Business and red tape worries were raised by various organisations on Thursday after President Cyril Ramaphosa signed the Employment Equity Amendment Bill on Wednesday.
Legal action is also being considered by others, with calls for further government engagement.
On Wednesday, Solidarity said its legal team had already started to prepare for litigation and had indicated that it would serve its court papers soon, saying the amendments were unconstitutional.
The bill seeks to progress the transformation of South Africa’s workforce by “setting equity targets for economic sectors and geographical regions and requiring enterprises to develop transformation plans” with new measures to promote workplace diversity and equality.
Jonathan Goldberg, the chairperson of Global Business Solutions, explained that the amended bill would probably be one of the most far-reaching labour statutes in the recent past and was expected to be implemented in September 2023.
“The major amendment in the EEAB is that the Minister of Employment and Labour is mandated by law to set race, gender and persons with disabilities targets that must be achieved over a five-year period.
“This is probably the most significant change since democracy. Designated employers who fail to obtain a certificate and comply with the EEAB will face disqualification from public sector tenders, fines and litigation, as well as other penalties,” Goldberg said.
Business Unity CEO Cas Coovadia said in a statement that while the signing of the bill into law ended a long period of uncertainty on the proposed changes and impact of South African transformation laws, it had several concerns.
“Busa welcomes the step, which is in line with the position the organisation had adopted throughout the bill process from Nedlac to Parliament. Most importantly, Busa is pleased that employment equity targets for sectors will be set by the Minister of Employment and Labour only after consultation with the relevant business and employer bodies in the affected sectors,” he said.
However, Coovadia said some aspects of the law remained problematic as the organisation had raised in Parliament during the public hearings process in 2021 and 2022.
For example, measuring compliance and issuing compliance certificates as a licence to do business with the state would depend on whether a company has met its targets and did not have a case of unfair discrimination raised against it at the CCMA or Labour Court in the previous 12 months.
“What concerns us is treating targets as quotas, which would be against the spirit and letter of the law anyway,” said Coovadia.
He added that “companies should not be subjected to double punishment by the 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.”
While welcoming the transformation mandate driven through the employment equity legislation, Busa also expressed concerns around the fragmentation of policy objectives and enforcement mechanisms within the government, with some companies, because of their sectors, expected to comply with different transformation targets administered by different government departments or entities.
“These complex arrangements increase the compliance burden, which in turn may derail transformation, especially at a time when South Africa desperately needs economic growth to generate much-needed employment,” said Coovadia, adding that Busa would continue constructive engagements with the Department of Employment and Labour on the implementation arrangements, which would hopefully resolve some of the concerns it raised.
This amendment of the Employment Equity Act is yet another ill-conceived idea pulling the country into the abyss. Although this venture is guised under different terminology, this is nothing other than a race-based quota system forced upon employers.
Gerhard Papenfus, the CEO of the National Employers' Association of South Africa (Neasa), said Neasa was of the view that the new “quota’ system” was entirely unlawful and unconstitutional and would soon communicate further actions in this regard.
“This amendment simply confirms what we already know: this government has no clue as to what it takes to build a successful business, and this government needs successful businesses to keep South Africa afloat. This legislation is just another step in killing the goose that lays the golden eggs.
“Government does not understand that employing the best person for the job, without exception, is critical for business to succeed. This principle and employment practice dictates that when employing a person in a position, various critical factors, but definitely not race and gender, have to be considered, ” Papenfus said.
Meanwhile, DA MP Michael Cardo said in a statement that the political party would now be joining the legal action being undertaken by union Solidarity to stop this draconian race-based Act in court.
The DA had previously urged the President to not sign the Bill in an open letter issued last year.
“The Act will confer on the Minister wide-ranging powers to set numerical race-based employment targets across varying sectors and regions. The Act will further require employers to secure compliance certificates issued by the Minister in order to do business with the state.
“This will increase inefficiency and add further unnecessary red-tape when conducting business in South Africa. Government should not be getting in the way of business given the 32.7% unemployment rate experienced in the final quarter of 2022,” Cardo said.
BUSINESS REPORT