Eskom Victory: Appeal Court Upholds "Pipeline" Shortlisting as Lawful Transformation Strategy

John Botha
Nov 17
4 min read

Labour Appeal Court clarifies when preferential recruitment practices comply with employment equity requirements

In a significant ruling that provides much-needed clarity on the boundaries of affirmative action in recruitment, the Labour Appeal Court (LAC) has overturned a lower court decision and found that Eskom's controversial "pipelining" shortlisting practice does not constitute unfair discrimination.

The Case at a Glance

Altus Erasmus, a long-serving Eskom employee, applied for a senior management position. Despite being recommended for appointment after progressing through the recruitment process, he was not ultimately selected. The case centred on Eskom's employment equity policy, which prioritised candidates from designated groups, specifically African males and females at senior management level, to achieve representativity and transformation objectives.

Critically, the policy meant that candidates from non-designated groups (in this case, white males) were only considered for shortlisting if no suitable designated candidates were available in the initial recruitment round. This created what Erasmus argued was a "secondary shortlisting opportunity" that effectively excluded him from fair consideration.

The Labour Court's Initial Finding

The Labour Court sided with Erasmus, finding that Eskom's practice constituted unfair discrimination and an "absolute barrier" to employment for non-designated groups. The court reasoned that:

Shortlisted candidates must not be excluded solely on race or gender before the interview stage
Such exclusion removes the opportunity to compete for employment
The practice was not a proper affirmative action measure under the Employment Equity Act (EEA)

Eskom was ordered to compensate Erasmus and remedy its recruitment methods.

The Appeal Court's Reversal

The Labour Appeal Court took a fundamentally different view, overturning the Labour Court's decision and finding that Eskom's employment equity and pipelining practices were rational, lawful, and did not amount to absolute exclusion.

Key Principles Established

The LAC emphasised several critical points:

Equity measures may legitimately inform recruitment, provided they are not rigid quotas or applied in a manner that absolutely excludes any group without further consideration
"Pipelining" is permissible as part of broader equity strategies designed to advance redress and transformation, particularly when targeting senior management levels where historical imbalances persist
Designated groups are not automatically appointed, and non-designated groups are not precluded at every stage—rather, the practice allows focused advancement of transformation objectives while permitting consideration of non-designated candidates when suitable designated candidates are not available
There was no outright ban; instead, the policy was a method to achieve demographic targets at senior levels while creating opportunities for appointments from targeted groups in the absence of suitable candidates

The Constitutional Framework

The LAC applied the established test from SAPS v Barnard, which requires that affirmative action measures must:

Target a disadvantaged class
Seek to advance or protect that class
Promote substantive equality

The court found that Eskom's policy met these requirements and was a rational response to persistent demographic imbalances at management level, consistent with both the Constitution and the Employment Equity Act.

Practical Implications for Employers

This judgment provides important guidance for organisations implementing employment equity plans:

What employers CAN do:

Implement preferential shortlisting practices that prioritize designated groups for specific positions or levels where underrepresentation exists
Create "pipeline" systems that focus initial recruitment efforts on designated candidates
Design staged recruitment processes that allow for targeted advancement of transformation objectives

What remains critical:

Such practices must be rational and proportionate to the transformation objectives
They must be applied as part of broader equity strategies, not as isolated exclusionary measures
There must be flexibility to consider non-designated candidates when suitable designated candidates are not available
The measures must not operate as rigid quotas or absolute barriers

The Broader Context

With the new Employment Equity Amendment Act dispensation now in effect, this judgment is particularly timely. The LAC's reasoning supports a purposive, flexible approach to achieving employment equity targets while maintaining constitutional compliance.

Employers should note that the court distinguished between:

Legitimate transformation measures that structure recruitment to advance designated groups
Unlawful discrimination that creates absolute barriers without justification or flexibility

The Eskom decision affirms that employers have significant latitude to implement robust employment equity measures, including preferential shortlisting practices, provided these are:

Rationally connected to legitimate transformation objectives
Applied flexibly rather than as rigid exclusions
Part of comprehensive employment equity strategies
Consistent with the constitutional imperative of achieving substantive equality

Organisations should review their recruitment and shortlisting practices to ensure they align with this framework, particularly as they navigate compliance with updated employment equity requirements and sectoral targets.

For assistance with employment equity compliance, recruitment policies, or navigating complex transformation requirements, contact Global Business Solutions. Join us at the Annual Labour Law Update. This year's theme is Labour Law at the Crossroads: Adapting to Change in an Uncertain Economy and with Massive Labour Law Reform Impacting Case Law. What you'll gain:

Master the Digital Transformation of Labour Law in 2025
200+ Labour Law Cases Unpacked by Jonathan Goldberg
Critical Updates on Upcoming Legislation & NEDLAC Amendments
Navigate Workplace Challenges from the Digital Era to Discrimination Laws

GBS Annual Labour Law Update 2025 #ALLU2025 Banner.

View our upcoming events: Upcoming Events and Qualifications, like Landmark Judgment: Equal Parental Leave for All Parents, Managing Absenteeism in the Workplace, #ALLU2025, Advanced Occupational Certificate: HRM Officer (NQF 6), and Advanced Occupational Certificate: HRM Officer (NQF 6).