Big changes for businesses in 2025 – what you need to know
The date has been set for when the amendments to the Employment Equity Act (EEA) become effective, which have significant implications for larger employers or those who seek to do business with the State.
President Cyril Ramaphosa proclaimed the effective date of amendments as 1 January 2025.
Melissa Cogger, a Partner at Bowmans, explained that once sectoral targets are finalised, designated employers must review their employment equity plans to ensure their goals align with these targets or provide A reasonable justification if they do not.
“The most controversial of all the amendments by far, is the introduction of sectoral targets, and it remains to be seen what the final version of the sectoral targets will look like,” said Cogger.
The Department of Employment and Labour (DoEL) released draft regulations for public comment on sector identification and sectoral targets for designated groups on 12 May 2023 and again on 1 February 2024.
Cogger said that it is unclear whether the February 2024 draft will be finalized or if another version will be issued for further comment.
However, once the changes to the law come into effect, the Minister will have the authority to identify different sectors by publishing them in the official government notice.
The Minister will then consult with those sectors, issue a draft version of the sector targets for public comment, and after considering feedback, publish the final rules.
The DoEL said that there will be a transitional period that will apply in relation to the sectoral targets.
Notable amendments
Cogger said that the most notable amendments include (among others):
- The deletion of part of the definition of a ‘designated employer’
This will mean that, with effect from 1 January 2025 an employer will only be considered a designated employer for purposes of the affirmative action provisions of the EEA if it employs 50 or more employees.
There will no longer be any consideration given to an employer’s total annual turnover.
- The amendment to the definition of ‘disabilities’
The amended is broader than the previous definition. It will include people with intellectual or sensory impairments which may substantially limit their entry into or advancement in employment.
- An amendment to psychological testing
To address the capacity constraints of the Health Professions Council, their previous role in certifying psychological assessments will fall away.
- Clarification on the consultation obligations with representative trade unions
A designated employer is only required to consult with the representative trade union and not the members of the representative trade union individually.
- The ability of the Minister to identify national economic sectors and set numerical targets for any such sectors
The numerical goals set by designated employers in their employment equity plans must comply with the sectoral targets set by the Minister.
In determining whether a designated employer is implementing its employment equity plan in compliance with the EEA, the Director-General or any other person applying the EEA will take into account whether the designated employer has complied with a sectoral target.
- Submission of the annual employment equity report
Previously, the law set a strict deadline of 1 October for submitting the employment equity report, and employers also had to notify the Director-General by August if they were unable to meet the deadline.
This caused practical issues for employers who found it difficult to comply with this timing.
The amendments now remove the fixed 1 October deadline.
Instead, the report will be submitted according to new guidelines that will be established later (referred to as “in such manner as may be prescribed”). This gives more flexibility to employers.
Additionally, if an employer cannot meet the new submission deadlines, they will be allowed to notify the Director-General and explain why they could not submit the report on time.
- Income differentials statement will no longer be submitted to the Employment Conditions Commission
Instead, the income differentials statement will be submitted to the National Minimum Wage Commission.
- Labour inspector’s powers are broadened
The amendment includes the power to request and obtain a written undertaking to comply with obligations including the failure to prepare an employment equity plan (which was not previously included), and to ‘serve’ compliance orders rather than to ‘issue’ such orders.
- Introduction of criteria to be met by an employer in order for a certificate of compliance to be issued by the DoEL.
This applies to all employers—whether designated or not—who wish to supply goods, services, or lease items to government bodies.
To obtain the certificate, the Minister must be satisfied that:
- The employer has met sectoral numerical targets or provided a reasonable explanation for not doing so.
- The employer has submitted its annual employment equity report.
- There have been no findings of unfair discrimination against the employer by the Commission for Conciliation, Mediation, and Arbitration (CCMA) or a court in the past 12 months.
- The CCMA has not issued an award against the employer for failing to pay the national minimum wage in the past year.
Going forward
Cogger said that employers would be premature in amending their employment equity plans at this stage.
“Only once the final sectoral targets are published should designated employers consult with their employees (or representative trade unions), conduct an analysis of the workforce and prepare either a new or amended employment equity plan in line with the sectoral targets,” said Cogger.
“Once this is done, designated employers can report on their plans,” she added.
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