The Employment Equity Act (EEA) was enacted to promote equal opportunity and eliminate unfair discrimination in the workplace. The Act has undergone several amendments since its inception in 1998. The latest amendment will be coming into effect in 2023. These amendments impose new obligations on employers and require them to take more proactive steps towards creating an equitable and inclusive workplace. In this article, we will explore the 2023 amendments to the Employment Equity Act and the consequences of non-compliance with the new provisions.
The amendments of the Employment Equity Act require employers to take proactive steps to address barriers to employment equity in their workplaces. Employers are now required to conduct a workforce analysis, identify areas on under-representation, and develop plans to address these gaps.
The most notable amendment to the EEA, is the change in the definition of “designated employer”. The definition will be amended to exclude employers who employ fewer than 50 employees, regardless of their annual turnover.
As a consequence of this amendment, smaller employers are not required to comply with the obligations of a designated employer relating to affirmative action, including the development and implementation of employment equity plans and reporting to and submission of employment equity reports to the Department of Employment and Labour. However, this will not deprive smaller employers of their ability to secure a certificate of compliance under section 53 of the EEA.
The amendments to the EEA will however have significant implications for larger, designated employers, or designated or non-designated employers who would like to engage in business opportunities with the state.
The new section 15A will introduce sectoral numerical targets. The purpose of this amendment is to ensure that there is equitable representation of people from designated groups, i.e., historically disadvantaged groups of people based on race, gender and disability, at all occupational levels in the workforce. The amendment will empower the Minister of Employment and Labour to identify national economic sectors for purposes of the administration of the EEA and set numerical targets for each sector.
The sectoral numerical targets will have an impact on an employer’s eligibility with regards to the awarding of state contracts. The amendment to section 53 of the EEA dealing with state contracts provides that the Minister may only issue a compliance certificate if the employer has complied with the sectoral numerical targets set by the Minister for the relevant sector, or has demonstrated a reasonable ground for non-compliance.
Employers who fail to comply with the new provisions of the EEA may face significant consequences. These consequences can include:
1. Penalties and Fines
Non-compliance with the EEA can result in significant penalties and fines. Employers who fail to submit their employment equity plans or reports may be fined up to 10% of their turnover. Employers who fail to implement their employment equity plans may be subject to further fines and penalties.
2. Legal Action
Employers who fail to comply with the EEA may be subject to legal action by the Department of Employment and Labour. The Department of Employment and Labour can order employers to comply with the EEA and pay compensation to affected employees.
3. Damage to Reputation
Non-compliance with the EEA can damage an employer’s reputation. News of non-compliance can quickly spread through the media and social media, leading to negative publicity and damage to the employer’s brand.
4. Difficulty in Recruitment and Retention
Employers who fail to comply with the EEA may find it difficult to attract and retain employees. Employees are more likely to work for employers who promote equal opportunities and eliminate unfair discrimination in the workplace. Failure to comply with the EEA can also result in employees feeling undervalued and discriminated against, leading to low morale, high turnover rates and difficulty in filling vacancies.
5. Loss of Business Opportunities
Non-compliance with the EEA can result in the loss of business opportunities. Many clients and customers now require suppliers to comply with the EEA as a condition of doing business. Failure to comply with the EEA can result in the loss of business opportunities and damage to the employer’s bottom line.
6. Loss of Government Tenders
Employers who fail to comply with the EEA may lose out on government tenders. The government requires all suppliers to comply with the EEA as a condition of doing business. Failure to comply with the EEA can result in the loss of government tenders, which can have a significant impact on the employer’s revenue.
Overall, the amendments to the Employment Equity Act represent an important step forward in the ongoing efforts to promote equal opportunities and fair treatment in the workplace in South Africa. By introducing new reporting requirements, strengthening enforcement mechanisms, and making technical improvements to the Act, the amendments are expected to make a significant contribution to the achievement of these goals. However, it will be important for employers and employees alike to remain vigilant and continue to work together to ensure that the provisions of the act are fully implemented and enforced.
Written by Robyn Jacobs
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).