Does your business comply with Employment Equity legislation? Employment Equity compliance not only makes good business sense but also avoids the imposition of fines by the Director-General and secures Management Control points on your BBBEE scorecard. In this blog, Transcend BEE Advisors unpack the provisions of Employment Equity and its significance.
What is Employment Equity?
The Employment Equity (EE) Act of 1998 is one of the central pillars driving transformation in South Africa. The purpose of the Act is to facilitate transformation in the workplace by incorporating two fundamental elements:
- Promoting equal opportunity and fair treatment in employment through the elimination of unfair discrimination; and
- Implementing affirmative action measures to redress the disadvantages in employment experienced by designated groups and to ensure their equitable representation in all occupational levels in the workforce.
Who does the Act apply to?
- Chapter II (sections 5 – 11) applies to all employers and employees and refers to the prohibition of unfair discrimination
- Chapter III (sections 12 – 27) applies to designated employers and refers to Affirmative Action
- A designated employer means an employer who employs 50 or more employees or has a total annual turnover as reflected in Schedule 4 of the Act, municipalities, and organs of state. Employers can also volunteer to become designated employers.
- Designated groups mean black people (African, Indian, Coloured), women, and people with disabilities.
- The South African National Defense Force, National Intelligence Agency, and South African Secret Services are excluded from this Act
A designated employer must implement affirmative action measures for designated groups to achieve employment equity. In order to implement affirmative action measures, a designated employer must meet the following elements for Employment Equity compliance:
Designated employers are required to establish representative consultation Employment Equity committees/ forums to consult on all matters related to Employment Equity. To ensure meaningful consultation, the employer must disclose all relevant information in these forum sessions.
The Employment Equity Committee/Forum should have about four meetings annually (once every quarter). Proof of consultation is required in the form of an Agenda, Signed meeting minutes, and attendance registers.
2. Barriers Analysis
Eliminating Employment Equity barriers is considered to be the main purpose of the EE Act. Barriers are said to exist in the organization’s policies, procedures, practices, and working environments if they adversely affect persons from the Designated Group. As a result, designated employers are required to do an internal audit of identifying barriers or obstacles that impede the advancement of, access to, and or participation in the employment of individuals from the designated groups, and to implement Affirmative Action measures to
address such barriers or obstacles. This also includes a complete analysis of workforce demographic profiles to determine the underrepresentation of specific groups.
3. Employment Equity Plan
Section 20 of the Employment Equity Act states that a Designated Employer must prepare and implement an employment equity plan, which must not be shorter than 1 year and not longer than 5 years, and should include a timetable for the achievement of goals and objectives for each year of the plan. As part of the effort to drive transformation within the workplace, a designated employer must prepare and implement an EE plan that outlines the company’s commitment to actively:
- Eliminate unfair discrimination in employment policies, procedures, and practices.
- Create a workplace that is free of any form of unfair discrimination and harassment.
- Identify Employment Equity barriers or obstacles and appropriate affirmative action measures.
- Strive to have a representative workforce of suitably qualified employees.
- Create an environment that facilitates, encourages, and is sensitive to diversity.
- Projects Employment Equity goals and targets that highlight commitment a representative workforce of suitably qualified employees will be achieved.
- Strategies towards the Equal pay for equal work requirements
4. Employment Equity Reporting
Annual submissions of Employment Equity reports (EEA2 and EEA4) to the Department of Employment and Labour must be submitted by 15 th of January every year, detailing the progress made towards the Employment Equity plan
5. Appointment of Employment Equity Manager/ Section 2 Manager
A designated employer must assign one or more senior managers to ensure
implementation and monitoring of the employment equity plan and must make
available necessary and authority resources for this purpose.
Penalties to Non-compliance
- Where an employer fails to comply with the provisions of the Act as laid out above, the Director-General may apply directly to the Labour Court to impose a fine ranging from the greater of R1.5 million or 2% of the employer’s turnover up to R2.7million or 10% of the employer’s turnover, depending on the frequency of the offence
- Non-compliance is a statutory offense for which the Chief Executive Officer can be criminally prosecuted
- An employer cannot claim any points under the Management Control pillar of the BBBEE scorecard if an Employment Equity report was not submitted to the Department of Employment and Labour.
Based on the above, It is quite evident that employers have to pay the necessary attention to Employment Equity in order to mitigate risk to their business, employees, and clients
The importance of Employment Equity
The focus on employment equity is not only about ensuring that all legislative requirements and reporting are completed but plays an important role in driving meaningful representation and fair employment practices in the workplace. Furthermore, research has shown that companies with a culturally diverse employment profile generally outperform their competitors by up to 35%.
Transcend Corporate Advisors has a team of highly experienced and knowledgeable BEE Consultants that can optimise and align the relevant Employment Equity requirements with company strategies so that compliance is achieved in a way that is sustainable and makes the most business sense.
If you are having challenges on any aspect of Employment Equity or just do not have time to do this efficiently, our BEE Advisors can walk you through the process and make sure you meet the requirements.