In September 2018 we received the Employment Equity Amendment Bill 2018; brought forth by the outcome of the Department of Labour’s 20 year review on the implementation of Employment Equity. The review highlights the under-representation of women within the private sector -in key-decision making positions- as well as the under representation of designated and disabled employees in managerial roles overall.
The Employment Equity Amendment bill proposes a number of substantial amendments to the Employment Equity Act, however, in my opinion, the main purposes is to allow the Minister of Labour to establish enforceable sectoral numerical targets to improve equitable representation on all levels of business, and to enhance the administration of the act with the proposed promulgation of section 53.
This article aims to address the major changes in the various sections of the Act.
Chapter 1 - Definitions
In Section 1 of the act, the definition of a designated Employer (a company that, by law, has to comply with the EE Act) has been amended by deleting paragraph (b,) which classifies employers with less than 50 employees as being designated based on their annual turnover. This would suggest that the only factor on which we can determine designation is based on the number of employees (being 50 or more).
The Definition of the National Minimum wage commission is introduced suggesting that the duties of the Employment Conditions commission has been absorbed by the National Minimum wage commission.
A definition of sector is included as an industry or service or part of any industry or service.
The Definition of “serve or submit” has been deleted. This definition refers to methods of communication, currently including sending communication in writing, delivering it by hand, delivering it by registered post, transmitting it by use of any electronic mechanism which allows for printing. This would allow the Minister to prescribe by regulation, the methods of communication, submission and service.
A definition of ‘the state’ is included as a national or provincial department as defined in the Public Finance Management Act. This is to ensure clarity with the application of section 53 which deals with state contracts.
Chapter 2 – Prohibition of Unfair discrimination
Section 8 of the Act deals with Psychological testing and other assessments, this section is amended by excluding the requirement that psychological tests need to be certified by the HPCSA. This suggests that it is believed that the HPCSA does not have the capacity to certify these assessments/tests and any disputes of such assessments will be evaluated by the Labour Court.
Chapter 3 – Affirmative Action
Section 14 of the act, which dealt with Voluntary Compliance to the EE Act, has been repealed. This suggests that an Employer who is currently deemed as “Non-Designated” cannot notify the Director General that they will be complying with the act out of their own free will for any reason (such as for tender-related purposes). Chapter 3 will thus only be applicable to Employers with more than 50 employers under the amended definition.
Section 15 of the act, which deals with affirmative action measures, has been amended with the proposed inclusion of section 15A subsection 1 – 5.
The inclusion of 15A Subsection 1 will allow the Minister to identify and group national economic sectors for the purpose of administration of Employment Equity. Subsection 2 will allow the Minister to establish numerical targets (a headcount target) for Employers in these sectors to ensure equitable representation of suitably qualified people from designated groups. This suggests that Employers will no longer be setting their own targets in line with the Economically Active Population as it is believed that Employers are using self-imposed targets as a “shield” to evade the law by setting low targets and achieving same within a reasonable time-frame
It is proposed in 15A subsection 3 that the Minister may issue a notice in terms of subsection 2 (above) which may set different numerical targets for the 6 occupational levels, or to set specific targets in regions within an economic sector, or, to set targets on the basis of any other relevant factor. Subsection 4 states that a draft of any notice needs to be gazetted and parties must be allowed at least 30 days to comment on the draft notice. This effectively allows the public 30 days per notice to voice their concerns with the proposed notices and/ or legislative changes. Subsection 5 will allow the minister to issue regulations prescribing criteria to be considered when determining a numerical target in terms of subsection 2 above. The minister of labour thus sets the bar for how stringent or radically transformative these targets are, and dispenses judgement on whether they were achieved or not.
The inclusion of section 15A is in my opinion the most aggressive amendment and seemingly included due to a perceived lack of commitment to transformation.
Section 20 refers to the Employment Equity plan and has been amended with the proposed inclusion after subsection 2, (2A) “The numerical goals set by an employer in terms of subsection (2) must comply with any sectoral target in terms of section 15A“. This will ensure that the goals and targets to be set in the Employment Equity plan, are in line with the “set” targets proposed in section 15A.
In Section 21, Reports, subsection (1) referring to the October deadline, has been replaced with a very vague section stating that a designated employer must submit a report once a year on such date and in such manner as may be prescribed. This doesn’t leave much room for planning as the deadline is not made clear in the amendment bill. In addition to this subsections 3 and 4 has been deleted and subsection 4A, failure to submit, has been amended to exclude the October deadline.
Section 27, Income Differentials, has been amended to propose a transfer of duties from the Employment Conditions Commission to the National Minimum wage Commission.
Chapter 5 – Monitoring, Enforcement and Legal Proceedings
Section 37, which deals with Compliance Orders, has been amended to propose that the duties of a labour inspector may also be fulfilled by a person acting on behalf of a labour inspector, thus, permitting the Minister to prescribe the manner in which compliance orders are served. This could lead to an influx of new pseudo- labour inspectors.
Section 42, Assessment of Compliance, has been amended to clarify that an Employer’s implementation of affirmative action may be measured against the demographic profile of either the national or the regional economically active population (EAP), and to measure whether the employer has achieved any sectoral target set by the Minister in terms of the proposed section 15A. This indicates that if these Sectoral Targets are not met, the employer may be deemed Non-compliant with the act, and face the corresponding consequences.
Chapter 6 – General Provisions
Section 53, State Contracts, is proposed to be promulgated as this section was not promulgated before. Section 53 is proposing that state contracts will only be awarded to Employers who has been certified as being compliant with the Employment Equity Act, an employer will be required to attach a certificate of compliance and/or a declaration by the employer that it complies with the relevant chapters of the act when applying for a contract with the state. A brand new subsection (6) has been included in section 53 which regulates when the Minister may issue a certificate of compliance with the Employment Equity Act. As per the proposed subsection 6, the below criteria needs to be met:
The Employer met the applicable sectoral targets in terms of section 15A or has provided reasonable and acceptable grounds for non-compliance
The Employer has submitted its most recent report (section 21)
The Employer has not been found (within the previous 12 months) to have breached the prohibition on unfair discrimination or failed to pay the national minimum wage in (National Minimum Wage Act, 2017)
Section 64, which allowed for the annual turnover thresholds in Schedule 4 to define employers with less than 50 employees as designated, has been repealed.
Schedule 4 – Turnover thresholds to determine if an employer is designated, has been repealed.
The proposed bill has been, by far, the most radical and aggressively transformative move by the Department of Labour to force employers to change their respective employment profiles. The entire introduction of the document is laden with undertones of frustration and implies that employers have found methods of subverting the point of economic transformation, and goes so far as to mention the “Carrot and Stick approach” – signifying an intention to force transformation of junior management/ skilled technical and higher occupational levels in a drastic fashion.
Inspections will be more frequent due to the ability of inspectors to allow others to act on their behalf when determining compliance
Employers whom are designated by virtue of turnover, with a staff compliment numbering less than 50, who operate exclusively in the private sector, will no longer be required to comply with Chapter 3, however, the de-registration process will still apply
Employers will be forced to employ either a set number or set percentage of staff per level based on targets set by external forces, or suffer the effects of being non-compliant
All Employers that deal with State Owned Enterprises will require the equivalent of a letter of good standing for Employment Equity, which will entail that they get audited or verified
We await further clarity from the Department in lines with the document after the public comment period has closed. (60 Days).
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