Proposed EE Amendment Bill

PUBLICATION OF THE EMPLOYMENT EQUITY AMENDMEND BILL, 2018 and 2020 – EXPLANATORY MEMORANDUM

Background

The Employment Equity Amendment Bill, 2020 is to be introduced to amend the Employment Equity Act, 1998. The amendments have the purpose of-

1. Allowing the Minister of Employment and Labour to establish sectoral numerical targets for the purpose of ensuring the equitable representation of suitably qualified people from designated groups (blacks, women and persons with a disability) at all occupation levels in the workforce; and
2. Enhancing the administration of the Act, including the implementation of section 53 concerning state contracts.

Amendment of section 1 (definitions) of Act 55 of 1998

The following changes are to be made to the definitions–

The definition of a designated employer is amended by repealing paragraph (b) which classified employers with fewer than 50 employees who meet a turnover threshold as designated employers.
Question: Will my company still need to comply with section 3 of the EE Act?
A definition of the National Minimum Wage Commission is introduced (and it means the Commission established in terms of the National Minimum Wage Act, 2017 (Act No of 2017).
A definition of sector is included (sector means an industry or service or part of any industry or service) – EEA17

Amendment of section 8 of Act 55 of 1998

Psychological testing and other similar assessments of an employee are prohibited unless the test or assessment being used–

(a) has been scientifically shown to be valid and reliable;

(b) can be applied fairly to all employees; and

(d) has been certified by the Health Professions Council of South Africa established by section 2 of the Health Professions Act, 1974 (Act 56 of 1974), or any other body which may be authorised by law to certify those tests or assessments.

Insertion of section 15A of Act 55 of 1998

A new section, 15A, is inserted which will allow the Minister to –

Identify national economic sectors for the purposes of the administration of the Employment Equity Act;
Establish numerical targets for these sectors.
The sectoral targets set may differentiate between occupational levels, sub-sectors, regions or other relevant factors.
The Minister may publish regulations listing the criteria to be applied in setting sectoral targets.

Section 20 of Act 55 of 1998 is amended

Amendment of section 20 of Act 55 of 1998 provision to link the sectoral EE targets to the numerical targets set by designated employers in the EE Plan of their workplaces.
Question: What is the possible impact on our company?
- All current employment equity plans will fall away on 22 September 2022. All designated employers to draft, implement and monitor a 5 year EE Plan, starting 1 October 2022 ending 30 September 2027, indicating achievement towards sectoral targets by year 5 (30 September 2027).
- Employers will need to set EE targets aligned to the sectoral targets.
- EE targets to be monitored against sectoral targets every year as part of the compliance certification process by various Stakeholders (Board, Top Management, EE Manager(s), Unions and DEL when reporting).

Amendment of section 21 of Act 55 of 1998

Section 21 is amended to permit the Minister to prescribe by regulation the manner in which employers are required to submit employment equity reports.

Amendment of section 27 of Act 55 of 1998

Section 27 is amended to transfer the functions of the Employment Conditions Commission in respect of reporting and monitoring of disproportionate income differentials to the National Minimum Wage Commission.

Amendment of section 37 of Act 55 of 1998

Section 37 is amended to permit the Minister to prescribe by regulation the manner of service of compliance orders on employers.

Amendment of section 53 of Act 55 of 1998

Section 53 provided that State contracts may only be issued to employers that have been certified as being in compliance with their obligations under the Employment Equity Act.
Subsection (1) is amended to require that an employer attaches a certificate when concluding a contract with the State in terms of Subsection (2) as conclusive evidence that the employer complies with the relevant Chapters of the Act.
A new section 53(6) is inserted to clarify that the Minister of Employment and Labour may only issue a certificate to an employer if the employer–
- has achieved any applicable sectoral targets or has raised a reasonable ground for non-compliance;
- has submitted its most recent employment equity report; and
- has not been found within the previous twelve months to have breached the prohibition on unfair discrimination or to have paid wages below the level of the national minimum wage.

DRAFT EMPLOYMENT EQUITY REGULATIONS, 2018 and 2020

Additional EEA forms include:

EEA15 – Request for an EE Compliance Certificate
EEA16A – EE Compliance Certificate for designated employers
EEA16B – EE Compliance Certificate for non-designated employers
EEA17 – Economic Sectors and Sub-Sectors

Proposed changes to sectors

SECTORS	SUB-SECTORS (DIVISIONS)
AGRICULTURE, FORESTRY & FISHING	Crop and animal production, hunting and related services activities
	Forestry and logging
	Fishing and aquaculture
MINING AND QUARRYING	Mining of coal and lignite
	Extraction of crude petroleum and natural gas
	Mining of metal ores
	Other mining and quarrying
	Mining support service activities

SECTORS	SUB-SECTORS (DIVISIONS)
MANUFACTURING	Manufacturing of food products; beverages and tobacco products
	Manufacturing of textile; wearing apparel; leather and related products
	Manufacturing of wood and product of wood; furniture; cork; articles of straw; plaiting materials; paper and paper products
	Manufacture of printing; reproduction of recorded media; computer; electronic and optical product

SECTORS	SUB-SECTORS (DIVISIONS)
MANUFACTURING	Manufacture of coke; refined petroleum products; chemicals; chemical products; pharmaceuticals; medicinal chemical; botanical products; rubber; tyres and tubes; plastic products and non-metallic mineral products
	Manufacture of basic metals; fabricated metal products; except machinery and equipment
	Manufacture of electrical equipment; machinery; equipment; motor vehicles; trailers; semi-trailers; transport equipment; installation of machinery and equipment

SECTORS	SUB-SECTORS (DIVISIONS)
CONSTRUCTION	Construction of buildings
	Civil Engineering
	Specialised construction activities
FINANCIAL AND INSURANCE ACTIVITIES	Financial service activities, except insurance and pension funding
	Insurance, reinsurance and pension funding, except compulsory social security
	Activities auxiliary to financial service and insurance activities

SECTORS	SUB-SECTORS (DIVISIONS)
CONSTRUCTION	Construction of buildings
	Civil Engineering
	Specialised construction activities
FINANCIAL AND INSURANCE ACTIVITIES	Financial service activities, except insurance and pension funding
	Insurance, reinsurance and pension funding, except compulsory social security
	Activities auxiliary to financial service and insurance activities

SECTORS	SUB-SECTORS (DIVISIONS)
TRANSPORTATION AND STORAGE	Land transport and transport via pipeline
	Water transport
	Air transport
	Warehousing and support activities for transportation
	Postal and courier activities

SECTORS	SUB-SECTORS (DIVISIONS)
INFORMATION AND COMMUNICATION	Publishing activities
	Motion picture, video and television programme production, sound recording and music publishing activities
	Programme and broadcasting services
	Telecommunication
	Computer programming, consultancy and related activities
	Information services activities
	Publishing activities

SECTORS	SUB-SECTORS (DIVISIONS)
WATER SUPPLY, SEWERAGE, WASTE MANAGEMENT AND REMEDIATION ACTIVITIES	Water collection, treatment and supply
	Sewerage
	Waste collection, treatment and disposal activities; materials recovery
	Remediation activities and other waste management services
	Water collection, treatment and supply
ELECTRICITY, GAS, STEAM AND AIR CONDITIONING SUPPLY	Electricity, gas, steam and air conditioning supply

SECTORS	SUB-SECTORS (DIVISIONS)
HUMAN HEALTH AND SOCIAL WORK ACTIVITIES	Human health activities
	Residential care activities
	Social work activities without accommodation
	Human health activities
ARTS, ENTERTAINMENT AND RECREATION	Creative, arts and entertainment activities
	Libraries, archives, museums and other cultural activities
	Gambling and betting activities
	Sports activities and amusement and recreation activities
	Other amusement and recreation activities

SECTORS	SUB-SECTORS (DIVISIONS)
REAL ESTATE ACTIVITIES	Real estate activities with own or leased property
	Real estate activities on a fee or Contract basis
PROFESSIONAL, SCIENTIFIC AND TECHNICAL ACTIVITIES	Legal and accounting, bookkeeping and auditing activities, tax consultancy
	Activities of head office; management consultancy activities
	Architectural and engineering activities; technical testing and analysis
	Scientific Research and experimental development on natural science and engineering; and social sciences and humanities

SECTORS	SUB-SECTORS (DIVISIONS)
PROFESSIONAL, SCIENTIFIC AND TECHNICAL ACTIVITIES	Advertising and market research and public opinion
	Specialised design and Photographic activities
	Veterinary activities
WHOLESALE AND RETAIL TRADE; REPAIR OF MOTOR VEHICLES AND MOTORCYCLES	Wholesale and retail trade and; repair of motor vehicles and motorcycles, including sales of motor vehicles; wholesale of motor vehicles; retail of new and used motor vehicles; sale and maintenance of repair of motor vehicles and motorcycles and related parts and accessories; retail of automotive fuel in specialised stores

SECTORS

SUB-SECTORS (DIVISIONS)

WHOLESALE AND RETAIL TRADE; REPAIR OF MOTOR VEHICLES AND MOTORCYCLES

Wholesale trade of motor vehicles and motorcycles, including wholesale of agricultural raw materials and live animals, food, beverages, tobacco, household goods, machinery, equipment and supplies and other specialised wholesale such as slid, liquid and gaseous fuels, metals and metal ore, construction materials, hardware, plumbing and heating equipment and supplies, waste and scrap, trade in diamonds, pearls and other precious and semi-precious stones

SECTORS	SUB-SECTORS (DIVISIONS)
WHOLESALE AND RETAIL TRADE; REPAIR OF MOTOR VEHICLES AND MOTORCYCLES	Retail trade of motor vehicle and motorcycles, including retail sale in non-specialised stores with food, beverages, retail sale of food, beverages, tobacco information and communications equipment, cultural and recreation goods, and other goods such as clothing, footwear and leather, pharmaceutical and medical goods, cosmetics and toilet articles and jewellery in specialised stores.

SECTORS	SUB-SECTORS (DIVISIONS)
ACCOMMODATION AND FOOD SERVICE ACTIVITIES	Accommodation, Short term accommodation activities
	Camping grounds, recreational vehicle parks and trailer parks
	Food and beverage service activities; Restaurants and mobile food service; Event catering another food service activities
PUBLIC ADMINISTRATION AND DEFENCE; COMPULSORY SOCIAL SECURITY	Administration of the state and the economic and social policy of the community and provision of services to the community as a whole at National; Provincial and Local government levels
	Compulsory social security activities

SECTORS	SUB-SECTORS (DIVISIONS)
EDUCATION	Pre – primary and primary education and activities of after-school centres; Primary education
	Secondary; Technical and vocational education
	Higher education
	Other education
	Educational support activities
ADMINISTRATIVE AND SUPPORT ACTIVITIES	Renting and leasing of motor vehicles (with or without driver)
	Renting and leasing of personal and household goods
	Renting and leasing of other machinery, equipment and tangible goods

SECTORS	SUB-SECTORS (DIVISIONS)
ADMINISTRATIVE AND SUPPORT ACTIVITIES	Activities of employment placement agencies
	Temporary employment agency activities; and other human resources provision
	Travel agency, tour operator, reservation service and related activities
	Security and investigation related to private security activities; security systems service activities
	Services to buildings such as cleaning, landscape care and maintenance service activities

SECTORS	SUB-SECTORS (DIVISIONS)
ADMINISTRATIVE AND SUPPORT ACTIVITIES	Office administrative, office support and other business support activities such as photocopying, document preparation
	Activities of call centres

POSSIBLE IMPACT FOR NON-COMPLIANCE

Possible impact on company’s BBBEE scorecard:
- May forfeit Management Control and EE element score, resulting in drop of level or be non-compliant.
How will BBBEE verification Agencies score non-designated employers?
- We believe by requesting your section 16B certificate, score based on current EE workforce profile.
What EE Chapters will apply to non-designated employers to obtain compliance certificate?
- Compliance with Chapter 2 of the EE Act, indicating that non-designated employer has not been found (within the previous twelve months) to have breached the prohibition on unfair discrimination and
- Has not paid wages (within the previous twelve months) below the level of the national minimum wage.
Loss of State (as defined) contracts.
Proposed penalties – up to 10% of annual turnover.

THE WAY FORWARD

Involvement from the Board, Top Management (C-Suite), HR Managers, EE Manager(s), Line Managers and Unions.
Additional meeting with Top Management – Preparation of new EEP.
Additional meeting with EEC – Preparation of new EEP.
EEA2 report to be amended, finalised and approved by CEO.
Amended EEA2 report to be discussed with EEC, substantiated by agenda’s, meeting minutes and signed registers.
Monitoring of barriers, EVIDENCE for compliance and non-achievement will be crucial.
Justifiable reasons for non-achievement to be investigated by a DEL Inspector
Justifiable reasons to be considered for failure to comply with annual EE targets
- Insufficient recruitment opportunities.
- Insufficient promotion opportunities.
- Insufficient target individuals from designated groups with the relevant qualifications, skills and experience.
- CCMA / Court order.
- Transfer of business.
- Merger / Acquisition.
- Impact on business economic circumstances (will need to elaborate, example due to impact of COVID-19 pandemic on business operations, loss of contract, etc.).