New BEE settlement a big boost for businesses: expert

 ·4 Jul 2023

The settlement agreement between Trade Union Solidarity and the Department of Employment regarding the nation’s employment equity laws will be welcomed by businesses across the country, Lisa-Anne Schäfer-King, Director at Fluxmans Attorneys, says.

In April this year, President Cyril Ramaphosa signed into law the Employment Equity Act (EEA), which empowers the employment minister, Thluas Nxesi, to set specific racial targets for 18 sectors in South Africa across four different skill levels.

Additionally, designated employers – those who employ more than 50 people – will have five years to ensure that their workforces represent the new racial and gender quotas on a provincial or national level.

Solidarity has been critical of the government’s new employment equity laws and referred a dispute to the International Labour Organisation (ILO), who then referred the matter to the Conciliation, Mediation and Arbitration (CCMA).

At the CCMA, the department and Solidarity reached a settlement agreement.

Schäfer-King said that the new agreement will be welcomed by businesses that have been battling with the fact that race places an important part in recruitment, promotion and restructuring processes due to Employment Equity legislation.

She said that the new Settlement Agreement will ensure that affirmative action is achieved nuancedly and that economically active population statistics will only be one of the various factors taken into consideration when businesses attempt to comply with equity laws.

“Whilst it will be interesting to see how labour, businesses and the courts will interpret ‘nuanced way’, the Settlement Agreement is clear that no absolute barrier may be placed on any employment practices affecting any person and no termination of employment may be affected as a consequence of compliance with affirmative action targets,” she said.

When drafting employment equity plans, businesses will also have to take into account the following criteria:

  • inherent requirements of the job;
  • the pool of suitably qualified persons;
  • the qualifications, skills, experience and capacity to acquire, within a reasonable timeframe, the ability to do the job;
  • the rate of turnover and natural attrition within the workplace;
  • recruitment and promotional trends within the workplace.

Moreover, where businesses cannot qualify with the affirmative action targets set out in their employment equity plan or by any other party, they will be able to prove why they could not comply on reasonable grounds whilst avoiding any non-compliance penalties.

The Settlement Agreement said that these reasonable grounds include:

  • insufficient recruitment opportunities;
  • insufficient promotion opportunities;
  • insufficient target individuals from the designated groups with the relevant qualifications, skills and experience;
  • CCMA awards/Court orders;
  • transfer of businesses
  • merger/acquisitions; and
  • impact on business economic circumstances.

She added that the signing of the agreement should help businesses when their creating employment equity plans.

“Hopefully, the signing of this Settlement Agreement will go a long way in positively assisting businesses in drafting and implementing employment equity plans now that the significant emphasis on “race” in recruitment, promotion and restructuring processes has been addressed,” she concluded.

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