Draft Employment Equity (‘EE’) Regulations (‘the 1 February Draft EE Regulations’) setting out revised Sector Targets, were published by the Department of Employment and Labour (‘DEL’) on 1 February 2024 in preparation for the commencement of Section 15A of the Employment Equity Amendment Act No 4 of 2022 (‘the Amendment Act’)

Section 15A of the Amendment Act provides for the introduction of Sector Targets with which Designated Employers (those > 50 employees) will have to comply in setting their EE Goals. Setor Targets are being introduced by the DEL to increase the pace of transformation, and to counter the existing practice on the part of some employers of setting low EE Goals[1].

Salient features of the 1 February Draft EE Regulations are:

• The subject matter of the Sector Targets has been changed from ‘Black’ to ‘Designated Groups’ i.e., ‘Designated Groups Male’, ‘Designated Groups Female’ and ‘Designated Groups Total’ as opposed to the previous ‘Black Male’, ‘Black Female’ and ‘Black Total’ Targets.
• There are no longer targets for African, Coloured or Indian Males or Females. Instead, Designated Employers are required to take ‘the applicable EAP’ into account when setting their ‘annual EE Targets’.
• Except for the Financial and Insurance Activities Sector, where a mistake was corrected, the Targets themselves (and those for the Male and Female target groups) did not change, despite all the well-motivated objections received to them from numerous employer organisations who submitted their comments on the regulations to the DEL.
• The provision of factors and/or criteria that need to be taken into account when:
  • Setting of 5-Year Sectoral Numerical Targets (sic); and
  • Preparing (which by definition includes the setting of Goals), and implementing an employment equity plan, reporting and compliance analysis of affirmative action in any workplace.
• No changes were made to the EAP to be used by Designated Employers with a National footprint in setting EE Goals.
• The provision of justifiable reasonable grounds that can be raised by Designated Employers and/or taken into consideration for not complying with EE Goals set pursuant to the targets.
• The forbidding of certain consequences arising from the implementation of AA Measures.

I deal with the last four bullets below.

1. Setting of 5-Year Sectoral Numerical Targets

The factors that need to be take into account by designated employers when setting their Numerical Goals are, inter alia:

• Their workforce profile (and the extent to which suitably qualified people from the different designated groups are equitably represented within each occupational level in the employers’ workforce in relation to the demographic profile of the National and Regional/Provincial Economically Active Population (EAP)).
• The relevant 5-year sectoral numerical targets.
• The applicable EAP.
• That employers will be measured against the annual targets set towards meeting the ‘relevant 5-year sectoral numerical targets’[2].
• That employers should not set (higher?) targets for those groups whose representation has already exceeded their EAP in a particular occupational level.
• Where a designated employer has exceeded the set numerical target of a particular racial/gender group at an occupational level, such an employer may not regress in that particular racial/gender group but should set targets towards the EAP.

2. Preparing and implementing an employment equity plan, reporting and compliance analysis

Criteria relevant to the setting of Goals (and their implementation), which employers are required to take into account, are:

• The pool of suitably qualified persons in the relevant Occupational Level.
• The rate of turn-over and natural attrition within a workplace (it is assumed in the Occupational Level in which EE Goals are being set).

Criteria relevant to the implementing an employment equity plan, reporting and compliance analysis of affirmative action in any workplace are the:

• Inherent requirements of the job,
• Qualification, skills, experience and the capacity to acquire, within a reasonable timeframe, the ability to do the job; and
• Recruitment and promotional trends within a workplace.

3. No changes made to the EAP to be used by Designated Employers with a National footprint in setting EE Goals

With regard to the EAP, the regulations again require that designated employers conducting their business/operations nationally use the National EAP, and that those conducting their business provincially, that province’s EAP. Although the wording is confusing it appears that designated employers conducting their business/operations nationally may instead choose to use the EAP of the province with the most employees.  However, they cannot use more than one EAP in the setting of their Goals.

4. Justifiable Reasonable Grounds for not achieving targets

These may include:

• Insufficient recruitment opportunities.
• Insufficient promotion opportunities.
• Insufficient target individuals from the designated groups with the relevant qualification, skills and experience.
• CCMA awards/Court Order.
• Transfer of business.
• Mergers/Acquisitions.
• Impact on business economic circumstances.

5. The forbidding of certain consequences arising from the implementation of Sector Targets

These are that:

• No absolute barrier may be placed upon any employment practices affecting any persons (as per Section 15(4) of the EE Act).
• No employment termination of any kind may be affected as a consequence of affirmative Action.

Conclusion

The DEL has not, except for one Sector, changed any of the Sectors Targets, or expanded the Sectors to include Sub-Sectors, as requested by numerous employer organisations in their well-motivated written submission in response to the Draft Regulations published on 12 May 2023.

It has, however, introduced regulations relevant to the setting of Goals and their implementation which appear to have opened the door to the setting of EE Goals that are achievable, and do not necessarily comply strictly with a Designated Employer’s Sector’s Targets, be it for both Males and Females, or its Male or Female Targets.

I am of the view that if this is indeed the case, such pragmatic approach by the DEL is likely to result in a much earlier implementation of Sector Targets than would otherwise have been the case. The opposition to the present proposed Sector Targets and call for the inclusion of Sub-Sectors with their own targets to cater for the differences in their workforce profiles and Male:Female ratios by Employer Organisations, is likely to be withdrawn in such event.

I will be dealing with the following aspects in subsequent articles on the 1 February Draft EE Regulations:

Why the change from ‘Black’ to ‘Designated Groups’ Targets in the 1 February Draft EE Regulations is ill-conceived and should be reversed.

The positive impact of the Agreement between Solidarity and the DEL on Sector Target EE Goal setting and implementation in the 1 February Draft EE Regulations.

Why the provisions in the 1 February Draft EE Regulations with regard to the usage of National or Provincial EAP is unlawful.

Written by Adv Jan Munnik, Managing Director of EES-SIYAKHA