Businesses respond to new BEE and transformation laws

Business Unity South Africa (BUSA) says that business welcomes long-awaited clarity on the Employment Equity Amendment Bill. However, there are still aspects of the law that remain problematic.

BUSA is a non-profit company that represents organised business interests in the country, consisting of roughly 35 organisation members stretching across chambers of commerce, unisectoral, corporate representative organisations and more.

Cas Coovadia, the CEO of the organisation, said that the signing of the bill by President Cyril Ramaphosa ends a long period of uncertainty on proposed changes to the transformation law.

The CEO added, however, that BUSA had raised a handful of problems with the bill during public hearings throughout its legislative process between 2021 and 2022.

According to Coovadia, a notable issue relates to measuring complaints and issuing compliance certificates as a licence to do business with the state. This depends solely on whether a company has met its targets and does not have a case of unfair discrimination raised against it at the CCMA or Labour Court in the past 12 months.

“What concerns us is treating targets as quotas, which would be against the spirit and the letter of the law anyway,” said Coovadia.

He added that “companies should not be subjected to double punishment by the CCMA or Labour Court and the Department of Employment and Labour for the same issue, which could lead to unnecessary litigation and derail our objective of transformed workplaces.”

The organisation further expressed concern around the fragmentation of policy objectives and enforcement mechanisms within government, with some companies, due to their sector, expected to comply with different transformational targets imposed by different departments.

“These complex arrangements increase the compliance burden, which in turn may derail transformation, especially at a time when South Africa desperately needs economic growth to generate much-needed employment,” said Coovadia.

On 12 April, Ramaphosa signed the Employment Equity Bill into law with the aim of promoting diversity and equality in workplaces across the country.

The Act prescribes, among other things, that companies with over 50 employees, irrespective of annual turnover, must create plans to meet employment equity targets and submit yearly reports to the Department of Employment and Labour.

In addition, companies wanting to do business with the government must provide a certificate from the Department stating that they adhere to the Employment Equity Act, meet its objectives, and pay their employees at least the national minimum wage.

Businesses not dealing directly with the government must still comply with these new laws.

At the point of the new law being assented to, public organisations took to push back against it. Civil society organisation Solidarity said that it is preparing for a legal battle over the new laws. Business group Sakeliga is also taking legal action.

Solidarity said that the new regulations grant the minister of employment and labour draconian racial powers to set specific employment equity targets across various sectors and businesses to establish employment equity plans.

“This Act, which imposes race targets on all sectors, will have dire consequences for our economy. New definitions of ‘designated employers’ will force small businesses to remain small and will cost thousands of jobs,” Solidarity said.

Read: Ramaphosa signs major new BEE and transformation rules for South Africa into law