Arguably one of the biggest changes to employment law within South Africa was released for public comment on 12 May 2023. The changes come in the form of the Draft Employment Equity Amendment Regulations. These regulations allow the Minister and the Department of Employment and Labour (DEL) to set equity targets for employers, across all sectors and geographic locations in South Africa. Employers across South Africa, no matter the size or the designated status of your business, the alarm bells should be ringing! In this article we will highlight at a high level what the impact will be on employers’ going forward, as well as how to best navigate the red tape imposed from the DEL.
The changes in these regulations affect employers with 50 or more people and impact the upper occupational levels, being Top management, Senior management, Professionally Qualified (Middle management) and Skilled-Technical (Junior management) workers. The lower levels, i.e., Semi-Skilled and Unskilled workers will still be measured against the National or Regional EAP targets where applicable. When comparing the current workforce representation in each sector and region against the forecasted sectoral targets, it begs the question – Are these transformative targets realistic and viable? We consider the following when looking at the viability of achieving these targets: The timeframe provided for achieving these targets; the availability of suitably qualified candidates, across the various talent pools in each sector and further sub-sectors; Natural attrition and the cost of training initiatives required for proper succession and experience planning; The effect of staff turnover and the current economic state of South Africa, including the toll of loadshedding on current business operations.
We have identified that the average target across all 18 Sectors for both Top Management and Senior management will be above 50% for black people. Based on the considerations above as well as the concerns below, this will be almost impossible for some sectors to achieve, especially considering the size of the gap that needs to be bridged and the timeframe in which to do so, adding to the ever-growing concerns of a South African business owner.
As LabourNet, we are the first to welcome and promote transformation at the highest levels in South Africa, understanding the benefit that diversity brings to the table, not only in race and gender but also through the difference in perspective and the problem-solving abilities that are present in a diverse workforce. If these sectoral targets had been set up correctly, the opportunity for improved transformation and buy-in would be immense. However, we are concerned that the Minister and the DEL will ultimately set employers up for failure. This will be through the lack of development and advancements of their initiatives in providing employers with the tools to comply and the way these amendments are being implemented.
The impact of non-compliance due to the immovable and poorly informed targets could be detrimental to both the unemployment rate and the economy, with businesses facing the harsh penalties, of which some penalties can be up to 10% of a business’s turnover, where an employer does not meet these determinations without proper cause, made by the Minister.
Another concern with the draft regulations is the lack of sub-sectoral targets. Each of the 18 sectors within the economy encompasses various sub-sectors, each experiencing their own challenges. This means, regardless of the core operations of a business, the employer operating under a sub-sector is subject to the broad targets of the main sector set by the Minister. This is detrimental for specialized businesses, with the need for specialized skill sets, for which talent pools have slim picking, or the training available to achieve the skill set required to do the job, is of a lengthy duration in line with the timeframes set for achieving these targets. Examples of this would be Manufacturing and Professional, Scientific and Technical Activities, both sectors encompass a broad range of sub-sectors and business operations. We have released a full overview of the Sectors and their sub-sectors.
The approach to achieving compliance going forward from 01 September 2023, would be for employers to ensure they are acutely aware of their existing gaps in relation to these targets and any policies, practices or procedures that may hinder their ability to achieve compliance with the new regulations. Employers should keep a close eye on existing talent, within their current workforce, with a plan that will revolve heavily around succession and experience planning to develop designated employees to the level required. Employers will need to have a keen interest in the benefit of pursuing available Skills Development funding, provided for by the SETA’s, as well as SARS, for PIVOTAL training initiatives for both employed and unemployed learners. This will ensure they have available funding to contribute towards these efforts and ensure they have the correct processes in place to achieve this effectively. Employers need a well thought out strategy per occupational level, ensuring they always have oversight on progress towards these targets to have any peace of mind during these uncertain times.
Despite the worrying picture above, the Minister will determine justifiable reasons for not reaching these targets and other relevant objectives to achieve, in the not yet posted regulations of the Act. The DEL has chosen to drive the compliance with these targets through being awarded a certificate of compliance to do business with the state, in which even employers who do not reach these targets will be eligible, based on certain factors such as poor performance financially as a business, job and skill scarcity etc. If there is evidence presented for the reason provided for not attaining these targets, an employer will still be eligible to be issued a compliance certificate and ultimately business with the state.
As LabourNet, we consult all sectors of the economy, and understand the impact of these amendments on your business. Therefore will be passing our comments to the Minister and DEL on the concerns identified above, to ensure that all LabourNet clients have a say regarding these fundamental changes to employment law. However, we will ensure that every client in which we manage their Employment Equity, will be well prepared for the daunting task ahead and that we have a strategy formulated for your business requirements, based on the gaps identified, regardless of the outcome of these stakeholder consultations.