In late 2020 the ANC proposed amendments to the Employment Equity act, which President Cyril Ramaphosa signed into law last week Wednesday. The legislation will take effect from 1 September. Below we have gathered the highlighted changes.
Definition of Designated Employer
The first fundamental change is the amendment of the definition of “designated employer”, a term used to qualify which businesses EE applies to. The previous legislation defined designated employers as:
- 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
In the 2020 legislation, designated employees are defined only as “An employer with more than 50 employees”. This now means that companies who have less than 50 employees are exempt from EE.
5 Year Plan
In the past designated employers were given the option of laying out a one, three, or 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.
These targets will now be set by the Minister of Employment and Labour, who will consult with different industries to set the targets. We have no indication of what these targets will be, as of yet, but we know that they will be sector-specific. Targets are anticipated to be revealed by October this year. We will update you as soon as we are made aware of them.
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.
For a company to reach their sectoral targets will not be impossible, though there may be some difficulties in adjusting to the type of planning required. Skills Development, BEE management control, and Employment Equity have all become links in the same chain, even though businesses often have separate people managing these areas, and plan for them at different times in the year. This will have to change as scenario planning will become all but a necessity.
We here at Mantis Networks are looking further into these topics, and are already looking at building a tool that will allow for high level EE planning, with forecasting features and scenario planning that will integrate with your Mantis BEE calculator. If this product interests you, join our EE tool waitlist and be the first to hear about developments, and be the first to have access when the software is released.
As always, we hope business is going well and we are here to answer any questions you might have.