South Africa: Introduction of sector-specific employment equity targets

Employer Action Code: Act

Amendments to the affirmative action provisions of the Employment Equity Act (EEA) were signed into law in April 2023. Among other changes, the amendments empower the minister of employment and labor to set employment targets for certain categories of employees, by industry sector and job level, which companies with 50 or more employees will have to reflect in their required employment equity plans. In May 2023, the minister published a draft implementing regulation with detailed targets for 18 sectors. The targeted effective date for the EEA amendments and regulation is September 1, 2023, although the government has yet to confirm this.

Key details

The main changes introduced by the amendments include:

• The minister of employment and labor will be authorized to set occupational and sectoral numerical employment targets that designated employers (i.e., those with 50 or more workers or with annual revenue above an industry-specific threshold) will have to reflect in their required employment equity plans as part of each plan’s goals. The sectoral targets are a projection of representation of qualified previously disadvantaged individuals (i.e., black people, women and people with disabilities — commonly referred to as PDIs) across all job levels in the covered sectors by the end of a five-year period. (Note: The EEA defines “black people” as referring to ”Africans, Coloreds and Indians”). Employment equity plans must include defined goals to be met by the end of the plan period as well as annual targets, measures, quantifiable success factors and timetables relating to affirmative action and the employment of specific groups of PDIs.
• Sectoral targets will be set at national and provincial levels. The applicable targets will be based on whether the designated employer operates nationally or in a particular province only.
• The minister has issued draft regulations proposing employment equity targets for 18 economic sectors, including agriculture, forestry and fishing; mining; manufacturing; construction; financial and insurance activities; transportation and storage; information and communication; water supply, sewerage, waste management and remediation activities; and electricity, gas steam and air conditioning supply, among others.
• Employers that fail to meet the sectoral targets without a justified reason may become ineligible for government contracts and face potential fines ranging between 2% and 10% of annual revenue.
• Companies with fewer than 50 employees, regardless of annual revenue, will no longer be required to comply with affirmative action requirements (including employment equity plans and the Income Differential Statement).

Employer implications

Among companies surveyed, affirmative action is most commonly implemented through the focused hiring of PDIs as well as education and training programs that target PDIs to facilitate promotional opportunities. A quarter of surveyed employers have formal PDI-specific hiring quotas. Designated employers should start reviewing their employment equity plans to make sure their employment goals are aligned with the proposed sector-based targets or, if required, to define the course of action for revising their plan. Preparation and implementation of employment equity plans require prior consultation with employees’ representatives (i.e., a representative labor union or representatives chosen by employees).