The Minister of Labour (Mildred Nelisiwe Oliphant) has proposed a number of amendments in the Employment Equity Amendment Bill, 2018. These proposed amendments will have vast and lasting effects on Business.

The Amendment Bill’s focus is to speed up transformation targets and processes in the private sector. The Minister is of the opinion that since the inception of the Employment Equity Act dating back to 1998, the private sector has failed to incorporate the spirit of transformation in businesses. Therefore, the proposed amendments will strengthen the transformation targets and sanctions against businesses that fails to implement Employment Equity goals and targets as per the Economic Active Population (EAP) released by Stats S.A. or Sector Gazetted targets.

The Amendment Bill seek to shorten the reporting periods on the EEA2 and EEA4 (Employment Equity Report and Income Differentials Report respectively) for Employers with less than 150 Employees.

Further, the Amendment Bill will force Designated Employers to comply with Chapter II and III (Prohibition of Unfair Discrimination and Affirmative Action respectively) where such Employers intend to conclude agreements with any Organ of State.

1. Designated Employers:
   1. All Businesses that has 50 or more employees is a designated employer and must comply with the Act.
   2. Any Business that had less than 50 employees would be a designated employer, if a certain annual turnover threshold was reached as per Schedule 4 of the Act.
   3. Schedule 4 will be repealed with this Amendment, in essence declaring all Businesses with less than 50 employees as non-designated employers.
2. Tendering with Organs of State:
   1. Any Designated Employer whom tenders for rendering any service or in kind to the State must comply with:
      1. Chapter II of the Act, Prohibition of Unfair Discrimination
      2. The Amendment Bill now includes a new requirement for performing Psychological testing and other similar assessments as per Section 8. The insertion of sub-section (d): “Psychological testing and other similar assessments have been certified by the Health Professions Council of South Africa established by section 2 of the Health Professions Act, 1974 (Act 56 of 1974), or any other body which may be authorized by law to certify those tests or assessments.”
      3. Chapter III of the Act, Affirmative Action.
   2. Any Non- Designated Employer whom tenders for rendering any service or in kind to the State must comply with:
      1. Chapter II of the Act, Prohibition of Unfair Discrimination.
   3. Non-Designated Employers and Designated Employers must further either attach an Employment Equity Certificate as evidence that the Employer is complying with the relevant chapters or a compliance declaration verified by the Director-General.
3. Establishment of Sectoral Targets – Insertion of Section 15A:
   1. The Minister may publish a notice in the Gazette that set Numerical goals and targets for different occupational levels in various sectors.
   2. The EAP statistics was used to determine the Numerical Goals and targets in Employment Equity Plans, the insertion of Section 15A will render the EAP obsolete and give the Minister sole discretion in determining what the Numerical goals and targets must be.
   3. If any Sectoral targets are Gazetted, Businesses falling within those sectors must draft their respective Employment Equity Plans (Section 20) within the framework of the targets.
4. Reporting periods
   1. Section 21(1) prescribed that Employers with 150 or fewer Employees may only report every 2 years. The Amendment Bill substitutes this section by declaring that any Designated Employer must now report on the first working day of October or any other date that may be prescribed.
5. Income Differentials:
   1. It is prominent to understand that Income Differentials (EEA4) is directly tied to the National Minimum Wage Bill. Designated Employers will now have to submit a statement, as prescribed by the employment conditions (Section 59 of the Basic Conditions of Employment Act) on the remuneration and benefits for each occupational level.
6. Compliance Orders:
   1. Section 37(1) is amended to Labour Inspectors and anyone acting on behalf of a Labour Inspector being allowed to now serve a compliance order.
7. Sanctions/ Penalties:
   1. At this stage no amendments has been proposed to fines for non-compliance.
   2. The only sanction with clear significance is the tendering of rendering services to State Organs. If Non- Designated Employers and Designated employers does not comply with their relevant Chapters, the Director-General will not issue an Employment Equity Certificate.
   3. Such a Certificate will only be issued to Employers on the following prerequisites:
      1. Meeting Sectoral targets, or Employers that could justify its failure to comply.
      2. Reported in terms of Section 21 (Employment Equity report)
      3. Has not been found by the CCMA or a Court within the previous 12 months to have:
         1. Breached the prohibition on unfair discrimination
         2. Failed to pay the National Minimum Wage Act

It is clear from the reading that Government seeks to impose more stringent measures on Employers, which could very well result in further contractions in Employment.

The risk of increased penalties for Employers who cannot comply with the measures is of the utmost concern where certain skilled level Employees are simply not available within designated groups and while it is idealistically sound to require Employers to develop their Employees, the costs involved in this often prove prohibitive against the already constrained budgets currently faced in the Business Sector.