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What Employers Need To Know About The Draft Employment Equity Amendment Bill

The Minister for Employment and Labour has published a Draft Employment Equity Amendment Bill, which proposes specific targets as far as affirmative action is concerned, and which any entities that do business with the State will have to comply with, failing which they will be unable to do any business with the State.  

In addition, any entity that wishes to do business with the State will have to obtain a Certificate from the Minister, confirming that it is in compliance with affirmative action targets, failing which the entity will also be prohibited from doing business with the State.  

In its present form, the Minister will be able to determine how many employees must form part of a designated group within specific companies, including per occupational level, and the Minister may also set targets in different sub-sectors and regions. The apparent reason for this is that government believes that the current eleven sectors that cater for all employees in South Africa are insufficient, hence the need to provide for sub-sectors and different regions, possibly in order to cater for region-specific demographics.  

Each employer will have to set targets and goals for their organisational structure that comply with the targets and goals set by the Minister for the sector or industry that they fall under, and the failure to comply may lead to substantial fines being imposed by Labour Inspectors that will assess the Employment Equity Plans of all employers to ensure compliance.  

Compliance by a designated employer may, in addition to being measured against the demographic profile of either the national or the regional economically active population, also be measured against an employer’s compliance with the sectoral numerical targets set by the Minister, which may become an onerous burden for employers, especially considering the fact that targets for sub-sectors and all occupational levels may be set by the Minister. 

The failure to set goals and targets in Employment Equity Plans may also become a contravention of the Bill should be enacted, and Labour Inspectors will be able to issue Compliance Notices, and unless the Bill is amended with regard to the levels of fines, employers could be fined between R 1.5 million and 2% of their turnover, and R 2.7 million and 10% of turn-over.  

The manner in which reports will have to be submitted may also change, in that the Bill proposes that designated employers will have to submit a statement to the National Wage Commission, detailing the remuneration and benefits received by employees in each occupational level of that employer’s workforce. Employers will also have to disclose Variable Pay of employees, especially senior employees, to demonstrate the remuneration gap between the highest and lowest paid employees. 

Reference is made to Fixed Pay and Variable Pay as being Total Remuneration, and for Middle, Senior and Top Management the on-target / expected remuneration as required by Remuneration Principle 14 of the King IV Report on Corporate Governance must be reported. This may become an exceptionally onerous task, especially for larger companies where this category of employees receives incentives, and it will be important to ensure that reports are accurate, least Compliance Orders are issued against the company.  

The one positive in the Bill is that employers with less than 50 employees may be absolved from compliance with the provisions of the Act if the Bill is enacted, as the Bill proposes that turn-over threshold for such employers be removed. How this will affect the ability of such employers to do business with the State is as yet uncertain, and it is likely that the Bill may be amended to cater with this apparent omission in the current draft of the Bill. 

As is evident from the above, compliance with employment equity legislation is set to become more complicated in the near future, and it is advisable to obtain professional assistance to ensure that employers and companies remain compliant at all times. 

If you have any questions about other Labour or Land issues, contact McCarthy & Associates Attorneys on (033) 266 6170 or admin@maalaw.co.za