What to expect from the new draft Employment Equity Act Regulations

27 March 2024 171
The Employment Equity Amendment Act 4 of 2022 (“Amendment Act”) was introduced in April 2023 but the commencement date has yet to be promulgated. To address the sectoral numerical targets provided for in the Amendment Act, new draft regulations were issued for comment on 1 February 2024 (“Draft Regulations”). In this article we take a look at the draft regulations and what they mean for employers.

A significant amendment introduced by the insertion of Section 15A by the Amendment Act is the powers afforded the Minister of Labour to set numerical targets for designated employers (with more than 50 employees) for economic sectors and speed up the pace of transformation. 

The Amendment Act proposes 5-year numerical targets that designated employers will have to aim for. Following initial criticism on how the proposed numerical targets were derived, the Draft Regulations commences with a thorough exposition of how the proposed sector numerical targets were arrived at.

The Draft Regulations also guide designated employers when developing their Employment Equity Plans (“EE Plans”): 

1. Designated employers must take account of their current workforce profile and compare that to the relevant sector numerical target as well as the applicable Economically Active Population (“EAP”) data for each occupational level.
2. This should then be used to set annual numerical targets by the employer for their workforce for each year of their 5-year plan.
3. Designated employers should first strive to meet the sector numerical targets applicable to them, or where these have already been achieved, then aim to achieve the applicable EAP.
4. Designated employers are warned not to set targets for groups whose representation already meets or exceeds the applicable EAP in a particular occupational level. However, employers may also not regress if they have met the set numerical target of a particular group at an occupational level.
5. Designated employers are required to set annual numerical targets for the upper occupational levels for which sector numerical targets have been provided. These levels include Top Management, Senior Management, Professionally Qualified & Middle Management, and Skilled Technical.
6. Designated employers are cautioned to continue to also set annual numerical goals for the lower occupational levels of Semi-Skilled and Unskilled employees, despite no sector numerical targets having been set for these levels.

Uncertainty regarding which EAP – national or provincial - a designated employer must use has also been clarified. According to the Draft Regulations, the National EAP will apply to designated employers that conduct their business or operations nationally and the Provincial EAP shall apply where the business or operations are conducted in a particular province. A designated employer cannot however use the National or Provincial EAP at the same time i.e. pick which EAP they wish to apply, but must choose only one demographic to apply and must use that demographic for the entire duration of their EE Plan. Where a designated employer operates in more than one Province, the employer may choose the EAP of the Province with the majority of employees.

Likewise with regards to which sector’s numerical targets to apply, the Draft Regulations now state that if a designated employer operates in more than one sector, the employer should choose the sector with the majority of employees.

Another vital change introduced by the Draft Regulations is the consolidation of the respective racial designations of African, Coloured and Indian into a single reference to a “designated group”, further differentiated by male and female. The sector numerical targets for the top four occupational levels are then set out for designated groups, with targets for male-designated groups and female-designated groups.

Employers are however cautioned that despite the numerical targets using the consolidated designated groups for target settings, designated employers must still differentiate in their annual targets between the various racial groups and take the EAP into account when doing so.

Lastly, the Draft Regulations record that the EAP are only one of a myriad of factors that need to be considered when considering an employer’s compliance. It is also clearly stated that no absolute barrier may be placed on any employment practices affecting any person from any racial group. Guidance is also given as to how employer compliance will be assessed what could constitute justifiable/reasonable grounds for not complying with set workplace targets and that an employer will not suffer any penalty or other form of disadvantage should there be justifiable/reasonable grounds for non-compliance. That said, an unjustifiable failure to comply may result in penalties as well as failure to obtain an Employment Equity Compliance Certificate necessary to do business with the State.

Disclaimer: This article is the personal opinion/view of the author(s) and is not necessarily that of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever and no action should be taken on the basis thereof unless its application and accuracy have been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken on the basis of this content without further written confirmation by the author(s).