Big change to South Africa’s strict new transformation laws that businesses need to know about

Recent amendments to the Employment Equity Amendment Bill – which is awaiting a sign-off from president Cyril Ramaphosa – make key changes that will give smaller businesses much-needed breathing room.

According to Gillian Lumb and Nadeem Mahomed from Cliffe Dekker Hofmeyr (CDH), smaller employers will be positively affected by a change in the definition of ‘designated employer’. The definition will be amended to exclude employers who employ fewer than 50 employees, irrespective of their annual turnover.

As a result of the amendment, smaller employers will not be required to comply with the obligations of a designated employer relating to affirmative action, including the development and implementation of employment equity plans and reporting to and submission of employment equity reports to the Department of Employment and Labour.

“This will significantly relieve the administrative burden on these employers,” the firm said.

The Employment Equity Amendment Bill, 2020 was passed by Parliament (National Assembly and National Council of Provinces) on 17 May 2022 and is waiting for the assenting and signing into law by president Cyril Ramaphosa.

The newly amended Employment Equity (EE) Act is set to come into operation on 1 September 2023, with the aim to aid workplace transformation in South Africa.

The amendments will empower the employment and labour minister to regulate sector-specific EE targets and to regulate compliance criteria to issue EE Compliance Certificates in terms of Section 53 of the Act.

While smaller employers will not be required to develop and submit employment equity reports, given the amendment which will bring about the deletion of section 14 of the EEA, they will nevertheless be entitled to obtain a certificate of compliance under section 53 of the EEA, CDH said.

Acting deputy director-general of Labour Policy and Industrial Relations, Thembinkosi Mkalipi, said the signing of the bill by the president is imminent.

He cautioned that even businesses that do not necessarily deal directly with the state would need to comply with the law.

Taking the small business changes into account, the EEA applies to all employees and employers, except the South African National Defence Force, National Intelligence Agency and South African Secret Services.

Mkalipi said the department would, in due course, publish the list of sector targets for public comment.

“The implication for employers is that if you have an EE plan in place, it will be affected by the setting of targets, and you will have to revisit your targets,” he said.

According to Mkalipi, 18 sectors have been consulted on the setting of EE targets.

The following sectors have been consulted, or are in the process of being consulted, with the targetted date set for the end of September:

• Education;
• Water supply,
• Sewerage management and remediation;
• Accommodation and food services;
• Human health and social work;
• Agriculture, forestry and fishing;
• Wholesale and retail trade;
• Repair of motor vehicles and motorcycles;
• Administrative and support;
• Professional, scientific and technical;
• Electricity, gas, steam and air conditioning supply;
• Financial and insurance activities.
• Mining and quarrying;
• Public administration;
• Defence;
• Manufacturing;
• Information and communication;
• Construction;
• Real estate.

CDH has compiled a FAQ regarding the coming changes for business, which can be accessed here.

Read: Strict workplace transformation rules coming for South Africa – what you need to know