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Ntando Thukwana | 14 April 2023

Companies will need to provide compliance certificates based on the race of employees in order to do business with the state. Picture - iStock

South Africa’s newly amended employment equity bill is set to be legally challenged as trade union Solidarity and the Democratic Alliance (DA) prepare to head to court to have it overturned.

The Employment Equity Amendment Bill was passed by parliament last year and signed into law by President Cyril Ramaphosa on Wednesday.

It aims to advance transformation of the workforce.

Under the new law, workplaces with more than 50 employees will be required to develop transformation or equity plans for their companies which are to be aligned to equity targets for economic sectors and geographical regions.

Employers will also be required to submit annual reports to the Department of Employment and Labour and pay workers equal pay for equal work.

A ‘significant’ development

Global Business Solutions chair Jonathan Goldberg says the amendment is probably the most significant change since democracy, warning that employers who fail to comply may face disqualification from public sector tenders, fines, litigation, and other penalties.

“The Employment Equity Amendment Bill comes at a time of major disruption in South Africa, including natural disasters, load shedding, poor economic growth, sporadic social unrest and protests, cyber-attacks and the like,” says Goldberg.

He adds however that employers can approach it as an opportunity to attract, develop and retain the best talent by having a meaningful employee value proposition.

Quota concerns

Lobby group Business Unity South Africa (Busa) has welcomed the signing of the bill but raised concerns regarding the setting of equity targets and how compliance will be measured.

“What concerns us is treating targets as quotas, which would be against the spirit and letter of the law,” says Busa CEO Cas Coovadia.

He adds that some companies may be overly burdened with compliance as a result of the sectors in which they operate because they would have to liaise with several government departments and entities.

“Companies should not be subjected to double punishment by the Commission for Conciliation, Mediation and Arbitration [CCMA] or Labour Court and the Department of Employment and Labour for the same issue, which could lead to unnecessary litigation and derail our objective of transformed workplaces,” says Coovadia.

‘Not good’

Solidarity and the DA are vehemently opposed to the bill.

On Wednesday, Solidarity said it is preparing for “major litigation”, and the DA said it would join the union’s legal fight.

Solidarity claims the legislation is unconstitutional and grants draconian racial powers to the minister of Employment and Labour.

“The minister can now do central racial planning at his own discretion,” says Solidarity chief executive Dr Dirk Hermann.

“This would be the most drastic race manipulating legislation in the world. It is anticipated that the private sector would have to follow the state’s example. Private enterprises will become state-run racial enterprises.”

The DA says the law, which requires employers to secure compliance certificates from the labour minister in order to do business with the state, will increase inefficiency and add further “unnecessary” red tape for those wanting to do business to deal with.

It said in the context of the country’s 32.7% unemployment rate, the government should not be getting in the way of business.

This article originally appeared on Moneyweb and was republished with permission.

‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.


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