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The Employment Equity Bill and BEE

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 means that organisations, especially those that do business with the state, will have to be in good standing when it comes to compliance with EE.

A key aspect of the new laws is determining which businesses are regarded as “designated employers” – the businesses which have to submit EE reports – as it is these employers that the laws directly address.

Under the previous act, a “designated employer” was an employer that employs 50 or more employees or an employer that employs fewer than 50 employees but has an annual turnover that is equal to or above the threshold determined by the EE Act, depending on the relevant sector.

This designated employer definition has now changed so that employers with fewer than 50 employees, irrespective of their annual turnover, will no longer form part of the designated employer definition and will be EXEMPT from compliance.

This is quite a significant change as these companies will not be required to implement measures to ensure suitably qualified people from designated groups have equal employment opportunities and are represented at all occupational levels in the workplace. For the big businesses that fall under the definition of a designated employer, however, the most impactful change is the empowerment of the employment and labour minister to regulate sectorial EE targets and compliance criteria.

How does this affect B-BBEE? One example is the MAC Sector of 07 December 2015?

The MAC Charter, a sector-specific framework for implementing B-BBEE must adapt to these new EE requirements. Companies with fewer than 50 employees no longer have to report regardless of their annual turnover whilst larger agency groups with more than 50 employees will be subject to the Employment and Labour Minister’s ambit on sectorial employment equity (EE) targets and compliance criteria. Agencies that fall outside of these revised criteria, such as agencies that fall under the Qualifying Small Enterprise (QSE) category under the B-BBEE Act, will no longer be required to account for or implement measures within their businesses that promote employment equity, skills development, and an increased share of management control or equitable representation at all levels of management.

The provisions of this Sector Code apply to Advertising, Public Relations, and Communication as marketing vehicles in all media including digital platforms. It is applicable to companies that derive more than 50% of their turnover from this sector. It is acknowledged that the Amended Codes of Good Practice will govern the management of B-BBEE. The MAC Sector Code will take precedence except when the MAC Sector Code is silent; the Amended Generic Codes of Good Practice will apply including but not limited to Key Measurement Principles and Definitions.

To this effect, a MAC Charter Council was established in 2022.

What is the Marketing, Advertising, and Communication (MAC) Charter Council?

The MAC Charter Council serves as the regulatory authority that regulates practices in the MAC sector. The council serves as an executive committee that represents Black Business Owners, Women, Persons Living with Disability, and the Youth. The council was appointed and launched in March 2022 by the Minister of the Presidency, Mr. Mondli Gungubele, to whom the council directly reports. The Minister of Trade, Industry, and Competition, Mr. Ebrahim Patel, is responsible for all Charter Councils. The Council was tasked with reviewing and aligning the existing 2016 Sector Code. The first draft of the revised Sector Code was to be submitted to the Minister by January 2023. This will allow the Council to communicate with all key players on the updated policies. No revised draft charter has been published for comment or review as of April 2023.

  1. What is the role of the MAC Charter Council?

To promote, drive and monitor transformation in the MAC sector, by facilitating the implementation of the B-BBEE sector code.
To practice effective compliance, governance, and ethics supervision.
To ensure consistent communication and education of compliance and ethics programs, and the promotion of all MAC programs.
To ensure that proper and appropriate procedure is followed when responding to incidents of violations, and taking preventative measures.

Which industries fall under the MAC Charter Council?

Public Relations
Marketing & Advertising
Communications
Research
Media – Digital & Online
B-BBEE

Eligibility as a qualifying small enterprise (QSE)

A Measured Entity with an annual Total Revenue of between R10 million and R50 million qualifies as a Qualifying Small Enterprise. A QSE must comply with all the elements of B-BBEE for the purposes of measurement.

Enhanced B-BBEE recognition level for QSE: A qualifying small enterprise that is 100% Black owned qualifies for a Level One B-BBEE recognition. A QSE which is at least 51% Black-owned qualifies for Level Two B-BBEE recognition level. A Black QSE is only required to obtain a sworn affidavit or Companies and Intellectual Property Commission (CIPC) issued certificate on an annual basis, confirming the following: Annual total Revenue of R50 million or less or R10 million or less if it is in the Public Relations sector; and Level of Black ownership.

Whilst the recent changes to the Employment Equity Act give QSE-sized companies freedom from submitting annual performance reports (Employment Equity status) it does not remove the responsibility for B-BBEE compliance as it would have a negative impact on their BEE Scorecard.

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