The Employment Equity Amendment Act, No. 47 of 2013 (Amendment Act) marks the very first of the amendments to the Employment Equity Act, No. 55 of 1998 (EEA) since it became effective in 1998.

The Amendment Act amends a number of provisions under the EEA and will have a direct impact on the regulation of disputes. The Amendment Act will also impact the extension of the jurisdiction of the Commission of Conciliation Mediation and Arbitration (CCMA) and the relationship between employers and the Department of Labour (DoL). The most noteworthy amendments are reviewed below.

Amendment to section 1 - the definition of "designated groups"

The EEA defines "designated group" broadly to mean black people, women and people with disabilities. The definition of "designated groups" is amended to limit the beneficiaries of affirmative action in terms of Chapter III of the EEA to persons who:

• are citizens of South Africa by birth or descent; or
• became citizens of South Africa by naturalisation -
  • before the 27 April 1994; or
  • after 26 April 1994 and who would have been entitled to acquire citizenship by naturalisation prior to that date, but for the policies of apartheid.

This has the potential effect of preventing employers from meeting their affirmative action targets if certain staff appointments are employees who became South African citizens after the advent of democracy.

Furthermore, the Amendment Act does not amend the term "black people" and this term therefore continues to refer to African, Coloured, Indian and people of Chinese descent.

Amendments to section 6:

Expansion of the grounds of unfair discrimination in terms of section 6(1)

The Amendment Act has expanded the meaning and reach of the terms "unfair discrimination" by including the term "or on any other arbitrary ground" as a listed ground of unfair discrimination which clarifies the uncertainty around whether discrimination, was previously unfair, simply based on the available listed grounds.

This amendment brings the Amendment Act in line with section 187(1)(f) of the Labour Relations Act, No. 66 of 1995 (the LRA), which provides that "(a) dismissal is automatically unfair … if the reason for the dismissal is … that the employer unfairly discriminated against the employee … on any arbitrary ground."

Insertion of the new section 6(4)

The inserted section 6(4) adds a new ground of unfair discrimination, which relates to the "terms and conditions of employment between employees of the same employer performing the same or substantially the same work, or work of equal value, that is directly or indirectly based on any one or more of the grounds listed in subsection (1)".

The employer thus has to show that such differences in wages or other conditions of employment are based on fair criteria, such as experience and skill.

The section empowers the Minister of Labour to prescribe the criteria and methodology for assessing work of equal value.

Amendment to section 10 - granting of jurisdiction to the CCMA

Section 10(6) of the EEA has been amended to include subsection (Aa) which allows an employee, whose dispute remains unresolved after conciliation, to refer the dispute to the CCMA for arbitration. This amendment is significant, because the Labour Court no longer enjoys exclusive jurisdiction over matters of unfair discrimination, as was previously the case under the EEA.

The criteria which has been set out for the referral of such a dispute are:

• the employee must have alleged unfair discrimination on the grounds of sexual harassment;
• in any other case, the employee must earn less than the threshold prescribed under section 6(3) of the Basic Conditions of Employment Act, No. 75 of 1997 (BCEA) currently being ZAR 193,805; or
• all the parties to the dispute must consent to arbitration. In this instance the referral may be made by any party to the dispute.

Furthermore, section 10(8) has been inserted, which provides that a person affected by an arbitrator's award in an unfair discrimination claim is entitled to take the decision on appeal to the Labour Court (as opposed to it being taken on review).

Amendments to section 11 - burden of proof

Whereas the EEA merely provided that whenever unfair discrimination was alleged, the employer bore the burden of establishing that such discrimination was fair, the Amendment Act now creates two scenarios under which the burden of proof is borne either by the employer or the employee.

Firstly, section 11(1) provides that where unfair discrimination is alleged on a ground listed in section 6(1), the burden of proof rests on the employer and must be proven on a balance of probabilities. The employer must show that such discrimination:

• did not take place; or
• is rational and not unfair, or is otherwise justifiable.

Secondly, section 11(2) provides that where unfair discrimination is alleged on an arbitrary ground, the burden shifts to the complainant (employee) and must be proven on a balance of probabilities. The complainant must show that:

• the conduct complained of is irrational;
• such conduct amounts to discrimination; and
• the discrimination is unfair. 

Amendments to section 21 - reports to the Director General

The Amendment Act simplifies the time frames in which reports required by section 21(1) must be submitted by the designated employer to the Director General (the DG) of the DoL. It provides that this report must be submitted to the DG "once every year on the first day of October or on such other date as may be prescribed".

Where a report cannot be submitted as prescribed, section 21(4A) of the Amendment Act provides for the notification, in writing, to the DG of any inability by an employer to submit a report by the first working day of October.

The DG is then empowered by section 21(4B) to apply to the Labour Court for the imposition of a fine in accordance with Schedule 1 of the Amendment Act where an employer:

• fails to submit a report;
• fails to notify the DG and to give reasons of any inability to submit a report as required by section 21(4A); or
• has notified the DG, but the DG believes the reasons given are false or invalid.

Amendments to sections 39 and 40 - objections to and appeals from compliance orders

The Amendment Act repeals sections 39 and 40 of the EEA, which provided for the objection to and appeals from compliance orders issued by a labour inspector in terms of section 37(1).

Any references to objections to compliance orders in other provisions in the EEA have also now been deleted.

Amendment to section 45 - consequences of failing to comply with DG's recommendations

Section 45 of the EEA has been amended to include sections 45(1)(a) and (b), which specify the action which can be taken by the DG in the case where an employer fails to comply with a request made by the DG in terms of section 43(2) or a recommendation made by the DG in terms of section 44(b).

These new sections allow the DG to apply to the Labour Court:

• for an order directing the employer to comply with the request or recommendation; or
• to impose a fine where the employer fails to justify such non-compliance.

Section 45(2) of the Amendment Act also provides for an employer to give notice to the DG, within the time periods prescribed, that the employer does not accept the request or recommendation made by the DG.

The DG would then have 90 days (in the case of a request) and 180 days (in the case of a recommendation) to make an application in terms of section 45(1), failing which, the request or recommendation would lapse.

Amendments to sections 59, 61 and Schedule 1 - Penalties

The Amendment Act increases the maximum fines (from ZAR 10,000 to ZAR 30,000) which can be imposed for criminal offences as contemplated in sections 59 and 61.

The Amendment Act also empowers the Minister of Labour to adjust such fines in order to counter the effect of inflation, without the need of the concurrence of the Minister of Justice and Constitutional Development.

Amendments to Schedule 4 - Total Annual Turnover Thresholds

In accordance with the powers granted to the Minister of Labour in terms of section 64A of the Amendment Act, the annual thresholds that an employer must exceed in order to be classified as a designated employer have been increased. Each sector's annual turnover thresholds has been significantly increased by 300%.

The result is that certain employers who were previously obliged to comply with certain provisions of the EEA, by virtue of their annual turnover, will no longer need to do so.

However, employers that retain 50 or more employees will still be regarded as designated employers, irrespective of their turnover.

Conclusion

The President is yet to announce a date on which the Amendment Act will come into operation. However, it is vital that employers familiarise themselves with the changes brought on by the Amendment Act to ensure compliance with the law and to avoid the hefty penalties which may be imposed for non-compliance.

Written by Dhevarsha Ramjettan and Mkuseli Bandezi, Webber Wentzel