Chapter 3. Labour Law Amendments
3.1 Employment Equity Amendment Act
Background
The purpose of the Employment Equity Act (EE Act) is to achieve equity in the workplace by 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, in order to ensure their equitable representation in all occupational categories and levels in the workforce.
Chapter II of the EE Act provides the ‘Unfair Discrimination’ measures, and it applies to every employer in the country, from private to public, and from small to large.
Chapter III of the EE Act provides for the ‘Affirmative Action’ measures. In terms of its requirements, ‘designated’ employers must submit annual EE reports containing the prescribed EEA2 and EEA4 information in respect of their 5-year plans.
The Director of Employment Equity, Ntsoaki Mamashela stated at one of the recent country-wide workshops that “self-regulation has not worked. EE does not blindly promote racial discrimination – it promotes the advancement of suitably qualified candidates”.
Status of the Employment Equity Amendment Act
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 draft amendments at that stage, and then again when more changes were made to the Bill over the years, the latest of which was published in December 2021.
The final Bill was approved by the National Council of Provinces and the National Assembly on 17 May 2022 and was assented to by President Cyril Ramaphosa in April 2023.
The final EE Amendment Act was issued in Government Gazette No. 48418 on 14 April 2023, but it has not yet been given an effective date. This date cannot be set until the sectoral numerical targets that are proposed in the draft Regulation and that are referred to in the EE Amendment Act, are finalised and published.
Status of the draft Employment Equity Regulation
The draft Employment Equity Regulation (EE Regulation) was published on 12 May 2023 in Government Gazette No. 48589 and made the proposed sectoral numerical targets available for public comment within 30 days of the Gazette’s publication date (i.e., by 12 June 2023).
The PAGSA did not submit comments on these draft Regulations – there is simply too much detail, and it is too specific to each industry sector to be able to make general comments. As one expert put it, the “draft regulations are, quite frankly, an incoherent mess”.
Public Comments on the draft Employment Equity Regulations
The purpose of this workbook is simply to inform readers of the changes to employment-related legislation and not to delve into the world of policy and its strange bedfellow, politics.
However, some comments in the media on the sectoral and regional employment percentages appear to be valid and important in that there is no doubt that there are proposed targets of 0,0% and 0,1% that effectively ban certain groups from employment in those areas. [0,1% of a person = ?  ]
Court challenges have been threatened and if this happens, at the least they will delay the implementation of the new requirements.
On the other hand, the government position is that:
“Self-regulation of employment equity targets has not moved the needle to expedite change in the workplace.“
And a pragmatic view:
“The reality at present is we have a law and we must engage with that law in light of its purpose and the goals it aims to realise.”
Let’s leave it there. No doubt genuine cases of unfairness and absurdity will come to the surface once employers start to implement the Regulations.
Government Official Announcement – Overview of the Amendments
The following News release (dated 12 April 2023) was published on the Government website on 14 April 2023.
It is included here because it does a reasonably good job of summarising the purpose and the main aspects of the Employment Equity Amendment Act and the associated draft Regulation, albeit from a government perspective.
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.
Employment Equity Amendment Act – 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.
In other words, 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 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 and/or region to achieve:
“the equitable representation of suitably qualified people from designated groups at all occupational levels in the workforce by designated employers”.
There are 18 national economic sectors with their respective sub-sectors (the list of national economic sectors and sub-sectors is contained in the draft Employment Equity Regulations).
Within the sectors, numerical targets may apply to certain sub-sectors, or regions, or occupational levels as proposed in the draft Employment Equity Regulations.
The proposed sectoral targets must be applied to the upper four Occupational levels being:
1. Top Management
2. Senior Management
3. Professionally Qualified
4. Skilled.
Note that it appears that the normal regional and national demographic targets must be applied as usual for the targets for the 5-year equity plans for the remaining two Occupational levels:
1. Semi-skilled
2. Unskilled.
The intention is that the sectoral targets 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 finalised and implemented, 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.
It now appears certain 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 the new five-year sectoral targets.
The PAGSA has 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.”
Implementation of the EE Amendment Act and the EE Regulation
Ntsoaki Mamashela – Director Employment Equity at Department of Employment and Labour – at a recent roadshow confirmed as follows:
“Although President Cyril Ramaphosa on 6 April 2023 signed the amended Employment Equity Act (EEA) into law, it is not yet effective – hence employers will be expected to report on their 2023 obligations using the current legislation, Department of Employment and Labour Director of Employment Equity advised employers.”
“It was our intention to have the new EE amendments coming into effect from 1 September 2023, so as to allow employers reporting on the new updated reporting system. We are ready to implement the new amendments. Legally, the President is required to proclaim the effective date. The proclamation notice is still pending,” Mamashela warned.”
The bottom line is that until an effective date of the EE Amendment Act is published, EE reporting by employers will be ‘business as usual’. The current Employment Equity Act must be used as normal when the reporting cycle kicks-in with both manual and online reporting opening on 1 September 2023, the manual reporting closing on 02 October 2023, and the online reporting closing on 15 January 2024.
Employment Equity – Practical problems and PAGSA Proposal
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 (early September 2023), our proposal had neither been rejected nor accepted, so we must wait and see what transpires … if anything.