GOVERNMENT COMING AFTER BUSINESSES IN SOUTH AFRICA FOR R1.5 MILLION OR UP TO 10% OF TURNOVER
- BEE NEWS
- Oct 17
- 5 min read
Staff Writer | 16 October 2025
The Department of Employment and Labour says it will come down hard on any employers in South Africa who do not comply with the Employment Equity Act (EEA) and the new racial employment targets it set in April.
Responding to a parliamentary Q&A, Minister Nomakhosazana Meth said that the department has various enforcement measures at its disposal to ensure compliance.
The first consequence of not adhering to the laws is that any employer that is found to be non-compliant with the relevant provisions of the EEA will not be issued with the EE Compliance Certificate.
This certificate is a prerequisite to accessing any state contract. This implies that any company without an EE Compliance Certificate will be prohibited from doing business with any organ of state, she said.
Secondly, any employer that fails to achieve its own annual EE targets towards meeting the applicable five-year sector EE targets—without any justifiable reasons—will be referred to the Labour Court.
If found guilty, these employers will be liable for a penalty or fine, which starts at R1.5 million or 2% of annual turnover—whichever is greater—and can escalate to 10% of turnover for repeat offenders.
The minister said that the EEA is “key transformative legislation” that is in place to protect the fundamental human right to equality and equity in employment.
It came into effect from 1 January 2025 and applies to “designated employers”, being any businesses employing more than 50 people.
“The EEA achieves equity in the workplace by promoting equal opportunity and fair treatment in employment through the elimination of unfair discrimination,” she said.
This is done by forcing employers to “redress the disadvantages in employment experienced by…black people; women; and persons with disabilities, to ensure their equitable representation in all occupational levels in the workforce.”
Through the EEA, the minister is empowered to set specific racial targets for 18 sectors in South Africa, which employers need to meet within five years. These were gazetted in April 2025.
These sectoral targets establish which percentage of a workforce needs to be made up of black people, women and people with disabilities, specifically singling out and minimising the representation of white males in the workplace.
Racial quotas by any other name
Government coming after businesses in South Africa for R1.5 million or up to 10% of turnover
The Department of Employment and Labour says it will come down hard on any employers in South Africa who do not comply with the Employment Equity Act (EEA) and the new racial employment targets it set in April.
Responding to a parliamentary Q&A, Minister Nomakhosazana Meth said that the department has various enforcement measures at its disposal to ensure compliance.
The first consequence of not adhering to the laws is that any employer that is found to be non-compliant with the relevant provisions of the EEA will not be issued with the EE Compliance Certificate.
This certificate is a prerequisite to accessing any state contract. This implies that any company without an EE Compliance Certificate will be prohibited from doing business with any organ of state, she said.
Secondly, any employer that fails to achieve its own annual EE targets towards meeting the applicable five-year sector EE targets—without any justifiable reasons—will be referred to the Labour Court.
If found guilty, these employers will be liable for a penalty or fine, which starts at R1.5 million or 2% of annual turnover—whichever is greater—and can escalate to 10% of turnover for repeat offenders.
The minister said that the EEA is “key transformative legislation” that is in place to protect the fundamental human right to equality and equity in employment.
It came into effect from 1 January 2025 and applies to “designated employers”, being any businesses employing more than 50 people.
“The EEA achieves equity in the workplace by promoting equal opportunity and fair treatment in employment through the elimination of unfair discrimination,” she said.
This is done by forcing employers to “redress the disadvantages in employment experienced by…black people; women; and persons with disabilities, to ensure their equitable representation in all occupational levels in the workforce.”
Through the EEA, the minister is empowered to set specific racial targets for 18 sectors in South Africa, which employers need to meet within five years. These were gazetted in April 2025.
These sectoral targets establish which percentage of a workforce needs to be made up of black people, women and people with disabilities, specifically singling out and minimising the representation of white males in the workplace.
Racial quotas by any other name
It is on this basis that the laws are being challenged in court, with opponents arguing that the targets amount to rigid quotas, are unimplementable, irrational, and unconstitutional.
The laws are being challenged by business lobby Sakeliga, the National Employer Association of South Africa (NEASA), and Business Unity South Africa.
The department has hit back at the characterisation, arguing that the targets cannot be seen as rigid quotas as they are five-year goals that companies must pursue on their own terms.
The laws also give various grounds for “justifiable” deviation, including:
Insufficient recruitment opportunities;
Insufficient promotion opportunities;
Insufficient target individuals from designated groups with relevant qualifications, prior learning, experience or capacity to acquire such within a reasonable time;
The impact of a CCMA award or court order;
A transfer of a business;
Mergers or acquisitions; and
The impact of economic conditions on the business.
However, critics have doubled and tripled down on their opposition, saying that the laws will stifle growth, force businesses to limit expansion and investment, and result in job losses as companies seek other markets.
Notably, Meth said that the laws are not intended to be a job creation policy. However, she said they should support job creation and not discourage it.
To this end, the laws reduce the administrative regulatory burden on small businesses (fewer than 50 employees) that do not need to comply. However, they are still subject to other sections of the law, which protect against discrimination.
These exemptions, she argued, create a conducive economic environment that will enable small businesses to grow, become sustainable and eventually create jobs.
While the minister is threatening harsh action and penalties on businesses that do not comply with the laws, she stressed that compliance levels will only be assessed in 2026.
Because the sectoral EE targets were only published for implementation on 15 April 2025, affected companies only had to submit their EE plans from 1 September 2025 to 15 January 2026.
“Therefore, it is premature at this time to assess how many designated employers are complying with the sector EE targets. The assessment of compliance with the sector EE targets will only come into effect in the 2026 EE Reporting period,” she said.
‘Disclaimer - The views and opinions expressed in this article are those of the author(s) and not necessarily those of the BEE CHAMBER’.