Employment equity bill gives labour minister far wider powers

3 August 2020

Legal disputes are likely if the latest draft of the Employment Equity Amendment Bill is passed.

The latest draft of the Employment Equity Amendment Bill was published on July 20, several years after the initial draft appeared for comment. The latest version, which will be heading to parliament, includes controversial amendments to the Employment Equity Act (EEA) of 1998, which permits far greater intervention by the minister and more red tape for employers hoping to do business with the state.

At the same time, the bill amends the definition of “designated employer” by excluding those who employ fewer than 50 people, regardless of their annual turnover. This means those employers will not be subject to the affirmative action provisions of the EEA. Voluntary reporting will be done away with. These amendments are a welcome relief from the regulatory burden already placed on small, medium and micro employers. It will introduce greater flexibility into a sector that the government has highlighted as being an important driver of SA’s post-Covid recovery plan.

However, the bill also seeks to double down on existing measures in the EEA to reach its aim of ensuring equitable representation of suitably qualified people from designated groups at all occupational levels in the workforce. First, section 15A empowers the minister to identify national economic sectors and determine numerical targets for those sectors. The bill requires that prior to doing so the minister must consult the Employment Equity Commission on the proposed sectors and targets he seeks to designate, and to publish any proposals for comment.

The bill requires that the numerical targets set by employers must comply with the sectoral targets set by the minister. When assessing compliance with the EEA, the director-general will also consider whether the employer has complied with the sectoral targets set by the minister. And it proposes that certain requirements must be met before the minister may issue a certificate of compliance to a designated employer in terms of section 53. One of those is the achievement of the sectoral targets set by the minister. It is obvious that a failure to meet these requirements will have serious implications for employers that seek to perform work for the state.ADVERTISING

The proposed insertion of section 15A and amendment to section 53 of the EEA will almost certainly lead to litigation. If implemented in its present form the numerical targets set by designated employers in their employment equity plans would likely be rendered meaningless. This is because the minister’s targets are likely to be broad-based and will have little regard for targets tailored by individual employers to suit their employment equity plans.

Allowing the minister to impose such targets unilaterally, without consulting stakeholders other than the Employment Equity Commission, will result in a “one-size-fits-all” approach and will almost certainly be disruptive of existing or future employment equity plans of employers. Disagreements with and litigation over such approaches in the context of bargaining council agreements in various industries have been well documented in the recent past, and similar difficulties are likely to arise here.

An important consideration will be which sectors are identified by the minister and what targets are determined, how they are determined and to which employers in the sector they will apply. In the absence of consultation with the relevant stakeholders in a particular industry, it is difficult to understand how the minister could arrive at any sort of informed or rational decision. Whatever the decisions, they are likely to be contentious and could lead to protracted legal disputes about their legality and enforceability.

A conceptual problem with the amendments may also arise. It could be argued that the proposed amendments requiring a designated employer to meet the targets set by the minister before it may do work for the state is not really a target but actually more akin to a quota. Our courts have found that quotas in employment equity plans are not permitted by the EEA and thus the amendments may not find favour with our courts. In those circumstances the provisions may be rendered unenforceable.

The bill also does not provide an employer with an opportunity to apply for exemption from these new provisions. Employers that fail to meet the minister’s targets may, however, provide a reasonable justification for the failure, though it is not clear to what extent the minister would be willing to accept any variations given his recent utterances in the media. What constitutes a “reasonable justification” is thus likely to become a contentious issue in due course.

The amendments come amid a global pandemic that has already had a severe impact on employers and employees. In response to the lockdown many employees have been retrenched (about 3-million by recent reports) and this may have negatively affected many employers’ employment equity plans. The situation is uncertain, and many employers will be focusing their energies on staying afloat and saving jobs during the next few months.

Nevertheless, the minister appears determined to implement the amendments as soon as possible given the slow rates of transformation in many of SA’s economic sectors. The minister’s new approach to ensuring compseliance with the EEA incorporates both the carrot and the stick; whether this approach will achieve its purpose remains to be seen.

• The authors are partners with Cowan-Harper-Madikizela Attorneys.

Source: Business Live at https://www.businesslive.co.za/bd/opinion/2020-08-03-employment-equity-bill-gives-labour-minister-far-wider-powers/