EE changes: What should you worry about? (Part 3)
Over the past couple of weeks, I have written about the changes in the Employment Equity Amendment Bill. Today, I will explain how the rules regarding affirmative action will change if the bill is passed.
This will include the amount you will be fined if you transgress these rules.
How much must my turnover be to qualify me as a designated employer?
As we all know, in terms of the current Employment Equity Act, designated employers:
1. Employ 50 or more employees; or
2. Have a turnover exceeding the threshold prescribed for that particular industry.
Designated employers must implement affirmative action measures to achieve their employment equity targets.
The industry-specific turnover thresholds have not increased since 1999. If the Employment Equity Amendment Bill is passed, these will be increased. Consult figure 1 to see how these thresholds will be increased.
How will the definition of designate groups change?
According to the current Employment Equity Act, every designated employer must implement affirmative action measures for people from designated groups to achieve employment equity targets. Currently, designated groups are:
- Black people (Africans, coloureds and Indians);
- Women; and
- People with disabilities.
Under the new legislation, the current definition of designated groups will be clarified to mean black people, women and people with disabilities who:
- Are citizens of the Republic of South Africa by birth or descent; or
- Became citizens of the Republic of South Africa by naturalisation before 27 April 1994 or after 26 April 1994. These people must have been entitled to acquire citizenship by naturalisation prior to that date but were prevented from doing so by apartheid policies.
How will chapter 3 of the current act change?
Here’s how the provisions of chapter 3 of the current act will change:
- All designated employers, regardless of the size of their workforce, must submit an employment equity report every year, on the first working day of October, unless the Minister of Labour prescribes otherwise.
Previously, a designated employer with less than 150 employees could submit its report every two years. However, an employer that only becomes a designated employer after the first working day of April must only submit its first report on the first working day of October the following year.
- The enforcement procedure has been streamlined and labour inspectors will not be required to request and obtain a written undertaking from a designated employer before issuing a compliance order.
If the inspector does issue a request for an undertaking, and the employer does not comply within the stated period, the Labour Court, on application by the Director General, may make the undertaking, or any part thereof, an order of Court.
If an employer has a compliance order issued against him, he will no longer be able to object to it, with the director general, and appeal to the Labour Court. If the employer does not comply with a compliance order, the employer may be referred directly to the Labour Court. This court may then issue an order directing him to comply. If the employer does not justify why he did not comply with the compliance order the Labour Court may issue him with a fine.
How will government assess if a designated employer is implementing employment equity according to the act?
Government will look at, for example:
- How suitably qualified people from different designate groups are represented in each occupational level in the workforce according to the demographic profile of the national and regional economically active population.
The director general no longer has to take the factors, listed in the current act, into account when he assesses how compliant an employer is with employment equity obligations. However, a number of factors have been deleted from the Employment Equity Amendment Bill:
- The pool of suitably qualified people from designated groups from which the employer may reasonably be expected to promote or appoint employees;
- Economic and financial factors relevant to the sector in which the employer operates;
- Recent and anticipated economic and financial circumstances of the employer;
- The number of present and planned vacancies that exist in the various categories and levels;
- The employer's labour turnover; and
- Progress made in implementing employment equity by other designated employers operating under comparable circumstances and within the same sector.
If I break these new rules, how much will I be fined?
Under the new legislation, the maximum fines that can be imposed on someone who transgresses the Employment Amendment Act have significantly increased:
- Violations of most sections in the Act will incur a maximum fixed penalty of between R1.5 million for a first offence and R2.7 million for a fourth offence. Currently, the maximum fines are between R500 000 and R900 000;
- If the sections of the act dealing with employment equity plans and reports are violated, the maximum fine will be the greater of the (increased) capped amounts set out above or a percentage of the employer’s turnover, which ranges from 2 to 10%.
*Figure 1
