THE NEW EMPLOYMENT EQUITY AMENDMENT BILL – AN OVERVIEW OF THE KEY AMENDMENTS

Background:

The Employment Equity Amendment Bill of 2020, which was passed by parliament on 17 May 2022, has now been signed into law by the president of the Republic of South Africa (“Employment Equity Amendment Bill”).

The Employment Equity Amendment Bill makes certain amendments to the Employment Equity Act No. 55 of 1998 (“Act”). The amendments are intended to –

  • empower the minister of labour (“Minister”) to determine sectoral numerical targets to ensure equitable representation of suitably qualified people from designated groups at all occupational levels in the workforce;
  • remove provision for non-designated employers to be allowed to notify the director general of the department of labour (“Director General”) of their intention to voluntarily comply with chapter 3 of the Act;
  • enhance the administration of the Act, including providing for the issuing of a certificate by the Minister confirming an employer’s compliance with certain chapters of the Act; and
  • remove the requirement for psychological testing and similar assessments to be certified.

The key changes brought about by the Employment Equity Amendment Bill are set out below in further detail.

Designated employers:

The Act requires all designated employers to implement certain affirmative action measures for people from designated groups in order to achieve employment equity.

Prior to the Employment Equity Amendment Bill being signed into law, a designated employer (“Designated Employer”) was defined in the Act as being –

“(a)       an employer who employs 50 or more employees;

(b)       an employer who employs fewer than 50 employees but has a total annual turnover that is equal to or above the applicable annual turnover of a small business in terms of the Schedule 4 of this Act;

(c)       a municipality, as referred to in Chapter 7 of the Constitution;

(d)       an organ of state as defined in section 239 of the Constitution, but excluding the National Defence Force, the National Intelligence Agency and the South African Secret Service; and

(e)       an employer bound by collective agreement in terms of section 23 or 31 of the Labour Relations Act, which appoints it as a designated employer in terms of this Act, to the extent provided for in the agreement.”

The Employment Equity Amendment Bill has amended the above definition by removing paragraph (b).  Therefore, employers who employ less than 50 (fifty) employees, regardless of their turnover, are no longer deemed Designated Employers for purposes of the Act and are no longer required to comply with the provisions of chapter 3 of the Act.

Section 14 of the Act, which previously allowed non-designated employers to notify the Director General of their intention to comply with chapter 3 of the Act as if they were Designated Employers, has also been repealed.

Sectoral targets:

Section 15 of the Act sets out the affirmative action measures which a Designated Employer must utilise to ensure that suitably qualified persons from designated groups have equal employment opportunities and are equitably represented in all occupational levels in the employer’s workforce. These include numerical goals to be set by Designated Employers.

The Employment Equity Amendment Bill has amended section 15 of the Act by inserting a new section 15A which allows the Minister to identify national economic sectors for the purpose of the Act and determine numerical targets for such sectors (“Sectoral Targets”). The Sectoral Targets may differ within a sector on the basis of different occupational levels, sub-sectors, regions or any other factor, and numerical goals to be set by Designated Employers must be compliant with the Sectoral Targets.

The Sectoral Targets will be set by the Minister by way of a notice in the government gazette after consultation with the relevant sectors and the commission for employment equity (“Notice”). Interested parties shall have no less than 30 (thirty) days to comment on a draft Notice.

Compliance certificates:

Section 53 of the Act requires every employer that makes an offer to conclude a contract with any organ of state for the provision of products or services, or for the hiring or letting of anything must, among other things, attach to such offer a certificate which certifies that the employer complies with the Act.

Section 53 of the Act, which has not yet been made operational, has been expanded by the Employment Equity Amendment Bill to provide that a compliance certificate may only be issued by the Minister to an employer if –

  • the employer has complied with the applicable Sectoral Targets or has raised reasonable grounds for non-compliance in respect of any target;
  • the employer has submitted its most recent employment equity report in terms of section 21 of the Act; and
  • within the previous 12 (twelve) months, the employer has not been found to have breached the prohibition on unfair discrimination contained in chapter 2 of the Act or paid wages below the prescribed minimum wage in terms of the Minimum Wage Act No. 9 of 2018.

Psychological testing and other similar assessments:

Section 8 of the Act previously provided that psychological testing and other similar assessments are prohibited unless the test or assessment complies with certain requirements which ensure validity, reliability, fairness, unbiasedness and are certified by the Health Professions Council of South Africa (“Council”) or any other authorised body (“Certification of Psychological Testing”).

The Employment Equity Amendment Bill has amended section 8 of the Act to exclude the Certification of Psychological Testing requirement, as the Council does not have the capacity or the procedures to attend to such certification.

It must however be noted that should a dispute arise, psychological testing remains subject to the evaluation of a competent labour court.

Concluding remarks:

For smaller employers that have less than 50 (fifty) employees, the amendment of the definition of a Designated Employer which excludes such employers from the requirements of chapter 3 of the Act and the removal of the possibility for non-designated employers to voluntarily comply with the Act will reduce the regulatory burden on such employers.

For larger employers that fall under the definition of a Designated Employer in terms of the amended Act, the effects of newly incorporated provisions which provide to the Minister the power to set Sectoral Targets are still to be seen, as this is dependent on the setting of the Sectoral Targets. Notwithstanding this, these amendments appear to provide the necessary tools to the Minister as well as appropriate provision for consultation and input from stakeholders, to enhance sector specific transformation in identified national economic sectors.

It is also worth noting that –

  • any employer that wishes to contract with any organ of state will be required to comply with the additional requirements for a compliance certificate to be issued by the Minister once section 53 of the Act becomes operative; and
  • psychological tests and other similar assessments which any employer wishes to conduct no longer need to be certified by the Council or any other authorised body in terms of the Act.

VDMA’s team of experts is at your disposal for any assistance with any compliance and employment law related assistance that you or your business may require.

Published 08 May 2023