Employment Equity Act Amendments

15 July 2022
South African Accounting Academy

B14-2020, introduced 21 July 2020. Approved by Parliament. Signed into law after being passed by the National Council of Provinces on Tuesday, 17 May 2022.

The Bill is in its final stage of promulgation as it has been sent to the President for signing.

It is expected that the Amendment Bill will be signed into force by the President in September 2022.

Two of the major changes brought about by the Bill are that; the definition of “designated employer” has been narrowed, and the Minister of Employment and Labour (Minister) has been empowered to determine sectoral numerical targets.

In the current Act, an employer that employs fewer than 50 employees (small businesses), but has a total annual turnover that is equal to or above the applicable annual turnover contained in Schedule 4 of the Act, is deemed to be a designated employer and falls within the scope of application of Chapter 3 of the Act (which deals with affirmative action measures).

The aforementioned inclusion of small businesses has been removed in the Bill, having the effect that Chapter 3 of the Act will no longer apply to small business regardless of their turnover. Accordingly, these employers will not be required to have an employment equity plan, submit reports, and the like. In this regard it is noteworthy that section 14 of the Act, which permits for voluntary compliance with Chapter 3, has been repealed.

The second major amendment, for the purposes of this article, is that of the newly created section 15A, with the pertinent aspects being:

The Minister may identify national economic sectors, which in terms of the Bill are defined as “an industry or service or part of any industry”.
For any economic sector that has been identified, the Minster may set numerical targets to ensure equitable representation of suitably qualified people from designated groups at all occupational levels in the workplace.
The sectoral targets shall be published in the Government Gazette, allowing interested parties at least 30 days to comment on them.

There is a likelihood that substantial litigation will flow from the setting of such targets.

It is envisaged by the Director of Employment Equity that all current employment equity plans will fall away and be replaced with new employment equity plans in terms of the Bill.

Click here to download the Bill:

https://www.gov.za/sites/default/files/gcis_document/202108/b14b-2020-employment-equity-amendment-bill.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

The Employment Equity Act is yet another piece of legislation that your clients must comply with, and which you must assess compliance with. If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (NOn-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.
As an auditor and independent reviewer, or an accountant, you need to consider whether your client is a “designated employer” who should then submit their Employment Equity reports accordingly.
You should also be aware of the changes that are made to the EE Act via this Amendment Bill.
If you meet the definition as a “designated employer”, you also need to comply with the Employment Equity Act in your workplace

Relevance to Your clients:

An entity who is regarded as a “designated employer” has a duty to comply with the Employment Equity Act, and directors have to fulfil their duties accordingly, otherwise they could be held liable.
Your clients should also be aware of the changes that are made to the EE Act via this Amendment Bill.

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