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EMPLOYMENT EQUITY ACT: BIG CHANGES, MORE NASTY FINES FROM AUGUST – EXPERTS

The 25th of July 2014 saw the gazetting of the effective date of the amended Employment Equity Act, mere days before its implementation date of 1 August 2014.

The passage of the amended Act has been subject to much debate and criticism. The substantially increased fines together with the discretion given to inspectors by the amended section 42 in order to determine substantive compliance, will almost certainly lead to an increase in litigation and possible corruption.

The changes

The most important amendments to the Employment Equity Act are as follows :

1. Extension of grounds of discrimination to include “any other arbitrary ground”.

In the past the grounds for discrimination were limited to issues such as age, race, gender, etc. Whilst this was not an exhaustive list, the extension bars unfair discrimination on any arbitrary ground.

2. Equal treatment included.

This topic has been the point of much discussion as the concept is not fully or consistently understood by all parties. This led to a group of Employment Equity Commissioners visiting foreign shores to research the topic and return to our shores with some definitive direction.

It is important to note that the concept goes beyond “equal work for equal pay” and is all encompassing. In a nutshell “equal treatment” means that unless you have justification for differential treatment on the grounds listed, you will be in breach of the Act.

This principle also finds a home in the new proposed Labour Relations Bill which calls for equal treatment between your perm staff and your TES, fixed term or part-time staff earning below the threshold (R205 433.30 per annum) and after 3 months service unless you have a justifiable reason for differential treatment.

3. Psychometric tests are to be certified by HPCSA or a similar body.

This has proven to be the change that has caused the least debate amongst the social partners. By inserting this definition we move away from the current grey definition which often leads to references to “Dr Google” and unfair practices.

4. More CCMA oversight.

One of the controversial changes is that the CCMA is to be given jurisdiction in sexual harassment matters; or in unfair discrimination matters where employees earn below the threshold; or finally by consent.

This not only represents a departure from the norm in terms of the settled process of dispute resolution involving the Labour Court as the forum where such disputes were previously exclusively settled, but also raises the question of whether damages will be claimable in the CCMA.

5. The burden of proof in discrimination cases has changed.

The onus now shifting to employers to prove that discrimination did not take place and, if it did, that it was fair.

6. There will be aligned reporting periods for large and small employers.

This particular change will inevitably place an administrative burden on small business who previously only needed to report every alternate year.

7. The most controversial of the changes must be the increase of fines.

There will be a variety of fines ranging from 2% – 10% of turnover with alternative rand values should they be greater than a fine based on turnover, or for certain offences. Whilst non–compliance is not condoned, what is concerning is that discretion is given to labour inspectors in terms of their assessment of compliance. This, linked to the ability to refer matters straight to the Labour Court (applying discretion) will pose a massive challenge in respect of possible corruption and the increase in litigation.

“These changes and increased fines will prove a massive threat to businesses should they not get their Employment Equity house in order.”

Employment Equity Regulations

Grant Wilkinson sizes up changes to employment equity rules.

On a similar note, the regulations are still under discussion and it appears that there may be a strong chance of moving towards regional demographics rather than national.

Historical background to the changes

Employment Equity and the principle of affirmative action have a long history of incorrect application. Originally, when the Act was released some companies retrenched their white staff and replaced them with staff of colour.

Alternatively, there have been occasions of “window dressing” and other acts of tokenism . Clearly this is not what the intention of the Employment Equity Act. Whilst we have numerous examples of success stories in the correct application, it is too often still interspersed with employment based purely on the skin colour of of the incumbent without having due regard to whether they are “suitably qualified” or not.

One of the judgements in the recent past, which has provided much needed clarity as to the correct application of Employment Equity and has thrust Employment Equity into the spotlight, is the case of Solidarity on behalf of Barnard versus the South African Police Services, shortly followed by the Department of Correctional Services’ case in Cape Town. The principle that is enunciated in the earlier judgement is that when we have two candidates, one who is part of the designated group we are looking for in terms of our Workforce Profile Analysis and Employment Equity Plan and the other not, the question is: are they of the similar level in terms of scoring for the job competencies or not?

If they are a suitably qualified person, you can apply affirmative action and pick the person in the group you are looking for in terms of your Employment Equity plan. If the candidate of the particular designated grouping you are looking for is far below that of your (as an example) white male, then the white male still gets employed.

This is clearly the correct application of affirmative action and is what has been lacking often in the past.

The future

Employment Equity and affirmative action will continue to remain in our legal system for the foreseeable future. Recent Employment Equity Conditions Commission Reports indicate a strong white male over-representation at top management level in the private sector and notable training of the same grouping at senior level. This statistic clearly indicates that unless something drastic is done, our demographic representation in companies will not change much and we will be having the same conversations ten years from now.

“The large fines together with discretion given to inspectors by the amended section 42 could lead to a large amount of litigation and possible corruption.”

Clearly, there is a need for the legislation to ensure that our workplaces represent our regional demographic, it is just the application thereof that needs to be closely adhered to and scrutinised.

Conclusion

Companies need to ensure that they comply with the new provisions of the legislation to ensure that they meet the requirements of law, are not fined, but also enter into these matters in the spirit of transformation. Only once we link our transformations strategy to the overall business one will we be successful and ensure overall compliance.

Posted on July 30, 2014 in Thought Leaders

By Jonathan Goldberg and Grant Wilkinson*

* Jonathan Goldberg is CEO and Grant Wilkinson is an executive member of Global Business Solutions.

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