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Employment Equity Act Summary

Table of Contents

The Employment Equity Act of 1998 is an important piece of legislation that aims to right the wrongs of Apartheid and other discriminatory laws and practices that created disparities in employment, occupation and remuneration, especially in relation to black people. This Act promotes the constitutional right of equality and the exercise of true democracy. It aims to eliminate unfair discrimination in employment and ensure employment equity to redress the effects of discrimination while driving the development and growth of a diverse and broadly representative workforce that will ultimately promote economic development. Below we outline essential elements of the Employment Equity Act and how this impacts businesses within the metal and engineering sector. 

What is the purpose of the Employment Equity Act in South Africa?

The Employment Equity Act was created to achieve equity in the workplace. According to the Act, this is achieved by promoting equal opportunity, quotas and fair treatment in employment by eliminating unfair discrimination. The Act also aims to implement affirmative action measures to redress the disadvantages in employment experienced by designated groups and ensures equitable representation in all occupational levels in the workforce.

This Act does not apply to members of the National Defence Force, the National Intelligence Agency, or the South African Secret Service.

Why should employers implement the Employment Equity Act?

The Employment Equity Act has the potential to improve employment standards and, in turn, the quality and trust in South African businesses.

If implemented correctly, this Act can stabilise and improve our economy, which is undoubtedly relevant, especially for those who rely on such fairness to ensure employment and development.

It is up to employers to ensure that business transformation is a priority. Often many businesses are only looking at their Employment Equity plans as a box to be ticked rather than as an essential way to grow and develop the business itself. It is crucial for companies to commit to transformation, especially within the Metals and Engineering sector. 

It is the employer’s responsibility to ensure that they prepare and implement a plan to achieve employment equity. Key to designing and preparing these plans is an understanding of the Act itself, which we will outline below.

Key aspects of the Employment Equity Act in South Africa

Key aspects of the Employment Equity Act in South Africa

Prohibition of Unfair Discrimination

Every employer must take steps to promote equal opportunity in the workplace through the elimination of unfair discrimination and preferential treatment in any employment policy or practice. Unfair discrimination includes the following:

No person may unfairly discriminate, directly or indirectly, against an employee in any employment policy or practice, on grounds relating to their demographic profile. This includes race, gender, sex, pregnancy, marital status, family responsibility, ethnic or social origin, colour, sexual orientation, age, disability, religion, HIV status, conscience, belief, political opinion, culture, language and birth.

It is not unfair discrimination to take affirmative action measures consistent with the purpose of this Act or to distinguish, exclude, or prefer any person on the basis of an inherent requirement of a job.

Harassment of an employee is a form of unfair discrimination and is prohibited by anyone.

Medical testing of an employee is prohibited unless legislation permits or requires the testing or it is justifiable in the light of medical facts, employment conditions, social policy, the fair distribution of employee benefits or the inherent requirements of a job. The testing of an employee to determine that employee’s HIV status is prohibited unless such testing is determined to be justifiable by the Labour Court in provisions of Section 50(4) of this Act.

Psychological testing and other similar assessments of an employee are prohibited unless the test or assessment being used has been scientifically shown to be valid and reliable or can be applied fairly to all employees and is not biased against any employee or group.

Unfair discrimination is grounds for unfair dismissal and can be incredibly costly for a business in terms of the arbitration process.

Affirmative Action

Affirmative action generally applies to employers and aims to achieve employment equity. Employers will need to implement affirmative action measures to achieve this. These appropriate measures are designed to ensure that suitably qualified people from designated groups have equal employment opportunities and are equitably represented in all occupational categories and levels in the workforce of a designated employer. The affirmative action measures implemented must include the following:

  • Measures to identify and eliminate employment barriers, including unfair discrimination, which adversely affect people from designated groups
  • Measures designed to further diversity in the workplace based on equal dignity and respect of all people
  • Making reasonable accommodation for people from designated groups in order to ensure that they enjoy equal opportunities and are equitably represented in the workforce of a designated employer
  • Measures to ensure the equitable representation of suitably qualified people from designated groups in all occupational categories and levels in the workforce
  • Measures to retain and develop people from designated groups and implementing appropriate training measures. This includes measures in terms of an Act of Parliament providing for skills development.

    Subject to Section 42, nothing in this section requires a designated employer to take any decision concerning an employment policy or practice that would establish an absolute barrier to the prospective or continued employment or advancement of people who are not from designated groups. 

Implementing affirmative action measures

When implementing affirmative action measures, an employer will need to consult with employees and their relevant trade unions to ensure that the plan reflects the interests of all employees. During this consultation phase, an employer must conduct detailed analyses and collect information regarding its employment policies, practices, and procedures to identify employment barriers that may affect people from designated groups. The employer will need to develop an employment equity plan that aims to outline how an employer seeks to make progress toward employment equity and share these with its consulting parties. This plan outlines the following: 

  • The objectives to be achieved for each year of the plan
  • The affirmative action measures to be implemented 
  • Where the analysis has identified underrepresentation of people from designated groups, the numerical goals to achieve the equitable representation of suitably qualified people from designated groups within each occupational category and level in the workforce
  • The timeline within which this is to be achieved, and the strategies intended to achieve those goals
  • The timetable for each year of the plan for the achievement of goals and objectives other than numerical goals
  • The duration of the plan which may not be short-term, shorter than one year, or long-term, longer than five years
  • The procedures that will be used to monitor and evaluate the implementation of the plan and whether reasonable progress is being made towards implementing employment equity
  • The internal processes to resolve any dispute about the interpretation or implementation of the plan
  • The persons in the workforce, including senior managers, responsible for monitoring and implementing the plan

The employer will then need to submit a report detailing the plan and affirmative action measures and successes that have been implemented.

Commission for Employment Equity

Commission for Employment Equity_

The Commission for Employment Equity was established to ensure that codes of good practice, regulations and policies relating to the Employment Equity Act are followed and implemented as they should be. This includes sectoral determinations, assessment of compliance, disproportionate income differentials, skills development legislation in relation to lack of relevant experience and more.   The Employment Conditions Commission makes awards recognising the achievements of employers in implementing the measures set out in this Act. This Commission also assists in helping the Minister research and report on industry and sector goals, norms and benchmarks to ensure that all measures being implemented are relevant and achievable. 

  • The Commission consists of a chairperson and eight other members appointed by the Minister to hold office on a part-time basis. The members of the Commission must include:
  • Two people nominated by those voting members of NEDLAC who represent organised labour
  • Two people nominated by those voting members of NEDLAC who represent organised business
  • Two people nominated by those voting members of NEDLAC who represent the State and
  • Two people nominated by those voting members of NEDLAC who represent the organisations of community and development interests in the Development Chamber in NEDLAC.

Monitoring, Enforcement and Legal Proceedings

Monitoring

The Employment Equity Act relies on the monitoring of the working environment by employees and trade union representatives. Any employee or representative trade union may bring an alleged contravention of this Act to the attention of another employee, the employer, a trade union, workplace forum, a labour inspector, the Director-General or the Commission.

Enforcement

In terms of enforcement of this Act and its measures, a labour inspector acting in terms of this Act has the authority to enter, question, and inspect as provided for in Sections 65 and 66 of the Basic Conditions of Employment Act. 

If the inspector has reasonable grounds to believe that the employer has failed to:

  • Consult with employees 
  • Conduct an analysis 
  • Prepare an employment equity plan 
  • Implement its employment equity plan
  • Submit an annual report 
  • Publish its report 
  • Prepare a successive employment equity plan 
  • Assign responsibility to one or more senior managers 
  • Inform its employees as required 
  • Keep records as required by Section 26.

They may issue a written undertaking from that employer. If the employer refuses to give a written undertaking or has failed to comply in reasonable time, then the inspector can issue a compliance order. This compliance order highlights which provisions the employer has not complied with, the steps the employer must take to ensure compliance, the timeline in which to do this, and the maximum fine should one be imposed. 

If a designated employer does not comply with an order within the period stated in it or does not object to that order in terms of Section 39, the Director-General may apply to the Labour Court to make the compliance order an order of the Labour Court. 

A designated employer may object to a compliance order by making written representations to the Director-General within 21 days after receiving that order. If the employer shows good cause at any time and stakes reasonable steps towards compliance, the Director-General may permit the employer to object after the period of 21 days has expired. After considering the designated employer’s representations and any other relevant information, the Director-General may confirm, vary or cancel all or any part of the order to which the employer objected. The Director-General must also specify the time period within which that employer must comply with any part of the order that is confirmed or varied.

A designated employer may also appeal to the Labour Court against a compliance order of the Director-General within 21 days after receiving that order. At any time, the Labour Court may permit the employer to appeal after the 21 -day time limit has expired if that employer shows good cause for failing to appeal within that time limit. Suppose the designated employer has appealed against an order of the Director-General. In that case, that order is suspended until the final determination of the appeal by the Labour Court or by any appeal against the decision of the Labour Court in that matter.

Legal proceedings

The following legal proceedings need to be noted in terms of compliance and non-compliance relating to this act: 

  • If a dispute has been referred to the CCMA by a party and the issue to which the dispute relates also forms the subject of a referral to the Labour Court by the Director-General in terms of Section 45, the CCMA proceedings must stay until the Labour Court makes a decision on the referral by the Director-General.
  • If a dispute has been referred to the CCMA by a party in terms of Chapter II against an employer being reviewed by the Director-General in terms of Section 43, there may not be conciliation or adjudication in respect of the dispute until the review has been completed and the employer has been informed of the outcome. Disputes concerning contraventions of this Act by the same employer may be consolidated.
  • A commissioner of the CCMA may, in any arbitration proceedings in terms of this Act, make any appropriate arbitration award that gives effect to a provision of this Act.
  • The Labour Council has exclusive jurisdiction to determine any dispute about the interpretation or application of this Act, except where this Act provides otherwise.
  • In making any order, the Labour Court may take into account any delay on the part of the party who seeks relief in processing a dispute in terms of this Act.
  • If the Labour Court declares that the medical testing of an employee is justifiable as contemplated in Section 7, the court may make any order that it considers appropriate in the circumstances.

General Provisions

General Provisions

Codes of good practice

The Minister may, on the advice of the Commission, issue or change any relevant code of good practice, which is an enabling Act. The codes of good practice are intended to provide employers with information that may assist them in implementing this Act. These codes of good practice are usually in line with the following: 

  • The preparation of employment equity plans
  • Advertising, recruitment procedures and selection criteria
  • Special measures to be taken in relation to persons with disabilities, including benefit schemes
  • Special measures to be taken in relation to persons with family responsibilities
  • Sexual harassment and racial harassment
  • Internal procedures to resolve disputes about the interpretation or application of this Act and sector-specific issues
  • Guidelines for employees on the prioritisation of certain designated groups.

Temporary employment services

For the purposes of this Act, a person whose services have been procured for, or provided to, a client by a temporary employment service is deemed to be the employee of that client, where that person’s employment with the client is of indefinite duration or for a period of three months or longer. Where a temporary employment service, on the express or implied instructions of a client, commits an act of unfair discrimination, both the temporary employment service and the client are jointly and severally liable.

Breach of confidentiality

Any person who discloses any confidential information acquired in the performance of a function in terms of this Act commits an offence. This does not apply if the disclosure of information is disclosed to enable a person to perform a function in terms of this Act, or if the information must be disclosed in terms of this Act, any other law or an order of court. A person convicted of an offence in terms of this section may be sentenced to a fine not exceeding R 10 000,00.

Liability of employers

If it is alleged that an employee, while at work, contravened a provision of this Act, or engaged in any conduct that would constitute a contravention of a provision of this Act, the alleged conduct must immediately be brought to the attention of the employer.

The employer must consult all relevant parties and must take the necessary steps to eliminate the alleged conduct and comply with the provisions of this Act. If the employer fails to take the required steps, and it is proved that the employee has contravened the relevant provision, the employer must also be deemed to have violated that provision.

An employer is not liable for an employee’s conduct if that employer is able to prove that it did all that was reasonably practicable to ensure that the employee would not act in contravention of this Act.

Obstruction, undue influence and fraud

No person may obstruct or attempt to improperly influence any person who is exercising a power or performing a function in terms of this Act or knowingly give false information in any document or information provided to the Director-General or a labour inspector in terms of this Act.

No employer may knowingly take any measure to avoid becoming a designated employer. A person who contravenes a provision of this section commits an offence and may be sentenced to a fine not exceeding R10 000,00.

Application of Act when in conflict with other laws

If any conflict relating to a matter dealt with in this Act arises between this Act and the provisions of any other law other than the Constitution or an Act of Parliament, the provisions of this Act prevail.

The Implementation and management of employment equity within the Metals and Engineering Sector

From the above, it is clear that the Employment Equity Act has a number of key measures that need to be implemented to ensure compliance. This can often feel overwhelming and intimidating, which is why here at SIEFSA we have highlighted the basic requirements necessary for compliance with this Act that will impact businesses in the metal and engineering sector. These include the following: 

  • Designated employers that employ 50 or more employees or have a total annual turnover that exceeds or equals the amounts in Schedule 4 of the EEA.
  • For the Manufacturing Sector, the threshold for these numerical targets is R30 million
  • Communicate and Consult with the workforce
  • Establish a committee representative of all occupational levels
  • Conduct an analysis to ensure a Review of all Policies and any potential barriers
  • Prepare an Employment Equity Plan and Monitor and Evaluate targets against goals.

It is vitally important to follow the practices set out above as it mitigates risk and gives your company a better chance to be compliant. Non-compliance to this Act attracts fines and penalties. The Department of Labour’s (DoL’s) online portal for Employment Equity submissions is open – CEOs and Section 24 Managers can receive an activation code from DoL to access the portal.

The amendments, in terms of this chapter, particularly in Section 53 of this Act, should make the Metals and Engineering Industry stand to attention.

Even though you may have long-standing contracts with Government Departments and related entities, your business will now need a Department of Labour (DoL) certificate of compliance with the Employment Equity Act. This could effectively see many in the industry potentially missing out on lucrative infrastructure projects and state contracts.  Those who are ready and compliant will have an enormous advantage over other businesses that are lagging behind.

SEIFSA plans to play a pivotal role in getting the Metals and Engineering Sector ready for this new reality. Through its relationship with the Department of Labour, its advice, training, consultation and audits, we provide our members with the strategic tools necessary to ensure compliance with this Act. 

It is important to remember that trying to achieve employment equity and BBBEE targets in the absence of an integrated employment equity and diversity management strategy could be one of the main reasons for the lack of progress in the industry. With this, you need to take into account the stipulations of other related Acts that will impact this process, like the National Minimum Wage Act as well as the Labour Relations Act. It is up to you, as the employer, to ensure that transformation within your business takes place by taking the relevant measures to ensure compliance. This will not only positively impact the industry but the national economic sector as a whole. 

Conclusion

Ensuring compliance with regards to the Employment Equity Act is not just a tick of a box. It is a transformative process aimed at bettering the economy. This Act focuses on righting the wrongs of the past by driving equality in the workplace. This is often easier said than done, which is why you need to ensure that you are compliant across all the stipulations and regulations of this Act. SIEFSA is here to assist its members in ensuring compliance and driving transformation within this dynamic economic sector. 

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