On 14 April 2023, President Cyril Ramaphosa assented to the Employment Equity Amendment Act 04 of 2022 (“The Amendment Act”). While the effective date of the Amendment Act has not yet been proclaimed by the President, the Amendment Act brings some substantial changes to the Employment Equity Act 55 of 1998 (“The EEA”).
THE EMPLOYMENT EQUITY ACT
In order to understand the changes to the EEA that have been occasioned by the Amendment Act, we must first understand the purpose and the application of the EEA.
The EEA was enacted in an attempt to redress the inequalities and disparities in employment, occupation and income within South Africa’s labour market, which arose as a result of Apartheid and other discriminatory laws and practices that previously existed in the country. The EEA, therefore, seeks to give effect to the Constitutional right to equality by inter alia eliminating unfair discrimination in employment, achieving a diverse workforce broadly representative of our population and promoting economic development and efficiency in the workplace.
The EEA seeks to redress the in
justices in the labour market occasioned by Apartheid and past discriminatory laws by promoting equal opportunities for all employees. Furthermore, the EEA ensures that all employees are treated equally by prohibiting the direct or indirect discrimination in any employment policy or practice on a number of grounds.
The EEA places a large emphasis on Employment Equity and Affirmative Action in order to achieve its purpose.
CHANGES TO THE EEA
1. A CHANGE TO THE DEFINITION OF “DESIGNATED EMPLOYEE”
The EEA applies to all employees and employers except the South National Defence Force, the National Intelligence Agency and the South African Secret Services. Chapter 3 of the Act which deals with Affirmative Action, however, only applies to Designated Employers.
In Section 1 of the EEA, the definition of a Designated Employer, extends to employers who have less than 50 employees but has a total annual turnover that is equal to or above the applicable annual turnover of small business in terms of the thresholds stipulated in schedule 4 of the EEA and amended by the Minister from time to time.
However, the Amendment Act shall delete subsection (b) of the definition. This means that when the Amendment Act comes into effect, employers who employ less than 50 employers shall no longer fall within the definition of a Designated Employer in terms of the EEA, regardless of what the employer’s annual turnover is.
Therefore, when the Amendment Act comes into effect, employers who employ less than 50 employees will not be required to comply with the obligations that the EEA imposes on Designated Employers in terms of Chapter 3 of the Act. This will have an effect on smaller employers, who will now no longer need to comply with the provisions of Chapter 3 of the EEA in order to obtain a certificate of compliance in terms of Section 53 of the EEA.
Companies are required to have a certificate of compliance in terms of Section 53 of the EEA in order to enter into agreements with organs of state for the furnishing of supplies and services or for the hiring or letting of anything.
The Amendment Act also acco
rdingly, repeals schedule 4 of the EEA.
The effect is that this should open up the market to small and medium sized enterprises and make it significantly similar for them to do business with the state without so much red tape. This amendment can been seen as a step towards achieving greater freedom for SMEs in the open market.
2. EXPANDING THE DEFINITIO
N OF “PEOPLE WITH DISABILITIES”
The Amendment Act expands the definition of “people with disabilities” to include people who suffer from intellectual or sensory impairments which, interaction with various barriers may substantially limit their prospects of entry into, or advancement in, employment. The inclusion of these words into the definition thus widens the scope of the term “people with disabilities” in the context of the EEA to include people who suffer from sensory and intellectual impairments. The Amendment further has the effect of giving the term “persons with disa
bilities” a corresponding meaning.
This change in definition is in line with the international development an understanding of what constitutes a disability.
3. THE ESTABLISHMENT
OF SECTORAL TARGETS
In an effort to enhance the representation of historically disadvantaged groups in each sector of the economy, the Amendment Act inserts Section 15A into the EEA which gives the Minister the power to identify national economic sectors and set numerical targets in each sector in order to achieve the purpose of the EEA.
The insertion of Section 2A into the EEA places an obligation on employers to ensure that the numerical goals comply with the sectoral targets referred to above, that apply to the respective employer.
Furthermore, an amendment to Section 42(1) of the EEA means that an employer’s compliance with a sectoral target, applicable to the respective employer as set out in terms of Section 15A, shall be a factor taken into account when considering whether the respective employer is implementing employment equity in compliance with the EEA.
We will have to see what comes of the Minister’s targets for each sector once published. These sectoral targets will require employers to have a strong understanding of the sector in which they are operating and the targets that they are required to meet. This will be complex legislation implemented to solve the complex historical problem of inequality in the labour market. It is strongly recommended that employers discuss these sectoral targets with their legal advisors and ensure that when they are published, they comment on the targets within the 30 days provided for.
4. THE NATIONAL MINIMUM WAGE ACT 9 OF 2018 & THE NATIONAL MINIMUM WAGE COMMISSION
The Amendments to Section 53(6) of the EEA mean that the Minister may only issue a certificate of compliance to an employer in terms of the EEA, if the Minister is satisfied that the CCMA has not issued an award against the respective employer in the previous 12 months for failing to pay the minimum wage in terms of the National Minimum Wage Act 9 of 2018. Companies that are unable to obtain a certificate of compliance can lose multi-million rand contracts with the st
ate and so we highly recommend that employers are constantly vigilant to ensure compliance with the National Minimum Wage Act 9 of 2018.
The Amendment Act also grants certain powers and responsibilities to the Minimum Wage Commission to achieve the EEA’s purpose.
5. THE POWERS OF LABOUR INSPECTORS
An amendment to Section 36 of the Act also extends the powers of Labour Inspectors to request a written undertaking from a Designated Employer to comply with paragraph (c) and prepare the employment equity plan required by Section 20 of the EEA within a stipulated period, if the Labour Inspector has reasonable grounds to believe that the employer has failed to do so.
Therefore, if a Labour Inspector has reasonable grounds to believe that an employer has not prepared an employment equity plan as stipulated in Section 20 of the EEA within a specified period, the Labour Inspector may request to be furnished with a written undertaking from the employer to comply with paragraph (c) by preparing the relevant employment equity plan.
The contents of this article are not to be construed as legal advice. In order to ensure substantial compliance with the provisions of the Employment Equity Act, an attorney should be consulted. Our team of attorneys at Naudé Dawson Inc are well equipped to provide assistance and advice on South African employment laws.
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