You may have heard about the Employment Equity Amendment Bill (the EEAB) and been wondering what it is and how it will affect your business. In this article, we look at the main aspects of the Bill and how it affects you and your business.

The approval process

The EEAB was passed by the National Assembly on 17 November 2021 and was sent to the National Council of Provinces for concurrence.  The EEAB will now be considered by the National Council of Provinces, where any amendments will be considered. Depending on whether any changes are made, it will be reconsidered by the National Assembly and then sent to President Cyril Ramaphosa to be signed into law.

The EEAB is not yet law

This means the EEAB is not yet law. Only once President Cyril Ramaphosa has signed the Bill into law will it become enforceable. It is important to note that there is considerable pushback on this Bill, especially due to the Supreme Court of Appeal judgment in the Sakeliga case against government tenders. In 2017, the then Minister of Finance, Pravin Gordon, elevated the BEE status of a company to a basis for pre-disqualification of tenderers. This was declared illegal and invalid in February 2022 owing to Constitutional Court litigation by Sakeliga.

Some are of the opinion that the EEAB is unconstitutional as the EEAB states that should a company not comply with the numerical targets that will be set by the minister, the company will be barred from entering into procurement contracts with the state. As such, some believe that President Cyril Ramaphosa should refuse to sign the EEAB into law. As head of the executive, he has an obligation to always uphold the Constitution. He is also expressly barred from giving his assent to a bill if he has reservations about its constitutionality. The passing of the EEAB into law is thus still hanging in the balance.

What is Employment Equity and what does the EEAB aim to achieve?

Employment Equity (EE) is the principle, underpinned by legislation, in terms of which employers are obliged to ensure that suitably qualified individuals from designated groups (those individuals who were discriminated against in the past) not only have equal opportunities, but are equally represented in all occupational levels and categories in different workplaces.

In principle, goals were set whereby EE was to be achieved in the workplace, and it was up to the employers to ensure that these goals were met. Employers have not been coming to the party in this regard, resulting in the current EEAB being expedited.

According to the Department of Employment and Labour, the EEAB will assist with:

– Reducing the EE reporting burden on small business owners.

-Assist the minister to regulate sector-specific Employment Equity numerical targets.

-Promulgate section 53 of the EEA for issuing the EE Compliance Certificate.

The major concern for employers is the sectoral targets and the enforcement thereof by the Department of Employment and Labour. With current legislation, employers have the power to determine and set their own numerical targets based on the underrepresentation of designated groups.

The underrepresentation in each occupational level is determined through a comparison with the Economically Active Population (EAP) statistic, either national or provincial. The same EAP statistic is applied to companies in all industries, which poses a challenge to employers who operate in industries that are, for example, male or female dominant.

The new sectoral targets will be determined by the minister after engagements with relevant stakeholders in each sector. The hope is that industry-specific challenges will be taken into consideration and that this could result in an opportunity for employers to better comply with Employment Equity targets.

The EEAB seeks to eliminate all current employment equity plans by September 2022, and to ensure that all new plans align with the new five-year targets set by the Employment and Labour Minister. Essentially, the EEAB sets to take the regulation of Employment Equity plans out of the hands of the employer and into the hands of the Employment and Labour Minister.

Employers who fail to comply with the provisions of the EEAB, including failing to prepare an Employment Equity plan that meets the required sectoral numerical target, face being fined.

Key changes in the EEAB

The main changes proposed in the EEAB are:

Only employers with 50+ employees will be deemed a ‘Designated Employer’, which means they must abide by the Employment Equity Act. Currently, employers who have a turnover above a certain benchmark are also deemed a – ‘Designated Employer’ irrespective of the number of employees the company has.

Numerical targets set by the employer must comply with the sectoral targets as determined by the minister and will be based on the industry that the company is in.

Non-compliance will result in an employer not receiving a compliance certificate resulting in the employer not being able to qualify for any state contracts.

Now, we must wait and see whether the EEAB is signed into law by the President. Until then, nothing will change in the Employment Equity Act and nothing has to change in your business.

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