Stricter ‘transformation’ rules for South Africa get the green light

The National Council of Provinces has passed the Employment Equity Amendment Bill, with the draft legislation now in its final stage of promulgation as it has been sent to the president for signing.

According to legal firm Cliffe Dekker Hofmeyr, two of the major changes brought about by the bill is that:

• The definition of ‘designated employer’ has been narrowed;
• The minister of employment and labour has been empowered to determine sectoral numerical targets.

Designated employers 

In the current Act, an employer that employs fewer than 50 employees (small businesses), but has a total annual turnover that is equal to or above the applicable annual turnover contained in Schedule 4 of the Act, is deemed to be a ‘designated employer’ and falls within the scope of application of Chapter 3 of the Act (which deals with affirmative action measures).

“The aforementioned inclusion of small businesses has been removed in the bill, having the effect that Chapter 3 of the Act will no longer apply to small business regardless of their turnover.

“Accordingly, these employers will not be required to have an employment equity plan, submit reports, and the like,” Cliffe Dekker Hofmeyr.

Targets 

The second major amendment, is that of the newly created section 15A, with the key aspects being:

• The minister may identify national economic sectors, which in terms of the bill are defined as ‘an industry or service or part of any industry’.

• For any economic sector that has been identified, the minister may set numerical targets to ensure equitable representation of suitably qualified people from designated groups at all occupational levels in the workplace.

The sectoral targets shall be published in the Government Gazette, allowing interested parties at least 30 days to comment on them. There is a likelihood that substantial litigation will flow from the setting of such targets.

It is envisaged by the director of employment equity that all current employment equity plans will fall away and be replaced with new employment equity plans in terms of the bill.

“The essence of these amendments would result in less onerous compliance for small businesses and more onerous provisions for larger businesses,” Cliffe Dekker Hofmeyr said.

Commentary by Hugo Pienaar and Gabby Schafer of Cliffe Dekker Hofmeyr. 

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