Since the Employment Equity amendments were signed into law earlier this year, there has been a lot of misinformation and misunderstanding concerning what this means for South African businesses. While there is no doubt that businesses will have to make changes to certain functions and planning procedures, it seems likely that these will only be evident in minimal ways.
Definition of Designated Employment
The first amendment we will be looking at is the definition of “designated employer”, a term used to qualify who the EE legislation is applicable to. In the past “ designated employers were defined as such:
- An employer with more than 50 employees
- An employer who employs fewer than 50 employees, but has a total annual turnover that is equal to or above the applicable annual turnover of a small business in terms of schedule 4 to this act:
Under the 2020 amendments the turnover threshold has been removed. Leaving the definition of designated employer as
- An employer with more than 50 employees
5 Year Plan
Previously, designated employers were given the option of laying out a one to five year plan. From now on all companies with more than 50 employees will be required to submit a five-year plan on how they will reach their targets.
Draft targets for these sectors have now been released, it is important to realise that these are not final. These targets are the reason for a lot of the controversy around EE, but this seems to come from misunderstandings with how the legislation will be applied.
Sandile July, director and head of employment at Werksmans, has stated that South African courts will not permit organisations to fire people so that they can employ a person of a different race. This means that the legislation will not in fact cause many jobs to be lost.
EE Compliance Certificate
There will also be a certificate granted to companies who are able to comply with their sectoral targets. This certificate will be important as it may affect a business’ ability to participate in state tenders and may be required to obtain business licences. Other sources indicate that non-complying companies may also be fined. These certificates will be auto-generated from your submitted EEA2 and EEA4 documentation.
To ensure that you are able to reach your targets by the end of the five year period, you will need aid. That is why we are in the process of developing an EE tool that will allow for in-depth scenario sketching, which will allow you to view your progress toward your goal as actual vs planned. We are developing this tool to go alongside our BEE calculator, so that you can be fully compliant.
If you want to ensure that you reach your EE targets, sign up now for our EE tool waitlist and receive updates on its development as well as early access to the product.