Another big hole in South Africa’s new BEE and transformation targets

On top of being confusing and littered with numerical errors, South Africa’s new racial targets for businesses may find themselves under legal scrutiny over procedural issues, law firm Bowmans says.

The proposed targets, gazetted last week (12 May 2023), laid out the Department of Employment and Labour’s “milestone” goals for transformation and employment equity in the country.

Minister Thulas Nxesi published the targets in terms of the new Employment Equity Amendment Act, which was assented to by President Cyril Ramaphosa earlier this month.

The new Act empowers the Minister of Employment and Labour to set industry-specific transformation targets, which all designated employers in the country need to build their employment equity plans around and try to achieve in five years.

Broadly, the goal is to push all companies that employ more than 50 people to transform and have their workforces more demographically representative – provincially or nationally – especially in top and senior management.

However, after publishing the proposed targets – open for public comment for 30 days to 12 June – the holes have started to shine through.

These are all the new BEE targets for businesses in South Africa

According to Melissa Cogger and Talita Laubscher from Bowmans, one of the key issues with the proposed targets is that they have been published without the governing legislation – the Act – being in effect.

While assented to and enacted by the president, they have not yet been promulgated, with the department pencilling in a start date later in the year.

“The proposed sectoral targets have come as a surprise as the Amendment Act is not yet in effect. The regulations are therefore premature and, if challenged, may be considered ultra vires,” Bowmans said.

This brings with it a host of procedural issues.

“Since 2019, various sectors have engaged with the department on the numerical targets. However, any engagements with stakeholders that took place prior to the amendments coming into effect were conducted without the enabling legislation being in place, and it remains to be seen how a court would view the status of such engagements.

“This is particularly in light of the much-changed environment since the Covid-19 pandemic and the current economic downturn,” the firm said.

In addition to this, the firm highlighted several of the other issues that have already been raised over the targets.

A big point of contention is that, in some cases, there is a 0% target for certain demographic groups.

“If strictly enforced, these 0% targets would amount to an absolute barrier to employment and advancement in employment for people from these groups – who happen to fall within the designated groups – which is not in line with the objectives of the Employment Equity Act.

“Exclusion of groups from the outset and a rigid application of targets would undermine the underlying purpose of the right to equality. Numerical goals and targets on the other hand serve as a flexible guideline in pursuit of representivity and equality in the workplace,” the firm said.

Furthermore, the targets seem to have some numerical errors, with most of the national and provincial targets not equating to 100%. This raises questions regarding the basis and manner in which they were calculated.

The Department of Employment and Labour released a media statement confirming, among other things, that the sectoral targets are not quotas, as employers still maintain their powers and responsibilities to determine their own annual employment equity targets towards achieving the regulated five-year sector targets.

The department emphasised that these sectoral targets are ‘milestones’.

However, as other legal experts pointed out, once the targets are ‘live’ any move by a business to take a ‘rigid’ approach to meeting these targets could see itself cross the line into quota territory, which could result in legal action.

“The regulations are creating confusion and may be the subject of legal challenge,” Bowmans said.

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