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

 ·12 Apr 2023

President Cyril Ramaphosa has signed the Employment Equity Bill into law.

Presidential spokesperson Vincent Magwenya noted the signing of the bill during a briefing on Wednesday (12 April).

The Employment Equity Amendment Bill, 2020 was passed by Parliament (National Assembly and National Council of Provinces) on 17 May 2022.

Magwenya said that the new laws will promote diversity and equality in the workplace and empower the government to set specific equity targets by sector and region, where transformation initiatives have lagged.

The law requires companies with more than 50 employees to submit employment equity plans for their companies on how to meet these targets, and then submit annual reports to the Department of Employment and Labour.

Companies seeking to do business with the state will be required to submit a certificate from the Department confirming that they are in compliance with the Employment Equity Act and its objectives, and that they do not pay their employees less than the national minimum wage.

As part of ensuring the employment equity objectives become reality, the law now compels labour inspectors to inspect workplaces and to issue employers with compliance orders. The Department of Employment and Labour has committed to increase the number of labour inspectors and health and safety inspectors who will enforce compliance.

What to expect

The main objectives of the amendments are to empower the Employment and Labour Minister to regulate sector-specific Employment Equity (EE) targets and to regulate compliance criteria to issue EE Compliance Certificates in terms of Section 53 of the EE Act.

This means that organisations, especially those that do business with the state, will have to be in good standing when it comes to compliance with EE.

A key aspect of the new laws is determining which businesses are regarded as “designated employers” – the businesses which have to submit things like EE reports – as it is these employers that the laws directly address.

Under the previous act, a “designated employer” was an employer that employs 50 or more employees or an employer that employs fewer than 50 employees but has an annual turnover that is equal to or above the threshold determined by the EE Act, depending on the relevant sector.

This designated employer definition has now changed so that employers that employ fewer than 50 employees, irrespective of their annual turnover, will no longer form part of the designated employer definition and, therefore, will be exempt from compliance.

This is quite a significant change as these companies will not be required to implement measures to ensure suitably qualified people from designated groups have equal employment opportunities and are represented at all occupational levels in the workplace.

For the big businesses that fall under the definition of a designated employer, however, the most impactful change is the empowerment of the employment and labour minister to regulate sectorial EE targets and compliance criteria.

This means EE targets for different sectors will be at the minister’s discretion. While these targets are not yet known, designated employers will have to keep a close watch on the regulations that the minister puts in place as it has a significant practical impact on the way that they are compliant with the act.

Even businesses that do not necessarily deal directly with the state will need to comply with the law.

Acting deputy director-general of Labour Policy and Industrial Relations, Thembinkosi Mkalipi, previously noted that a new EE online assessment system would be created to monitor the implementation of sector targets, and the assessment will be done annually.

Read: Transformation laws without end

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