JJ Van der Walt, legal counsel for employment law at Cliffe Dekker Hofmeyr, unpacks key provisions of the bill.
The Employment Equity Amendment Act 4 of 2022 (Amendment Act) became effective on 1 January 2025.
Gazetted by the employment and labour department on 20 July 2020, it was signed into law by President Cyril Ramaphosa on 12 April 2023.
Leading HR executives said at the time that the amendments to the bill would hold companies accountable in ensuring compliance, adding that it was long overdue. JJ Van der Walt, legal counsel for employment law at Cliffe Dekker Hofmeyr, unpacks some of the changes and possible shortcomings of the bill:
What are the more significant changes in the amendment? What will it address that has fallen short in the past?
Firstly, the Amendment Act amended the definition of ‘designated employer’ to limit compliance with affirmative action obligations (e.g., preparing, implementing and reporting on implementation of an employment equity plan) to employers employing 50 or more persons. The definition is amended to exclude employers who employ fewer than 50 employees, irrespective of their annual turnover.
The purpose of the amendment is to exclude smaller entities (and businesses) from having to comply with the obligations placed on designated employers and, thereby assist such employers, unburdening them from (a) the administrative and governance burden and (b) potential legal and reputational risk.
Secondly, it introduces new powers for the Minister of Employment and Labour to (a) identify national economic sectors and (b) set numerical targets for each such national economic sector.
The purpose of this amendment is to remove the right of employers to set numerical goals and afford the power to the Minister in an attempt to hasten transformation, especially on the more senior occupational levels of an enterprise.
Are there any blind spots/shortcomings that companies should be aware of?
At this stage, we emphasise that the sectoral numerical targets will be determined by the Minister in consultation with the Employment Equity Commission and published in a regulation. Although two draft regulations have been published for public comment, no final regulation has been published.
The shortcomings of the Amendment Act include the uncertainty created by the poor quality of the two draft regulations published for public comment. For example, no transitionary arrangements are provided for. In terms of the latest draft regulation, an employer that operates in more than one sector must use the sectoral numerical targets of the economic sector where most of its employees are located. This might create difficult and unintended consequences for employers who have, for example, a 60/40 percent split between two different sectors.
The republished regulation states that an employer that conducts its business operations nationally should apply the national EAP and an employer operating in a particular province should use the provincial EAP. Employers cannot use both national and provincial EAP demographics for the purposes of developing their employment equity plans and setting annual numerical targets. Some concerns have been raised in relation to whether this approach to using the national or provincial EAP aligns with the EEA as well as whether there is a general election for employers who operate in more than one province.
How could companies meet the stipulated obligations, without it becoming an overwhelming exercise?
Designated employers should be proactive and stay abreast of the impending changes. As soon as the regulations are published, designated employers should immediately consider (a) the impact thereof, (b) commence with preparation of a new employment equity plan and (c) start gearing its organisation’s policies and structures to comply with the sectoral targets as soon as possible.
