How to Prepare for an EE Audit from the Department of Labour

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Fear of the unknown often drives mankind into a panic- stricken, stomach-ulcer laden state of stress, or a resigned state of uncertainty. From a punitive perspective, most businesses shiver at the thought of incurring a turnover-based penalty, guaranteed to be upwards of one million South African Rands.

You’ve spent substantial time, either by yourself, with your HR Resource, or with the assistance of a professional, taking painstaking measures to generate spreadsheets, consider workforce planning initiatives, bickering with line managers regarding the specific demographics of your workforce and, regardless of whether you achieved your goals on an Employment Equity front, the Department of Labour has indicated that they’ll be paying you a visit in the near future. Despite your best intentions and attempts, you still feel apprehensive about the audit itself, possible challenges you’ll face, and the ultimate outcome of whether you are deemed compliant or not. This write-up aims to describe what will be unfolding throughout the audit, how you should prepare for it, and soothe your nerves in doing so.

As of 2018, there are three main types of EE-related audits, summarised in order of complexity.

1. Procedural Inspection

this entails a summary overview of employers’ current state of EE compliance by examining whether the main aspects of EE compliance have been adhered to, specifically measuring whether a senior manager has been appointed to drive EE Compliance, whether consultations with staff about the correct contents are being had, whether your EE Plan and strategies are documented, and whether you’ve successfully submitted your EE Reports for the previous period. The intention is to gain a broad, sweeping overview of whether the employer is complying with the legislation to a satisfactory level, by perusing the presence and quality of EE-documentation required and supplied.

2. Substantive Inspection

this occurs when an aggrieved party approaches or contacts the Department of Labour with a grievance that relates to, could be, or could be construed as, a contravention of the EE Act, unfair discrimination or a lack of transformation in the business. This is treated as an anonymous tip-off, and includes all the trimmings of a Procedural Inspection, along with interviews of your EE Committee and Senior Management, with the intention of identifying whether the allegations are true or false. While addressing the allegations, a procedural audit occurs, with an additional focus on substantive compliance (whether the employer is legitimately implementing EE, and how said implementation could have resolved this grievance without it being escalated to the Department of Labour.

3. Review by the Director General

this determines whether you are applying the EE Act correctly, whether you are compliant, the extent of your compliance, and monitors your implementation of the EE Act per se. All your EE Documentation, inclusive of reports, minutes of meetings, plans, training sessions and other relevant documents (going as far back as 3 years) are assessed in detail, and the inspector (on behalf of the Director General) indicates whether your organisation is transforming, is not transforming, or will not achieve transformation.

Regardless of which of the above-mentioned audits you find yourself in, and the intention of said audit, employers are requested to provide a list of documents to the relevant inspector, prior to a deadline, in order for the documents to be analysed. After the analysis, findings are discussed with the CEO and senior managers appointed to drive EE within the business, and formal correspondence is issued to the employer.

Documentary requirements are requested formally, and requires the EE manager or CEO to complete a checklist in addition to supplying said documentation, called the EEA7 Regulation. In preparation for said audit, let’s define the documents and their corresponding requirement.

  • Proof of assigning an EE Manager- This requests that the employer being audited indicates whether they have appointed any senior managers whom are hold accountable for the implementation of EE at their workplace, and to supply measurable proof of same, such as a detailed appointment letter directing a senior manager to ensure compliance with the EE Act, an amendment to their Terms and Conditions of employment by virtue of added measurable performance criteria, and whether said person holds sufficient authority to do the job properly.

  • Proof of consultation with a representative forum for consultation on EE, and the corresponding proof thereof. By indicating that the employer has consulted with representatives of all kinds of staff members in its employ, with specific focus on ensuring that all ethnic persuasions and gender-profiles have been given a voice to raise queries and concerns pertaining to diversity and discrimination.

  • Proof of conducting an analyses of the employer’s workforce, work-environment, the policies in place, processes, practices and procedures that apply to the business, and whether these have been vetted and updated to ensure that no unfairly discriminatory behaviour could take place in the organisation’s core and support functions.

  • Proof of a formal, detailed EE Plan being present and implemented within the workplace, and whether it includes the correct content, strategies to address a lack of diversity and whether the strategies and numerical targets will achieve transformation in the business.

  • Proof of an income differential statement being conducted- a breakdown of staff’s annualised salary figures and the discrepancies between people who perform the same, or similar, functions, with justifiable reasons for said differences.

  • Proof of EE Annual reports being submitted for the period being audited- the inspector will request information from as far back as three years.

All the above mentioned information should be prepared in hard and soft copy for the inspector in order to accurately assess the information. Failure to submit this is seen as an affront to the Director General and leads to punitive action being taken.

Any sensible employer would be well advised to prepare for the audit by ensuring that the core compliance items have been implemented, in order to prevent the inspector from applying for a fine. The recommended course of action is thus as follows;

1.Communicate the audit date to relevant stakeholders,

such as Top Management and HR. Ensure that they are made aware of the requirements, consequences of noncompliance, and timelines linked to the audit.

2. Generate a formal appointment letters

​if you do not have a formally appointed EE Manager and/ or EE Committee members, and have these co-signed by the CEO or Accounting Officer.

3. Obtain and duplicate all records of consultation with staff pertaining to employment equity consultations as far back as three years.

The more information you’re able to present, the more transparent and accommodating you appear to the Department of Labour. Pay special attention to the signed attendance registers, agendas of EE meetings and minutes thereof that are required. Should you not have agendas, it is recommended that you prepare these after the fact to reflect what was discussed. Although this is not best practice, it does entrench the fact that you covered the discussion points that were supposed to.

4. Ensure that your EE Analyses and EE Plan are on the corresponding template documentation. The EE Analyses should be conducted on the EEA12 Regulation document.

The EE Plan should be generated on the EEA13 Regulation document. Regardless of how diverse, transformative or transparent your organisation is, should the documentation required not be in line with the Department of Labour’s specifications, they will be rejected. It is advised that all documents be quality-checked and updated on the most current template documents on a frequent basis. Regardless of when the documents are updated, do ensure that the dates indicated on the original document match the dates on the updated version exactly, and that all signatures and signatories designated are current.

5. Obtain and present your most recent EE reports.

This specifically refers to three documents- the EEA2 Regulation Document, the EEA4 Regulation Document and the corresponding Letter of Acknowledgement.

6. Ensure that a copy of your EE Plan is made available to staff.

It is recommended that a copy be placed at reception and a memo is circulated to all staff.

7. Ensure that a copy of the EE Act is visibly displayed at each of your workplaces.

It is recommended that you place this on notice boards as well as in the kitchen/ cafeteria/ designated lunch area demarcated for staff, which all employers should have.

In line with best practices, corporate governance standards and common sense, consider the following after the above has been actioned;

8. Call an urgent meeting with your EE Consultative Committee,

informing them of the audit requirements, deadlines, dates and consequences of noncompliance. Ensure that as many of the EE Committee members, as reasonably possible, can attend the onsite audit and follow-up visits as determined by the Department of Labour. This has an enabling effect of reaffirming the purpose, involvement and validity of the EE Committee and indicates transparency. This is also a useful opportunity to ensure that you meet with your EE Committee and have the corresponding paper trail should you not have met with the EE Committee in a while.

9. Create a duplicate file of documentation for the inspector’s perusal and use.

This eliminates back-and-forth activities when comparing documents, and reduces requests for further information during the audit process. Please note that you will likely not receive this file back, so ensure to not supply the inspector with your original documents

10. Expect the Department of Labour to issue you with some form of request or recommendation in line with the intentions of transformation,

regardless of your current state of compliance and/or transformation. An auditor that finds no recommendations to make during an audit yields no value, and it reflects poorly on the Labour Inspector should they find no way of redirecting, reprimanding or re-aligning your company towards accelerated transformation.

Your last recommended option entails getting in touch with a subject matter expert to ensure that your business is compliant with EE Legislation before the Department of Labour checks in with you. As transformation is not only a national imperative but also an ethical one, being ahead of the curve and not having sleepless nights pertaining to the consequences of noncompliance seems way more sensible. By virtue of you reading this, you can safely establish that we are at your disposal should you require assistance with Employment Equity, with dedicated specialists in every one of our branches.

For more information on the above topic, please contact the LabourNet Helpdesk at

0861 LABNET (0861 522638).

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