The EEA Amendments & Draft Regulations: The impact and why employers must submit representations

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The EEA Amendments & Draft Regulations: The impact and why employers must submit representations

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Nadeem Mahomed: Hi, listeners, welcome to CDH conversations. This is the second part in our series on the Employment Equity Amendments. And just a few things regarding the Employment Equity Amendments, before we get into the podcast with our people who will be discussing some of the content in relation to the sectoral numerical targets, is that the effective date of the amendments is yet to be proclaimed by the President and the sectoral numerical targets were published on the 12^th of May, and interested parties have 30 days to submit any comments which they may have on these draft targets. Also, please look out for our thought leadership guideline, which will be published very soon, and will provide more details on the Employment Equity Amendments. Today we have two people who will be discussing some aspects of these amendments. And that is Imraan Mahomed, who is a director in our employment department, as well as JJ van der Walt, who is a Senior Associate in our employment department. And we are very happy to welcome them here to shed some further light on these amendments. Thank you for joining us.

Imraan Mahomed: Thank you, Nadeem. And for the passing on of the hot potato on this particular segment of the amendments to JJ and myself. JJ, perhaps if we can start out just with precisely placing the legislation in context. We know that this is equity legislation intended to achieve employment equity in the workplace that we know. We also know that the amendments have been published. Perhaps if you just want to start out with where it currently sits. Are the amendments in effect, have they taken effect? And we also know that on Friday, the 12^th of May, the long awaited regulations to be published by the Minister relating to the sector targets was published for comment. Tell us where that currently sits.

JJ van der Walt: So currently, the amendments are not in effect yet. But to purpose the amendment, and for the purpose of tonight's discussion is, the minister can identify two things: 1.) National economic sectors, and then determine or identify the targets that will be applicable to such a sector. Now, in addition to that, a notice published containing proposed regulations in terms of the Employment Equity Act, in which the minister has now identified 18 economic sectors. That's the first important point of note. And then together with that proposed five years sector targets for each of these economic sectors. In terms of the population groups that will be known now to be generally accepted to be African, coloured, Indians and whites, and then as well as your gender. Important to note that these targets for the next five years, if published, would then target only top management, senior management, professionally qualified individuals and skilled individuals. Then finally, another important issue to highlight is the minister has determined or rather proposed that these targets must be linked to what we call an economic active population. So what that means is, every target that is set, is in relation to an economic active population, either regionally, or provincially, or nationally. And all these intersecting issues can then provide certain considerations that designated employers must take into account but we can unpack these as we go along. So what is your take on these amendments, as I've now just discussed them?

Imraan Mahomed: Perhaps, JJ, let me start out or specifically refer to the regulations. My general sense or reading of the regulations is it there's many aspects of it that are quite unclear. In one aspect of clarity, at least for me, and I think for a number of employers is, how do you actually interpret the tables and how are they to be given affect to? So that's the one aspect. And another, which goes to some of the discussions that we've been having over the last couple of days is transitional arrangements. So once these regulations come into effect and become law, and these targets, in particular sectors become applicable to those economic sectors, how do employers currently transition from their current employment equity plans to what's required in terms of the targets that have been set? So those two aspects for me stand out. That having been said, JJ, perhaps if we get to discussion or in one that you and I have been debating for a while, relating to targets and quotas. Perhaps just as a starting point; What is a target verses a quota? Perhaps if you can start it on that.

JJ van der Walt: Thank you. It's a very interesting question. Now with regards to a quota, Let's just start off, a quota is something that is unlawful and unconstitutional, and it is in contrast with a numerical target, which is a mere guideline that employers should be and are motivated to follow. And the distinguishing characteristic between a target and a quota is on rigidity, meaning how rigid is a target, either in its formulation, meaning, you must only appoint, for example, females until you reach 50% representativity of females. If that is the formulation, it's a quota, because the employer in question doesn't have a discretion to decide whether or not to appoint someone other than a female until such time as 50% has been made. Whereas a normal simple numerical target would be during employment process, an employee should be and is motivated to rather prefer suitably qualified females over and above suitably qualified males, to transform them. Now, the question that becomes relevant to the new amendments is, how would employers interpret these tables that is quite difficult to comprehend by themselves. And then in addition to that, when you consider the powers of the government or rather the Department of Labour to enforce these numerical targets, where non compliance by employers can be met with severe penalties or fines, the question then becomes, succinctly put;

When enforcement follows a numerical target with a force of law, does that then become a quota?

Because what would an employer have as a defence against the department knocking on his door and saying: but you have not implemented your plan. You have not met the targets set by the minister in your specific economic sector. Those are the questions that we need to answer and are the questions that most probably the Constitutional Court at some point in time, will be met with because as we know, this exact same question has been answered twice by the Constitutional Courts already, where on both occasions, the plans were found to be unconstitutional.

Imraan Mahomed: So before any of this gets to the Constitutional Court, if that's likely or at least it's likely for challenges to be mounted against aspects of the amendments, we know immediately that employers have an ability to make representations to the minister under the regulations. The 30 days, the clock has already begun to tick from the 12^th of May. So quick takeaway points would be for industry leaders, specifically, large employers, employer organisations in the like, to seriously look at the regulations of the 12 targets and make representations to the department. That's terribly important. And for further clarity in respect of, at least as we've early identified transitional arrangements. That's the one big takeaway point. The other one, and I guess we can perhaps round off from this point, relates to the earlier issue that you referred to regarding non compliance, where a failure on the part of an employer to either prepare or implement an Employment Equity plan could lead to a fine of the greater of 1.5 million or 2% of an employee's turnover. So if you get to 2% of an employee's turnover, that could be quite a sizable penalty that an employer could face for non compliance with the Employment Equity Act. So it's a big move in something that employers really need to grapple with and come to terms with in relation to how to manage employment equity in their respective workplaces going forward.

Nadeem Mahomed: Thank you, Imran and JJ, for that very fruitful discussion. And thank you to our listeners for tuning in. Please look out for the third part in the series, which will continue the discussion on the Employment Equity Act amendments, thank you and goodbye.