The recent amendments to the Employment Equity Act are rooted in the intention to promote diversity and equality in South African workplaces. Makhanani Tlakula, human capital consultant at Transcend Corporate Advisors, explains how this may be achieved.
Why has the Employment Equity Act been amended, and what were some of the shortcomings within the employment equity compliance landscape necessitating this amendment?
The Employment Equity Act has been subject to several amendments following its promulgation in 1998. What is significant about the most recent amendment is that it has introduced new mechanisms for measuring compliance of South African employers. Essentially, what we can expect under the Employment Equity Amendment Act of 2022, is far more regulated compliance.
Historically, we have found that employer discretion has generally superseded the need for reasonable progress towards equitable representation. The result of this can be observed in the general stagnation of employment equity in South African business, where – according to the Commission for Employment Equity report – Black (African, Indian and Coloured) people make up over 90% of the unskilled occupational level but less than 35% of top management. It is evident that self-regulation by employers, is not working, hence the need for amended regulations.
What are the key changes to the Act that have been introduced?
Schedule 4 of the primary Act has been repealed, resulting in turnover thresholds for employers with a headcount of under 50 falling away. As a result, these employers will no longer be considered designated, and will not have to comply with the associated statutory responsibilities thereof.
The Minister of Labour will be empowered to regulate sector-specific numerical targets against which designated employers will be expected to make reasonable progress – they will be required to revise their employment equity plans to align their numerical goals and targets with those of the sectoral targets and economically active population (EAP) within a five-year period.
Finally, section 53 requires that all employers, both designated and non-designated, be in possession of an employment equity compliance certificate as a prerequisite to contract with the state and avoid penalties from the Department of Employment and Labour for non-compliance. Among other criteria established, eligibility of designated employers to obtain a compliance certificate will be greatly determined by the employer’s ability to make reasonable progress towards the targets applicable to them.
Why has the regulation of sector specific numerical targets for representation been introduced, and how will these targets be determined?
The regulation of sectoral targets has emerged because of the staggeringly low progress made against the national and provincial EAPs for designated and non-designated groups. Regulating targets will provide designated employers with terms of reference for what can be considered reasonable progress.
Sectoral targets will be determined through comprehensive consultative processes which take into consideration the BEE sector codes, national and provincial EAP statistics, sector dynamics and contexts and the 2022 workforce profiles. Draft targets have been published and released to the public, however, these are pending finalisation and have yet to be gazetted.
Are the targets likely to meet with a constitutional challenge since quotas are considered unlawful? If so, what is the anticipated outcome?
The Department of Employment and Labour has been intentional in emphasising that the sector targets will not act as quotas and are well within the confines of what is permitted in the Constitution. The targets, as communicated by the Department, are instead aspirational goals which designated employers have a flexibility and reasonable discretion to target. Additionally, the amended regulations will contain reasonable grounds for non-compliance which will be in place for employers who may experience challenges in aligning with the sectoral targets.
The definition of “disability” has been expanded to include persons with sensory and intellectual impairments. What impact will this have?
This amendment demonstrates prioritisation of increasing representation and improving economic outcomes of people with disabilities. The definition of disability is broad and oftentimes not well understood. Therefore, an expanded definition of disability in the context of the workplace will ideally facilitate more disclosure by people living with a disability and facilitate the provision of reasonable accommodation by employers.
What are some of the key challenges companies will face when attempting to meet sector or regional targets, and how will this affect skills acquisition and retention?
The availability of suitably qualified candidates from designated groups will be one of the biggest challenges for industries to overcome. Companies may end up competing for the same talent, resulting in increased costs of talent acquisition requiring companies to strategically invest in skills development for the longer term. On the other hand, this is an opportunity for companies to improve their recruitment and talent management systems and processes.
If companies are unable to comply with the Act, they face heavy fines and will be unable to tender for government contracts. How should business respond to this amendment?
Companies can respond to the amendments by implementing the following measures:
- Ensuring that they fully understand the amendments and compliance requirements.
- Achieving buy-in from management across the organisation, particularly in terms of talent management.
- Reviewing their employment equity policies and procedures and taking reasonable steps to eliminate barriers to achieving employment equity.
- Ensuring adequate consultation on the amendments with their committees and relevant stakeholders.
- Ensuring that their employment equity plans are transformational and that they are deliberate about implementing their plans.
Makhanani Tlakula
Human capital consultant at Transcend Corporate Advisory
Khani.Tlakula@transcend.co.za
https://www.transcend.co.za/
Source: The original version of this article was published in the Trialogue Business in Society Handbook 2023 (26th edition).