[vc_row][vc_column][vc_column_text]Set to tighten compliance, dissension on fines imposed.

JOHANNESBURG – Despite the outrage that the new Employment Equity Act has caused for emphasising race appointments and “disproportionate fines”, it has been recognised for encouraging compliance with transformation.

The Department of Labour amended the Act, which came into effectfrom August 1, making provisions for compliance and placing punitive measures on companies that do not comply.

Though the amendments do not change the structure of the Act, it is said to bolster transparency and improve the efficiency in monitoring employee rights.

Johan Botes, director of employment practice at Cliffe Dekker Hofmeyr, says the new Act aims to eradicate unfair discrimination and promote equality in the workplace.

“What the Act is trying to do, amongst others, is to prevent arbitrariness and provide clarity of pay differentials. An employer cannot pay an employee more or promote them on arbitrary grounds such as the fact that the employee is liked or ‘has blue eyes’. There must be a fair ground for differentiation in payment,” Botes told Moneyweb.

Bowman Gilfillan director and labour law specialist Chris Todd believes the amendments signal that the department is taking employment equity seriously.

The Act does not prescribe targets with which organisations must comply. “But in reporting compliance in respect of employment equity, designated employers are obliged to present a plan on how to achieve its affirmative action goals in the workplace,” clarifies Botes.

The affirmative action goals will differ across employers and various industries.

Criticism: penalties, race-based appointments and admin

The most controversial change is the value of the fines imposed on employers that do not comply with the Act. Fines according to the department could range from 2% to 10% of an organisation’s turnover or alternatively a substantially increased rand equivalent.

Grant Wilkinson, executive at consultancy Global Business Solutions, says fines could vary, depending on what organisations fail to comply with.

“The big concern is that the fines may be viewed as disproportionate to the offence committed, as those fines are based on the Competition Commission fines, where there is a manipulation of industry,” Wilkinson told Moneyweb.

Todd says: “The department is trying to increase the penalty if employers do not comply, arguing that too many employers are not complying with their obligations to implement employment equity.”

But the frustrations at the centre of the Act, which was first introduced in 1998, are largely based on the criticism for race-based appointments alone. Freedom Market Foundation director Temba Nolutshungu says the Act has not aided transformation because of its emphasis on race beyond competence for senior positions.

“The Employment Equity Act racially discriminates and organisations are regularly forced to hire by race. And we have not achieved what we aspired to with the Act,” he explains.

The build-up to the promulgation of the new Act was met with outrage in some quarters. In March the draft regulations gazetted by the department proposed that organisations should use national and regional demographics as a guideline to appoint candidates to senior positions. This created concerns that national minority groups would be discriminated against for senior positions.

Botes says there is no clarity on regulations regarding national and regional demographics and the department is yet to publish regulations.

Wilkinson says the latest Employment Equity Commission’s report indicated that top management is not representative of South Africa’s demographics and the training done at senior managerial level is aimed at the same demographic. “As a result, should things continue as is, we will be having the same conversation five to ten years from now,” he adds.

The Act also makes concessions for equal treatment, which will see employers in breach of the Act if they don’t justify differential treatment of employees.

Another concern is the impact on small businesses. Under the previous Act small businesses reported on employment equity compliance every two years, while the new Act calls for annual reporting. This is said to add pressure to small businesses with additional administration burdens.


The Commission for Conciliation, Mediation and Arbitration (CCMA) will now have increased arbitration powers for sexual harassment disputes (which falls under discrimination) or unfair discrimination on remuneration discrepancies.

Disputes were previously heard by the Labour Court.

Commenting on the move, Todd says: “This will enable access to the CCMA for lower paid workers with complaints of discrimination, and might improve access to justice. Although there is now specific reference in the Act to pay discrimination, this has previously been prohibited.”

If unfair discrimination claims are leveled against employers, the burden is now on them to provide proof that discrimination did not take place or if it did, fairness must be proved.

“Other changes which cut out certain steps in the enforcement process might actually make it harder for the department, requiring the department to take employers to court instead of getting inspectors to resolve issues with employers directly,” Todd explains.

Despite the expected hurdles the new Act might pose for businesses, Botes says employment equity should be welcomed by most participants. “If you consider where we are as a nation, I don’t think the amended provisions are onerous. We still have a long way to go to achieve equality in the workplace and further statutory guidance on achieving this should be welcomed,” he admits.

Tags: Employment Equity Act, Employment Equity, affirmative action, bee, discrimination, ccma, Department of Labour, Grant Wilkinson, fmf, Temba Nolutshungu, Johan Botes, Chris Todd

Source: www.moneyweb.co.za
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