Key changes to the Employment Equity Act

At a glance

• From 1 January 2025, only employers with more than 50 employees will be considered 'designated employers', removing the turnover threshold and reducing the regulatory burden on small businesses.
• The Minister of Employment and Labour can set sector-specific numerical targets to ensure equitable representation of designated groups at all occupational levels.
• Designated employers must align their numerical targets with those set by the government in their employment equity plans.
• Designated employers must meet sectoral targets or have reasonable grounds for non-compliance to obtain a certificate of compliance for government contracts.

The President of South Africa has issued a proclamation in terms of which the amendments to the Employment Equity Act, 1998 (EEA), which were signed into law in 2023, will come into effect on 1 January 2025.

A summary of the material amendments to the EEA are as follows:

• The definition of 'designated employer' will change with effect from 1 January 2025. In this regard, a 'designated employer' is currently an employer with more than 50 employees, or which has a turnover in excess of the prescribed turnover threshold for the sector in which the employer operates. The amendments have the effect of removing the turnover threshold so that only employers with more than 50 employees will be regarded as 'designated employers' for the purposes of the EEA. This means that employers with less than 50 employees will not need to comply with the affirmative action provisions in the EEA and will accordingly not need to have an employment equity plan in place and to submit employment equity reports on an annual basis. This amendment is intended to reduce the regulatory burden on small businesses.
• The Minister of Employment and Labour (Minister) has been empowered to set sectoral numerical targets by way of regulations to ensure equitable representation of people from 'designated groups' (eg African, Coloured and Indian people, women and people with disabilities) at all occupational levels in the workplace. The numerical targets will differ across sectors and occupational levels. While there have been draft regulations to this effect these regulations have not yet come into effect and it remains to be seen what the final sectoral numerical targets will look like.
• An amendment to section 20 of the EEA (employment equity plans) links the sectoral numerical targets prescribed by government to the numerical targets that must be set by a 'designated employer' in its employment equity plan. This will be a significant change as currently an employer sets its own numerical targets based on the demographics of the country or province in which it operates and the pool of suitably qualified candidates in the different occupational levels within the business.
• Going forward 'designated employers' will only be able to obtain a certificate of compliance to do work for government if they have met the applicable sectoral targets or have a reasonable ground for non-compliance and provided that there have been no complaints of unfair discrimination in relation to that employer.
• The definition of 'people with disabilities' has been amended and will henceforth include people who have a long-term or recurring physical, mental, intellectual or sensory impairment which, in interaction with various barriers, may substantially limit their prospects of entry into, or advancement in, employment.
• There is no longer a requirement for the Health Professionals Council of South Africa to certify psychological testing and similar assessments in order for such assessments to be valid.
• Labour inspectors have been given the authority to request a written undertaking from 'designated employers', to amongst other things, consult with employees, conduct an analysis, publish its report and assign responsibility to one or more senior managers.
• The Minister has been empowered to make regulations regarding the manner of service of compliance orders on 'designated employers' relating to the affirmative action aspects of the EEA.
• Section 21 of the EEA has been amended to remove the specific date for annual submissions of employment equity reports. The Minister is now empowered to make regulations dealing with the requirements of employers for submitting their employment equity reports and the timing of submissions. Furthermore, going forward 'designated employers' will no longer be required to submit the income differentials statement to the Employment Conditions Commission and instead this will need to be submitted to the National Minimum Wage Commission.
• Section 16 of the EEA has been amended to clarify that where there is a representative trade union in a workplace, a 'designated employer' is only required to consult with the union and not with its employees in circumstances where consultation is required.