Frik Boonzaaier | 23 November 2022
EXPERT ADVICE | By January 15, 2023, businesses are required to submit their employment equity reports outlining the progress they are making in implementing their employment equity (EE) plans. Missing this deadline, as well as failing to implement the other duties outlined in the Act, could result in a R1.5 million to 2% of turnover fine, depending on the particular nature of non-compliance.
The purpose of the Employment Equity Act is to eradicate unfair discrimination and to implement affirmative action, considering that there are still gaps from the past that need to be addressed.
Senior human capital consultant at The BEE Chamber, Frik Boonzaaier, explains: “We have a history and today, we are still feeling the impact of that history therefore we need to do certain things to ensure that everyone can participate in the economy. Designated employers need a solid plan to guide their EE implementation, which they need to report against annually – it is important to report to ensure compliance, but also to outline your transformative approach in an EE Plan.”
A ‘designated employer’ is an employer who employs 50 or more employees or an employer who employs fewer than 50 employees but has an annual turnover above the industry thresholds as reflected in Schedule 4 of the EE Act.
EE plans, therefore, need to show transformation rather than compliance only. “You need both, but we need to look beyond mere compliance. Although the report is a measure of how well a business is tracking in implementing the transformation plan, it is important to realise that a business needs an actual plan. It becomes very evident at the time of submitting a report if there is no plan against which implementation is reported.
“When you draft a plan, ensure you address the gaps between your current business profile in line with economically active population (EAP) statistics , as well as looking at what makes it difficult for previously disadvantaged individuals to access or progress within your business. The plan should then be developed such that it addresses both the EAP gaps and outlines the affirmative action measures you need to put in place to overcome the barriers. Look at the numbers, set the new numbers you want to achieve and show in your plan how over time you will get closer to the EAP; these are the main areas of your plan which will also be referenced in your reporting.”
Boonzaaier’s tips for successful reporting:
Accuracy: It goes without saying that your report needs to be accurate and honest. Most inaccuracies appear because companies do not know how to complete the various tables.
Consultation: It is important that both the EE plan and EE reports are consulted through an EE committee, the members of which are nominated by their peers. Because the EE committee will play a part in managing the process, they must have a thorough understanding of the Employment Equity Act.
Report against the plan: “I cannot stress this enough: you need a plan to be able to submit a proper report. It is fraudulent to submit a report without a plan. The BEE Chamber meets with clients, assisting them with drafting a compliant and transformative plan, or adapting their plan to be achievable, which is a key focus.” Businesses can prepare an EE plan which spans between one and five years, with three years being the most common. The optimal duration will be based on the size and nature of the business. Objectives need to be outlined for each year of the plan.
Time: The size of a company impacts the time needed for reporting. It is a fairly simple task for a small company, especially with the EAA2 report (which includes the latest workforce profile, historical staff movements, as well as a focus on skill development). However, if you are a large business, allow adequate time, especially for completing the EEA4 report which looks at differences in the terms and conditions of employment, as the necessary analyses can be tedious.
Amongst others, the EEA4 report poses questions about whether a company has a policy to indicate the acceptable vertical pay gap. Therefore, the EE plan should include affirmative action measures to overcome the vertical pay gap and identify income gaps between different groups. Without a policy, the questions posed on the EEA4 cannot be addressed effectively.
“Employment equity can add enormous value to an organisation, provided it is understood and implemented correctly. Research has consistently shown that diverse companies outperform their counterparts in terms of important business imperatives, for example, customer service, cashflow, profit and adaptability. If we are truly committed to transformation and if we approach the EE plan and EE report effectively, it offers a structured approach which addresses both the transformation of a business, as well as ensuring compliance with the legislative employment equity framework.”
‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’