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UNINTENDED CONSEQUENCES OF REPLACING ‘BLACK’ WITH ‘DESIGNATED GROUP’ TARGETS

Adv Jan Munnik | 16 May 2024


Draft Employment Equity (‘EE’) Regulations (‘the 1 February Draft EE Regulations’) setting out revised Sector Targets, were published by the Department of Employment and Labour (‘DEL’) on 1 February 2024 in preparation for the commencement of Section 15A of the Employment Equity Amendment Act No 4 of 2022 (‘the Amendment Act’).


Section 15A of the resultant Amended Act provides for the introduction of Sector Targets with which Designated Employers (those > 50 employees) will have to comply in setting their EE Goals. Sector Targets are being introduced by the DEL to increase the pace of transformation, and to counter the existing practice on the part of some employers of setting low EE Goals.


One of the changes made to the 12 May 2023 Draft EE Regulations in the 1 February Draft EE Regulations is that the subject matter of the Sector Targets has been changed from ‘Black’ to ‘Designated Groups’ i.e., ‘Designated Groups Male’, ‘Designated Groups Female’ and ‘Designated Groups Total’ as opposed to the previous ‘Black Male’, ‘Black Female’ and ‘Black Total’ Targets.


There are several unintended consequences resulting from this change that threaten achievement of the objectives of the EE Act. These are that:

The % Targets for Blacks and Black Females will be decreased by the % White Female Target.

  • The % Targets for Designated Groups will in fact be lower.

  • The resultant % Targets for White Males will be higher, whilst those for White Females will be lower.


I deal with each above consequence below.


The % Targets for Blacks and Back Females will be decrease.


12 May Draft Sector Targets Gazette Black Targets for each Sector are identical to the 1 February Draft Sector Targets Gazette


The 12 May 2023 Draft EE Regulations read together with the amendment to Section 20 (2) to the EE Act, in the 2022 EE Amendment Act, required Designated Employers to apply the % Black, % Black Male and % Black Female targets (as well as their resultant African, Coloured and Indian (‘ACI’) Targets) set out therein applicable to their respective Sectors in the setting of their EE Numerical Goals in each of the Top Four Occupational Levels.


Except for the Financial and Insurance Activities Sector, where a mistake was corrected, the % Targets themselves (and those for the Male and Female target groups) were not changed by the 1 February 2024 Draft EE Regulations i.e., the Black, Black Male and Black Female % Targets of the 12 May 2023 Draft EE Regulations are identical to the % Designated Group, Designated Group Male and Designated Group Female % Targets for each Sector’s four Occupational Levels of the 1 February 2024 Draft EE Regulations.


Difference between Black Targets and Designated Group Targets


Designated Groups consist of African, Coloured and Indian Males and Females, White Females and Persons with Disabilities.


As Persons with Disabilities have their own Sector Targets, it is assumed that they are not intended to be part of the Designated Groups Targets of the 1 February 2024 Draft EE Regulations for all employees.


This means that:

  • Designated Group Targets = Black Targets plus White Females Targets;

  • Designated Groups Male Targets = Black Male Targets; and

  • Designated Group Female Targets = Black Females Targets plus White Females Targets.


Impact of Regulation 3.4.4 and 3.4.6 on the setting of % White Female Goal


Regulation 3.4.4. reads as follows:

‘Employers should not set targets (our emphasis) for those groups whose representation have already exceeded their EAP in a particular occupational level.’


Regulation 3.4.6 reads as follows:

‘Where a designated employer has exceeded the set numerical target of a particular racial/gender group at an occupational level, such an employer may not regress (our emphasis) in that particular racial/gender group but should set targets towards the EAP’.

The provision in Regulation 3.4.4 that EE Targets (sic) should not be set for ‘those groups whose representation have already exceeded their EAP’ conflicts with the provisions of Section 20(2)(c) of the EE Act as amended, read together with Clause 7.4 of the 2017 Codes of Good Practice on the Preparation, Implementation and Monitoring of the Employment Equity Plan and the EEA13 of the 2014 EE Regulations, which requires EE Numerical Goals to be set for each race and gender Group.


Based on the above wording of Regulation 3.4.6, it would then seem that in the event of the % White Female Start Month Profile (‘SMP’) being above or below its EAP, a Designated Employer is required to set a White Female Target between its % SMP and its % EAP.


According to the data furnished by the DEL in the 12 May 2024 Draft Sector Targets Gazette, the average % White Females representivity in the top four Occupational Levels was higher than 3.5% in almost all 18 Sectors, and up to over 30% in some.


This means that in almost all cases the % White Female Target will be lower than its % SMP, but higher that its EAP of 3.5% Nationally, and likely to be well above their NEAP of 3.5% in some cases.


Black and Black Female Targets are reduced by % White Female Start Month Profile


Accordingly, a consequence of the changing of the 12 May 2023 Draft EE Regulations from ‘Black’ to ‘Designated Group’ Targets in the 1 February 2024 Draft EE Regulations, is that % Black and % Black Female Targets of the former Gazette, are both reduced by the % White Females Target, which can be anything between 30% and 3.5%. This may even result in a negative % Black Goal!


The % Targets for Designated Groups will in fact be lower.


As White Females are part of Designated Groups, it follows that in terms of the 12 May 2023 Draft EE Regulations, the Targets for Designated Group = the % Black Target plus the % White Female Target.


This means that the Designated Groups Target of the 12 May 2023 Draft EE Regulations will necessarily always be higher than the Designated Group (Black) Target of the 1 February 2024 Draft EE Regulations’ as White Females are included in the 1 February 2024 Sector Targets’ Designated Groups Targets.


Furthermore, as illustrated above, the % White Female Target is likely to be higher than its % SMP representivity in the case of the subject matter of Sector Targets being ‘Black’.

The change from ‘Black’ to ‘Designated Group’ Targets will increase the resultant % White Male Target (instead of decreasing them) and not increase the % White Female Target.


Calculation of (resultant) % White & FN Target


As EE Goals need to be set in respect of each individual race and gender group of the EEA2, EEA12 and EEA13 Workforce Profile template, and they need to add up to 100%, the following consequences necessarily flow from applying % Black and % Designated Group Target respectively in the setting of EE Goals with regard to resultant White and Foreign National (‘FN’) Target:

  • When applying a Black Target, the resultant % White and FN Target (Males and Females) = 100% minus the applicable % Black Target.

  • When applying a Designated Group Target, the resultant % White and FN Male (only) Target = 100% minus the applicable % Designated Group Target.


% White Male Target will necessarily increase with change of Sector Targets from ‘Black’ to ‘Designated Groups’


In setting EE Goals where the subject matter of Sector Targets is ‘Black’, as per the 12 May 2023 Draft EE Regulations, a Designated Employer will need to select a % White Males Goal (normally lower than its % SMP) and % White Female Goal (normally higher than its % SMP) that add up to 100% minus the % Black Target.


In setting EE Goals where the subject matter of Sector Targets is ‘Designated Groups’, as per the 1 February 2024 Draft EE Regulations, the % White Male Goal will automatically be 100% minus the applicable Designated Group Target, which is the same as the 12 May 2023 Draft EE Regulations ‘Black’ Target.


It follows that the % White Male target will increase (instead of decreasing) if the Designated Group Targets of the 1 February 2024 Draft EE Regulations were to be retained, as it will no longer be required to set any EE Goals for White Females (higher than their SMP %) as they are included in Designated Group % Targets, and the White Male targets will simply be 100% minus the Sector Target’s Designated Group Target i.e., there will be no need to split this balance with White Females.


% White Female Target will necessarily remain static with change of Sector Targets from ‘Black’ to ‘Designated Groups’


As shown above, the % White Female target cannot, pursuant to the provisions of Regulation 3.4.6 of the 1 February 2024 Draft EE Regulations, be increased as, in almost all cases, its SMP representivity will be higher than the EAP for White Females.


On the other hand, the % White Female target a Designated Employer can set pursuant to the provisions of the 12 May 2023 Draft EE Regulations is only limited to 100% minus the % Black Target minus the selected % White Male Target.


Example to illustrate the above unintended consequences.


Let us assume that a Designated Employer in the Manufacturing Sector selects a White Male Goal of 40% and a White Female Goal of 20% pursuant to the above Black Target in the 12 May 2023 Draft EE Regulations.


The resultant differences in the targets for Designated Groups, Blacks, Black Females, White Males and White Females, set pursuant to the 12 May 2023, and 1 February 2024 Draft EE Regulations after applying the above targets, data and assumptions, are set out below.


Conclusion


It is submitted that the above example illustrates quite clearly the unintended consequences of the resultant % Targets for Blacks, Back Females and Designated Groups being lower, and White Males higher, in the event of the subject matter of Sector Targets being ‘Designated Groups’ as opposed to ‘Black’, which clearly threaten achievement of the EE Act’s overriding objective of achievement of equitable representation of all race an gender groups.


I will be dealing with the following further aspects in subsequent articles on the 1 February Draft EE Regulations:

  • The positive impact of the Agreement between Solidarity and the DEL on Sector Target EE Goal setting and implementation in the 1 February Draft EE Regulations.

  • Why the provisions in the 1 February Draft EE Regulations with regard to the usage of National or Provincial EAP is unlawful.


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


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