‘BEE settlement’ changes nothing: legal experts

 ·4 Jul 2023

Werksmans head of employment, Sandile July, and senior associate, Nonkosazana Nkosi, say that the recent “BEE settlement agreement” signed by trade union Solidarity and the Department of Employment and Labour (DEL) has changed nothing in South Africa’s employment equity laws.

The parties signed the settlement at the end of June after Solidarity approached the International Labour Organisation seeking intervention against the government’s black economic empowerment and affirmative action policies.

Through the Commission for Conciliation, Mediation and Arbitration (CCMA), Solidarity and the government – via the DEL – reached some form of consensus on the laws, with both parties hailing it as a ‘landmark’ in dealing with sensitive racial employment issues in the country.

Broadly, the settlement agreement ensures:

  • Race is not the only criterion taken into account when hiring or promoting employees in South Africa;
  • Employment cannot be terminated on the basis of race or to meet the government’s racial targets;
  • Businesses cannot be penalised for non-compliance with the laws, provided they have a valid reason not to.

While the agreement has been celebrated as a victory by Solidarity, supported by the government for ‘demystifying’ the country’s BEE laws, and seen as a positive for businesses by other legal experts – Werksmans said the agreement has done nothing but reinforce what has always been the case in law.

“The settlement agreement goes no further than to succinctly convey the existing and/or proposed employment equity regime. It was not necessary to approach the ILO, as the outcome maintains the current course of developments,” the legal experts said.

This is especially the case with one of the biggest ‘fights’ underpinning the agreement – where Solidarity and other stakeholders were concerned that the government’s racial targets would force businesses to fire minority workers to make room for black workers.

“A bar against the termination of employment as a means of compliance with the employment equity targets is included in the settlement. Is this a necessary or helpful condition? No,” said July.

“Employment equity interventions must not apply in violation of a person’s constitutional rights to human dignity, fair labour practices and freedom of trade, occupation and profession.

“Employment policies and practices are still subject to the Labour Relations Act 66 of 1995, as amended. A dismissal must be lawful and fair. No employer can justify an irrational and arbitrary decision to terminate employment on account of compliance with employment equity targets,” he said.

July noted that in any event, any employment policy or practice must comply with the Employment Equity Act, which already clearly prohibits the implementation or enforcement of employment equity targets in a manner that creates absolute barriers to prospective or continued employment.

This includes barriers for the advancement of individuals that are not part of the designated groups.

“So the ‘no absolute barrier’”’ condition simply reiterates the status quo, as we know it,” he said.

The legal experts noted that the same is true for all other aspects of the agreement, making the entire exercise unnecessary.

The criteria highlighted to be taken into account for hiring and promotions – outside of race – are not new, and were introduced into law in 2018. The conditions under which businesses could be allowed to deviate or not comply with the laws are also not new additions or proposals.

“Given the current state of employment equity interventions, was the settlement agreement necessary? We are of the view that the complaint and, consequently, the agreement was not necessary.

“The settlement agreement reaffirms and reinforces the very essence of the proposed employment equity regime,” they said.

Read: New BEE settlement a big boost for businesses: expert

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