhalipi.

He explains that, as a result of this slow progress, government took a policy decision to enter into negotiations with the National Economic Development and Labour Council and the Employment Equity Commission, where business was also represented.

The Commissioner of Employment Equity originally released the Bill for consideration in October 2019.

The Bill re-emphasises the importance of companies actively transforming their workplace through implementing a dedicated and active EE committee; developing an EE plan and commitment to transformation; and ensuring compliance to all EE regulations.

A lack of transformation in the workplace could result in a company being deemed non-compliant, which could present serious business risks or implications in the form of fines, penalties and nonaccess to work.

Sector-specific EE targets

Every year the Employment Equity Commission report reflects poor transformation statistics, especially across management levels, in respect of the representation of black people, women and people with disabilities.

The proposed amendments to the Employment Equity Act thus empowers the Employment and Labour Minister, in consultation with sector stakeholders, to introduce enabling provisions for the setting of sector-specific EE numerical targets which employers must meet within five years. “Target setting is not new, except that now government comes into the picture in setting the target,” says Mkhalipi.

“We are already busy with negotiations with different sectors in terms of the targets. We are not waiting for the Bill. We have already consulted the mining, banking and retail sectors and will be contacting other sectors to see whether we can reach an agreement on what targets to set.

“When we reach agreements, they must be published so that citizens know what targets companies should meet going forward,” says Mkhalipi.

He explains that if, for example, a target of 50 percent senior management representivity was set in the banking sector – which is in line with the sector's own broadbased black economic empowerment targets – each bank would have to state how it would achieve this target over the next five years. After the five-year period, the sector must have met the stipulated target.

If the Bill is passed by Parliament, it will also reduce the regulatory burden on small businesses, as those with less than 50 employees will no longer have to report on their EE targets, irrespective of their turnover.

EE compliance certificate

The Bill will also ensure that an EE certificate of compliance becomes a pre-condition for access to state contracts.

“If a company doesn't meet a target, it will not get a compliance certificate and will not be able to do business with the state,” Mkhaliphi says, explaining that this has not been promulgated in the past.

In addition, if a company is found to have committed any form of unfair discrimination by the Commission for Conciliation, Mediation and Arbitration or Labour Court, in the 12 months preceding the submission of the employment equity report, a compliance certificate will not be issued.

To meet the targets, companies should start conducting an analysis of the gap between what their black, women and persons with disabilities representation is now and compare these levels of representation to the targets set in the Management Control element of the broad-based black economic empowerment codes, as at this stage the Ministerial targets could be similar to these. Companies will also have to plan their workforce needs over the next five years carefully and put the necessary employment policies and procedures in place to drive progress.

From the perspective of inequality in the workplace, the Bill will bring in mandatory training of employees, meaning that companies will also have to focus on their training and development.