South Africa’s major new ‘transformation’ law is coming – what you need to know

The Department of Employment and Labour has published a notice indicating that it plans to introduce the Employment Equity Amendment Bill to the National Assembly.

First announced by Labour minister Thulas Nxesi in July 2019, the bill promises to make a number of significant changes to the country’s employment equity laws.

At the time, Nxesi said that this will include the setting of sector-specific employment targets to address the gross under-representation of black South Africans, women and persons with disabilities.

The new draft bill now explicitly states that the labour minister may set numerical targets for any national economic sector.

This must be done after consulting the National Minimum Wage Commission ‘for the purpose of ensuring the equitable representation of suitably qualified people from designated groups at all occupational levels in the workforce’.

“A notice may set different numerical targets for different occupational levels, sub-sectors or regions within a sector or on the basis of any other relevant factor,” the draft bill states.

“A draft of any notice that the Minister proposes must be published in the Gazette, allowing interested parties at least 30 days to comment thereon.”

The bill also introduces a number of other regulatory changes.

Notably:

  • An employment equity certificate of compliance will now become a precondition for access to state contracts.
  • Employers with less than 50 employees will no longer have to report on their employment equity targets, irrespective of their turnover.

Speeding up transformation

An earlier draft version of the bill published at the end of 2018 indicated that the changes were made to speed up transformation in the country.

The bill states that while the public sector has seen significant changes, the private sector continues to lag behind.

“It has been 20 years since the inception of the Employment Equity Act, however the pace of transformation has been slow,” the department said.

“Relative to the demographics of the Economically Active Population (EAP) as released by Stats SA, marginal progress in relation to the equitable representation of the designated groups, in particular Africans, coloureds and persons with disabilities have been made in the middle-to-upper occupational levels, which is repeatedly visible in the statistics contained in all the Commission for Employment Equity (CEE) annual reports.”

In a February 2020 interview, the Department of Labour’s Thembinkosi Mkhaliphi said that there has been limited transformation since the Employment Equity Act was first introduced 21 years ago.

“The law then moved from the premise that there should be no involvement of government enforcing transformation in terms of target setting. It left it to companies themselves to set their own targets and goals,” he said.

Government’s role then was to monitor these targets.

“We realised that over the last 21 years, nothing has happened that should have happened and no real significant change has taken place. There has been very limited change and if we continue to go at the rate that we’re going, it will take another 100 years before we really transform,” he said.


Won’t hurt business

Asked whether the sector targets could stifle business, Mkhaliphi said current legislation states that employers can set their own targets and that the introduction of government setting the targets is not new.

“Target setting is not new, except that now government comes into the picture in setting the target. The principle of setting targets is not new, therefore it can’t be said that this is a drastic change that will affect business.”

However, he noted that not everyone will be happy with the proposed changes.

“It’s a give and take. We put the proposal of lessening the burden on small business to sweeten the carrot. It was also debated at the Employment Equity Commission, where business was also represented.”

He dismissed the notion that the bill will inadvertently lead to job losses.

“Unless if you’re saying that by putting black people into positions, you’re reducing productivity for companies, that evidence is not there. We do not think that it will affect business.

“It is how you run your company that affects your business. This notion that black people mean incompetency is not correct.”

You can read the full draft bill below.


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South Africa’s major new ‘transformation’ law is coming – what you need to know