It is always important to consider the regulatory environment. Looking at the “S” in ESG, one should consider the Broad-Based Black Economic Empowerment (B-BBEE), for it has become a crucial part of South African Legislation. While progress around B-BBEE has taken place, the change in the C-Suite of originations is yet to create the inclusion impact many had hoped for. To reach the goals set out in the transformation agenda in the country, one should not only consider addressing obstacles within the state. There is also a responsibility that falls on the Private Sector to have the courage to stand firm in ensuring sustainable change by closely considering diversity, equity, and inclusion.
The continued quest for redress led to the appointment of the country’s new B-BBEE Advisory Council in June 2022, which will guide the government on the ‘intensified transformation’ of the economy. However, for authentic and accelerated transformation to be achieved, the B-BBEE act must be applied consistently by both the Public and Private Sectors, particularly concerning Section 10 and Section 13 (G). These sections refer to the Status of the Codes and Reporting by entities in the Public and Private Sectors.
Although no substantial changes have been made to the B-BBEE Act and Amended Codes of Good Practice after 2015, the most significant transformation push comes through the new Employment Equity Amendment Bill, which is expected to be the vanguard in a new transformation push for the country.
The Department of Employment and Labour governs the Employment Equity Act, allowing minister Thulas Nxesi to set employment equity targets for different business sectors. Targets may be set for different occupational levels, sub-sectors, or regions.
The Amendment of the EE Act of 1998
The Amendment of the EE Act of 1998 is intended:
- To reduce the regulatory burden on small businesses;
- Empower the Employment and Labour Minister to regulate sector-specific EE numerical targets;
- To promulgate section 53 of the EEA for issuing the EE Compliance Certificate.
The expected introduction of five-year sector targets will mark a new beginning for inclusion. All current Employment Equity plans fell away on 22 September 2022. The new plans will have to be aligned with five-year targets, as self-regulation is yet to deliver broader diversity and inclusion.
The primary purpose of the Employment Equity Act is to promote the right to Equality, to ensure that all employees receive equal opportunities and be treated fairly by their Employers.
The Two Significant Changes
As a result, the Amendment Bill has seen two significant changes, namely:
- The definition of “designated employer” has been narrowed, and the Minister of Employment and Labour (Minister) has been empowered to determine sectoral numerical targets. In the current Act, an employer that employs fewer than 50 employees (small businesses), but has a total annual turnover that is equal to or above the applicable annual turnover contained in Schedule 4 of the Act, is deemed to be a designated employer and falls within the scope of application of Chapter 3 of the Act (which deals with affirmative action measures).
- The inclusion of small businesses has been removed from the Bill, thus Chapter 3 of the Act will no longer apply to small businesses regardless of their turnover. These employers will therefore not be required to produce an employment equity plan and submit annual reports. Notably, section 14 of the Act, which permits voluntary compliance with Chapter 3, has been repealed.
section 15A
The newly created section 15A, contain pertinent aspects; The Minister has the power to identify National Economic Sectors, that are defined as “an industry or service or part of any industry” and may set numerical targets to be achieved to ensure representation of suitably qualified individuals from designated groups in all organisational occupational levels.
The sectoral targets will be published in the Government Gazette, giving interested parties a minimum of 30 days for commentary.
Several additional sections were amended to align with section 15A. In so doing, section 20 has been amended by inserting section 20(2A) requiring a designated employer to align numerical targets in its employment equity plan, with the applicable sectoral targets set by the Minister.
Section 42, has been amended by inserting section 42(1)(a) that requires alignment with the Minister’s sectoral targets in so far as compliance with the Act is concerned. In addition hereto, the amended section 53 requires a designated employer to set its numerical targets following the applicable sectoral targets as determined by the Minister as a precondition for a compliance certificate to permit contracting with the state.
These amendments assist small businesses in having a less onerous compliance process. Once these targets have been Gazetted a follow up-article detailing these targets will be published. Feel free to reach out if you need assistance with your current employment equity submission.
Suzaan Bezuidenhout
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