Melissa Cogger, Partner, Bowmans

The long-awaited effective date of the amendments to the Employment Equity Act, 1998 (EEA) has been proclaimed by President Ramaphosa. The effective date is 1 January 2025.

The amendments have significant implications for larger designated employers, or designated and non-designated employers who seek to do business with the State. Among other things, and once sectoral targets are published in their final form, designated employers will need to review their employment equity plans to ensure that their numerical targets and goals align with any sectoral targets that may be published by the Minister of Employment and Labour (Minister), and where they do not, that there is reasonable justification. It is advisable that such justification is set out in the designated employer’s employment equity plan.

The most controversial of all the amendments by far, is the introduction of sectoral targets, and it remains to be seen what the final version of the sectoral targets will look like. The Department of Employment and Labour (DoEL) published draft regulations for public comment identifying sectors and proposing various sectoral targets in respect of designated groups on 12 May 2023 and again on 1 February 2024. It remains to be seen whether the February 2024 draft regulations will be published in final form or whether another version of the sectoral targets will be published for public comment.

Once the amendments are effective, the Minister will be empowered to identify sectors by government gazette, consult with the relevant sectors and issue a draft notice for public comment in respect of the identification of sectors and the setting of sectoral targets before publishing a final version. During the DoEL’s roadshows in September 2024, representatives of the DoEL informed attendees that there will be a transitional period that will apply in relation to the sectoral targets.

As a reminder, the most notable amendments include among others:

• The deletion of part of the definition of a ‘designated employer’. This will mean that, with effect from 1 January 2025 an employer (other than a municipality, organ of state or an employer appointed as a designated employer in terms of a collective agreement) will only be considered a designated employer for purposes of the affirmative action provisions of the EEA if it employs 50 or more employees. There will no longer be any consideration given to an employer’s total annual turnover.

• The amendment to the definition of ‘disabilities’. The amended definition is aligned with the UN Convention on the rights of persons with disabilities and is broader than the previous definition. It will include people with intellectual or sensory impairments which may substantially limit their entry into or advancement in employment.

• An amendment to psychological testing. The previous role of the Health Professions Council (HPC) in certifying psychological assessments will fall away. This amendment sought to address the capacity constraints of the HPC.

• Clarification on the consultation obligations with representative trade unions wherein a designated employer is only required to consult with the representative trade union and not the members of the representative trade union individually

• The ability of the Minister to identify national economic sectors and set numerical targets for any such sectors. The numerical goals set by designated employers in their employment equity plans must comply with the sectoral targets set by the Minister. In determining whether a designated employer is implementing its employment equity plan in compliance with the EEA, the Director-General or any other person applying the EEA will take into account whether the designated employer has complied with a sectoral target.

• The reference to 1 October has been removed in relation to the submission of the annual employment equity report, instead, the amendments contemplate that the report will be submitted in such manner as may be prescribed. In addition, if designated employers are unable to submit a report within the time periods prescribed, they can notify the Director General and provide reasons for their inability to do so. Designated employers are no longer confined to submitting the notification before August in the same year, which has previously presented a number of practical difficulties for designated employers.

• The income differentials statement will no longer be submitted to the Employment Conditions Commission. Instead, the income differentials statement will be submitted to the National Minimum Wage Commission.

• The labour inspector’s powers are broadened. The amendment includes the power to request and obtain a written undertaking to comply with obligations including the failure to prepare an employment equity plan (which was not previously included), and to ‘serve’ compliance orders rather than to ‘issue’ such orders.

• The introduction of criteria to be met by an employer in order for a certificate of compliance to be issued by the DoEL. Such certificate will be required for employers to conclude agreements with the State. Whilst this section was introduced some time ago, it will finally come into effect on 1 January 2025. In terms of section 53, ‘every employer’ (designated or non-designated) that makes an offer to conclude an agreement with any organ of state for the furnishing of supplies or services to that organ of state, or for the hiring or letting of anything must, if it is a designated employer, comply with Chapters II and III of the EEA; and if it is not a designated employer, comply with Chapter II of the EEA. The employer’s offer should be accompanied by a certificate issued by the Minister. In terms of the amendments, a compliance certificate may only be issued if the Minister is satisfied that:

• the employer has complied with any sectoral numerical targets applicable to the employer, or has raised a reasonable ground justifying its failure to comply;
• the employer has submitted its annual employment equity report;
• there have been no findings by the Commission for Conciliation, Mediation and Arbitration (CCMA) or a court that the employer breached the unfair discrimination provisions of the EEA in the previous 12 months; and
• the CCMA has not issued an award against the employer in the previous 12 months for failing to pay the national minimum wage.

Employers would be premature in amending their employment equity plans at this stage. Only once the final sectoral targets are published should designated employers consult with their employees (or representative trade unions), conduct an analysis of the workforce and prepare either a new or amended employment equity plan in line with the sectoral targets. Once this is done, designated employers can report on their plans.

ENDS