On 1 February 2024, the Minister of Employment and Labour published the draft regulations on proposed sectoral numerical targets. The amendments made to the Employment Equity Act, of 1998 enacted in 2023 were accompanied by two sets of draft regulations, published in 2018 and 2023 respectively.
A recent article named “The Employment Equity Bill and BEE” was published via link https://beeratings.com/the-employment-equity-bill-and-bee/
This new article is an update based on the draft regulations published via Gazette 50058 in February 2024. This new gazette follows on from public comment and debate that surrounded the previous draft of the regulations, which was released in May 2023 (May 2023 Regulations), and the agreement subsequently signed between the South African Government and trade union, Solidarity which was made an order of court in October 2023 (Settlement Agreement).
The public has 90 days (i.e. until 2 May 2024) to comment on the February 2024 Regulations.
One of the first noticeable changes from the May 2023 Regulations is that the February 2024 Regulations explain how the proposed five-year targets were determined and provide more detailed guidance for designated employers on how the targets are to be applied.
The February 2024 Regulations indicate that, in setting the numerical targets, the Department of Employment and Labour (DoEL) took into account not only the demographic profile of the national and regional/provincial economically active population (EAP) but also the workforce profiles of each economic sector, based on information provided in the 2022 EE reports submitted by employers to the DoEL. This is encouraging, as it takes into account the realities of a particular sector, which for example, could be more dominated by males. In addition, unique sector dynamics such as skills availability, economic and market forces and ownership, which were factors raised by stakeholders as part of the previous consultation process, have also been taken into account.
When it comes to applying the targets, the February 2024 Regulations make it clear that designated employers will be required to set annual numerical goals and will be measured against these annual goals towards meeting the relevant five-year sectoral targets. When setting these annual goals, designated employers must also take into account their workforce profiles and the applicable EAP.
Whether the provincial or national EAP should be applied still depends on whether a designated employer operates its business nationally or in a particular province. Helpfully, however, the February 2024 Regulations now explain what EAP a designated employer should choose if it operates in more than one province, which was unclear from the May 2023 Regulations. In these circumstances, the guidance indicates that a designated employer may choose the EAP of the province in which the majority of employees perform their functions. Similarly, where a designated employer operates in more than one sector, it should choose the economic sector with the majority of employees.
The amended Employment Equity Bill was recently signed into law, which empowers the government to set specific equity targets and regulate sector-specific employment equity (EE) targets. The new legislation requires companies with more than 50 employees to submit employment equity plans and annual reports to the Department of Employment and Labour. This increased transparency and accountability will require South African companies including those in the media and advertising sector to be more diligent in their compliance efforts, which may result in a higher degree of scrutiny from regulators and the public.
The main objectives of the amendments are to empower the Employment and Labour Minister to regulate SECTOR-SPECIFIC Employment Equity (EE) targets and to regulate compliance criteria to issue EE Compliance Certificates in terms of Section 53 of the EE Act. This has a knock-on effect on BEE compliance as discussed in the previous article referred to.
The draft regulations include further information regarding the following: a) legislative requirements for the setting of sectoral numerical targets; b) a list of Economic Sectors; c) setting of 5-year sectoral numerical targets and (d) the implementation of affirmative action measures.
Some important points to note about the 2024 Regulations
(a) Sectoral targets
Designated employers will be measured against annual targets set to reach the five-year sectoral numerical targets. The targets are to be set for all population groups in the four occupational levels where there is an under representation concerning the economically active population (“EAP“).
The targets are combined for designated groups per sector (i.e., they do not specify for African, Coloured, Indian and White) while providing specific targets for each gender. This does not mean, however, that designated employers are still not required to set targets at other occupational levels as required by the applicable provisions of the EEA.
The national EAP shall apply to designated employers conducting their business/operations nationally and the respective provincial EAP shall apply to designated employers conducting their business/operations provincially. While a designated employer can choose whether to use a national EAP or a provincial EAP, the designated employer cannot use national and provincial EAP at the same time.
A designated employer who operates in more than one province and chooses to use the provincial EAP may choose the province with the majority of employees. A designated employer who operates in more than one sector may choose the sector in which the majority of employees.
The proposed sectoral numerical targets are not meant to equal 100% as they exclude, for instance, sectoral targets.
(b) Affirmative action measures
The 2024 Draft Regulations emphasize that no absolute barrier may be placed on employment practices. In addition, no employer will incur penalties or any form of disadvantage, if in the compliance analysis of affirmative action in any workplace, there are justifiable/reasonable grounds for non-compliance. Furthermore, an employee’s employment cannot be affected as a consequence of affirmative action.
Once the amendments to the EEA are in effect, and the final version of the regulations is published, designated employers will be required to comply with the relevant sectoral targets in setting the numerical goals in their employment equity plans.
What is important to appreciate is that the prescribed targets are five-year targets, and designated employers will maintain the power and responsibility to determine their own annual goals towards achieving the relevant five-year targets.
While sectoral targets are only set for the four upper occupational levels (i.e. Top Management, Senior Management, Professionally Qualified, and Skilled), designated employers will still be required to set numerical goals and annual targets for the semi-skilled and unskilled occupational levels in their employment equity plans.
Further, while the sectoral targets no longer distinguish between the particular population groups recognised as ‘designated’ for purposes of the EEA, designated employers will still need to set distinct annual goals for each category of the designated group in their plans and will be required to continue to report on their workforce profile annually.
