Chapter 3. Labour Law Amendments
3.1 Employment Equity Amendment Bill
Employment Equity Amendment Bill – Status
This very long-running amendment Bill was first issued as a draft Bill in Gazette No. 41922 on 21 September 2018.
The PAGSA commented on the proposed changes at that stage, and again when more changes were made to the Bill over the years, the latest of which was published in December 2021.
The final Bill has been approved by the National Council of Provinces and the National Assembly on 17 May 2022 but must still be promulgated (signed into law by the State President) and then given an effective date before its requirements can be implemented.
LATE FLASH:
The State President has just signed the final Bill, so it has been promulgated and we now have an Employment Equity Amendment Act.
However, at the time of writing, (14 April 2023), the Gazette containing the EE Amendment Act had not yet been published. This means that at this point in time we still do not have an effective date from which the changes will be put into operation, but that is dependent on the issuing of the proposed sectoral targets for public comment.
See the ‘LATE FLASH’ in the ‘Sectoral Targets Discussions’ section below.
Note that the information in this workbook that follows beneath has not been changed. The workbook reflects the amendments included in the final Amendment Bill, and the Amendment Act will not differ from the final Amendment Bill that was approved by Parliament.
Objections to the Bill
Promulgation was expected to happen in September 2022, but this did not happen.
My assumption (unconfirmed) is that the signing of the Bill has been delayed because some organisations have threatened to take lodge formal objections against the proposed sectoral targets along the lines of:
“The “Employment Equity” Bill will allow a Minister to set race quotas across the private sector, enforceable by multimillion rand fines, if it is allowed to become law”, and
“If the Employment Equity is amended it will mean that an employer will be bound to use the sectoral targets fixed by the minister and consultation with employees would be rendered meaningless.”
It appears that these organisations are prepared to take their objections all the way to the Constitutional Court.
Sectoral Targets Discussions
Before an effective date can be announced, the new sectoral targets (see the next section) that have been under discussion for more than a year must be finalised (there are 18 financial sectors and only one of them had been finalised by September 2021).
It stands to reason that the portion of the Amendment Bill that provides for sectoral targets cannot be implemented until the sectoral targets are issued in a Gazette that allows 30 days for comments and only once finalised, can then be published in a regulation.
I assume that parts of the EEA2 will be revised and published for comments as part of the same process.
LATE FLASH:
At the time of writing, (14 April 2023), I was informed by the Equity Directorate as follows.
Kindly note that, now that the EE Amendments have been promulgated, we are required to publish the proposed Sector EE Targets for public comment for 30 days. Kindly be on the look-out for the publication.
Thereafter, we will consider the public comments and then the Minister will publish the Final Regulation of the Sector EE Targets for implementation.
We will [then] announce the effective date for implementation.
Implementation?
Once promulgated, in my opinion the most practical date to make the new requirements effective is from the start of October, the first day of the ‘Employment Equity Year’ for most employers (1 October 2023).
On 31 August 2022, the Department of Employment and Labour’s Acting Deputy Director-General (DDG) of Labour Policy and Industrial Relations, Thembinkosi Mkalipi, announced that the signing of the Bill by the President was expected to happen sometime before the beginning of next year [this has not happened], and that the effective date will be on 1 September 2023.
However, there is a remote possibilty that the ‘Equity Year’ dates are revised (see the PAGSA proposal towards the end of this section). If this proposal to standardise the ‘Equity Year’ is accepted, the effective date could then be 1 March 2024.
Lastly, the PAGSA has made the Equity authorities aware that payroll suppliers and employers need sufficient time in which to change payroll systems and to implement the changes at clients.
Employment Equity Amendment Bill – Summary of the Changes
Change to the definition of a Designated Employer
All employers must comply with the ‘Unfair Discrimination’ requirements of Chapter II of the EE Act, but only ‘designated employers’ must comply with the ‘Affirmative Action’ requirements of Chapter III.
In a significant change that will reduce red tape for ‘smaller’ employers in future, the definition of a “designated employer” will be amended by the deletion of paragraph (b) that currently includes as a designated employer:
“a person who employs fewer than 50 employees but has a total annual turn-over that is equal to or above the applicable annual turn-over of a small business in terms of the Schedule 4 of this Act;”
Once promulgated, designated employers will be defined as follows –
(a) a person who employs 50 or more employees;
(b) … [to be deleted]
(c) a municipality, as referred to in Chapter 7 of the Constitution;
(d) an organ of state as defined in section 239 of the Constitution, but excluding the National Defence Force, the National Intelligence Agency and the South African Secret Service; and
This means that once the changes are made effective, all employers with less than 50 employees will be excluded from Chapter III (‘Affirmative Action’) and will no longer have to submit an annual Equity plan.
Note that those employers that in future will no longer be designated once the changes are made effective and that then do not have to comply with the ‘Affirmative Action’ requirements of Chapter III of the Employment Equity Act, must still comply with the ‘Unfair Discrimination’ requirements of Chapter II of the Act.
To obtain an Employment Equity Compliance Certificate for state tenders:
1. All employers must comply with the National Minimum Wage Act
2. All employers must comply with the ‘Unfair Discrimination’ requirements of Chapter II of the Employment Equity Act
3. Designated employers must in addition submit annual employment equity plans and be seen to be making progress against the targets and goals specified in those plans.
Voluntary compliance
Section 14 of the current EE Act allows an employer that is not a designated employer to notify the Director-General that it intends to comply voluntarily with the ‘Affirmative Action’ Chapter and submit an Equity plan as if it were a designated employer.
The Employment Equity Bill proposes to repeal (delete) section 14, which on the face of it means that in terms of section 53 (see below), employers with less than 50 employees will no longer be able to voluntarily submit an Equity plan and to then tender for government business. This is not correct.
As stated above, non-designated employers with less than 50 employees can still be issued with a Certificate of Compliance to enable them to do business with Government if they comply with:
• Chapter II of the EE Act (‘Unfair Discrimination’), and
• The National Minimum Wage Act.
Section 14 has been repealed to remove the administration burden of notifying the Director General.
Section 15A (Establishment of Sectoral Targets)
According to the Department of Employment and Labour, the purpose of introducing the sectoral numerical targets is to focus on targets tailored for the specific characteristics of each sector to achieve:
“the equitable representation of suitably qualified people from designated groups at all occupational levels in the workforce by designated employers”.
Section 15A has been added to the EE Act to provide for numerical targets for any sector as follows:

As required by section 15A, the Minister of Employment and Labour will publish a notice in the Gazette identifying national economic sectors for the purposes of the Employment Equity Act. This notice may set different numerical targets for different occupational levels, or regions within a sector, or on the basis of any other relevant factor.
Application of the new Sectoral Targets in Practice
In the absence of finalised sectoral targets, the intention is that they must be applied to the employer’s workforce profile (the EEA2) and won’t impact on the financial reporting (the EEA4).
This was confirmed by the Equity Directorate:
“The Sector EE targets will only affect the composition of the workforce/ employees covered and reported in EEA2 Report – the EEA4 covers the remuneration paid to the employees/ workforce covered in the EEA2.
This means that once released, the new sectoral targets will influence the EEA2 Workforce Profile plans (the employer’s ‘headcount’ numbers). The results over the years will be measured against the employer’s EEA2 5-year plan and the results of the sectoral target restructuring will be reflected in financial terms in the EEA4 tables.
The intention appears to be that all current equity plans will fall away when the new requirements are made effective, and the new plans will have to be aligned with five-year sectoral targets.
At the moment there are more questions than answers on the practical aspects of the implementation of the new sectoral targets, so we have asked the equity authorities in advance to prepare a Guide to assist employers.
Section 20 (Employment Equity Plan)
Section 20 is proposed to be amended by the addition of the following:
“The numerical goals set by an employer in terms of subsection (2) must comply with any sectoral target in terms of section 15A that applies it. “
Section 53 (State Contracts)
This section has a new subsection 6 that states that:
“(6) The Minister may only issue a certificate in terms of subsection (2) if the Minister is satisfied that the employer–
(a) has met any sectoral targets in terms of section 15A that applies to it or has provided reasonable grounds, as contemplated by section 42(4), justifying its failure to comply;
(b) has submitted a report in terms of section 21;
(c) has not been found by the CCMA or a court within the previous twelve months to have –
i. breached the prohibition on unfair discrimination in Chapter 2; or
ii. failed to pay the national minimum wage in terms of the National Minimum Wage Act, 2017.”
Employment Equity – Practical problems and PAGSA Proposal
Terminology
In the interests of effective communication, I have used these abbreviated descriptions for the following concepts:
1. ‘Equity Year’
o The employment equity reporting year declared by the employer at the top of page 2 of the EEA2
o The 12-month period applied by the employer to calculate, consolidate, and analyse employee data for submission of the EEA2 and EEA4 reports to the Equity Directorate
2. ‘Equity Submission Period’
o The period during which the EEA2 and EEA4 reports must be submitted by the employer.
You won’t see these abbreviated descriptions in the legislation or the regulations, but the equity authorities are comfortable with their use.
Problems in Practice
The ‘Equity Year’ varies between employers for historical reasons, but it appears that most employers have an ‘Equity Year’ of 1 October to 30 September of the following year.
However, the manual submission dates open on 1 September and closes on 1 October, which means that:
1. The employee data in the payroll in respect of September is only finalised towards the end of September, therefore on the opening date of 1 September data in the payroll is incomplete and therefore inaccurate.

2. If the employer waits until the end of September for the employee data to be complete and accurate, then there are at best only a couple of days in which to create the report and submit it manually before the closing date of 1 October.
This suggests that if the employer’s ‘Equity Year’ is 1 November 2022 to 30 October 2023, the manual reports will then be submitted between 1 Sep 2024 and 1 Oct 2024 because they are too late for the 2023 reporting year.
Another problem is that because employers have different ‘Equity Years’, the 12-month period reported on will include different periods of the year for different employers. As a result, and from a statistical comparison analysis view, the equity statistics for a year can be a ‘scrambled egg’ scenario resulting from different influences and events during the various 12-month periods.
The Covid hard lockdown period in 2020 is a classic example (hopefully not repeated).
The full Covid period fell into the ‘Equity Year’ for some employers, while only portions of the Covid period were included in other employer’s reports. The differences in the years being reported distorts the comparative statistical value for the country of the equity reports for that year – apples are not being compared to apples.
PAGSA Proposal to Equity Directorate
Without going into detail, the PAGSA has submitted a proposal to the Equity authorities:
1. To specify a single standard ‘Equity Year’ for all employers, and
2. To align this ‘standard’ year with the tax year (1 March to 28 February).
The opening and closing dates for submissions will then be the same as for tax certificate submissions and also for the Return of Earnings for the Compensation Fund (1 April to 31 May).
If this proposal is accepted by the Equity authorities (I am not holding my breath) the practical date of implementation should be 1 March 2024. At the time of writing this workbook (late February 2023), our proposal had neither been rejected nor accepted, so we must wait and see what transpires.
President assents to the Employment Equity Amendment Bill
LATE FLASH
I will discuss the implications of the new sectoral targets and their application in payrolls in the September 2023 ‘Mid-year Payroll Taxes Update’ webinars when the information is available.
The following News release (dated 12 April 2023) was published on the Government website on 14 April 2023.
President Cyril Ramaphosa has signed into law the Employment Equity Amendment Bill of 2020. The Amendment Bill seeks to advance transformation of South Africa’s workforce by setting equity targets for economic sectors and geographical regions and requiring enterprises to develop transformation plans.
The Bill amends the Employment Equity Act of 1998 (Act No 55 of 1998) with new measures to promote diversity and equality in the workplace.
Among its key provisions, the Amendment Bill empowers the Minister of Employment and Labour to set employment-equity targets for economic sectors, as well as regions where transformation is lagging.
The amendment Bill also empowers the Minister of Employment and Labour to regulate compliance criteria to issue Compliance Certificates as per Section 53 of the Employment Equity Act.
The amended Act allows the Minister of Employment and Labour to set regional targets given that racial diversity in South Africa often has regional differences.
The law requires employers with more than 50 employees to submit employment equity plans for their companies, spelling out how they will achieve these targets. Employers are then required to submit annual reports to the Department of Employment and Labour.
In the area of remuneration, the law requires employers to pay workers equal pay for equal work.
The Bill provides clear definitions of discrimination and sets out what workers can do when facing such discrimination – including lodging grievances with the Commission for Conciliation, Mediation and Arbitration, or the Labour Courts.
Companies seeking to do business with the state will be required to submit a certificate from the Department confirming that they are in compliance with the Employment Equity Act and its objectives, and that they do not pay their employees less than the national minimum wage.
As part of ensuring the employment equity objectives become reality, the law now compels labour inspectors to inspect workplaces and to issue employers with compliance orders.
The Department of Employment and Labour has committed to increase the number of labour inspectors and health and safety inspectors who will enforce compliance.
In closing, we must now wait and see what the impact of these significant new legislation requirements is going to be in the workplace and what the impact on the economy is going to be.