Employment Equity Act: How the changes will affect the way you run your business

By on October 1, 2014

Despite the outrage that the new Employment Equity Act has caused for emphasising race appointments and top-heavy fines, it has been recognised for encouraging compliance with transformation.

The 25th of July 2014 saw the gazetting of the effective date of the amended Employment Equity Act, mere days before its implementation date of 1 August 2014.

The Department of Labour amended the Act making provisions for compliance and placing punitive measures on companies that do not comply.

So what’s changed?

  • Extension of the scope of discrimination to include “any other arbitrary ground”.

In the past the grounds for discrimination were limited to issues such as age, race, gender, etc. Whilst this was not an exhaustive list, the extension bars unfair discrimination on any arbitrary ground.

  • Equal treatment included.

It is important to note that the concept goes beyond “equal work for equal pay” and is all encompassing. This means that unless you have justification for differential treatment on the grounds listed, you will be in breach of the Act.

In the new proposed Labour Relations Bill it calls for equal treatment between your perm staff and your TES, fixed term or part-time staff earning below the threshold (R205 433.30 per annum) and after 3 months service unless you have a justifiable reason for differential treatment.

What the Act is trying to do, amongst others, is to prevent arbitrariness and provide clarity of pay differentials.

There must be a fair ground for differentiation in payment

  • Psychometric tests are to be certified by HPCSA or a similar body.

This has proven to be the change that has caused the least debate amongst the social partners. By inserting this definition we move away from the current grey definition which often leads to unfair practices.

  • Greater CCMA oversight.

The Commission for Conciliation, Mediation and Arbitration (CCMA) will now have increased arbitration powers for sexual harassment disputes (which falls under discrimination) or unfair discrimination on remuneration discrepancies.

Disputes were previously heard by the Labour Court. Section 10 of the EEA is radically changed by the insertion of subsection 6(aA).

In addition, employees earning below the threshold of section 6(3) of the BCEA will now have the right to refer any other dispute to arbitration in the CCMA instead of the Labour Court.

A new subsection 8 provides that an unhappy respondent may then appeal to the Labour Court

This also raises the question of whether damages will be claimable in the CCMA

  • The burden of proof in discrimination cases has changed.

The onus now shifting to employers to prove that discrimination did not take place and, if it did, that it was fair. Under the previous clause the employee bears the burden the proof of showing discrimination and the employer must then establish that it is fair.

The new clause is aligned with the burden of proof in terms of section 13 of the Promotion of Equality and Prevention of Unfair Discrimination Act.

  • Reporting Periods

This particular change will inevitably place an administrative burden on small business who previously only needed to report every alternate year.

Section 21 deals with reporting, is amended by deleting the distinction between designated employers with 150 employees and less and substituted with a new clause requiring all designated employers to submit its first report within 12 months after commencement of the EEA or, if later, within 12 months after the date on which that employer became a designated employer.

Thereafter all designated employers must submit a report once every year, not once every two years, on the first working day of October or on such other date as may be prescribed.

  • Increase of fines.

There will be a variety of fines ranging from 2% – 10% of turnover with alternative rand values should they be greater than a fine based on turnover, or for certain offences. Whilst non–compliance is not condoned, what is concerning is that discretion is given to labour inspectors in terms of their assessment of compliance.

Employment Equity compliance 

All organisations with 50 or more employees need to comply with the Act.  Organisations with fewer than 50 employees might also need to comply with the Act, depending on the annual turnover for the specific industry as tabled below.

Not complying with the Act could land your organisation with a fine from the Department of Labour who conduct random inspections regularly.

2 Sandton Close, Ground Floor Block B,
cnr. 5th Avenue & Norwich Close, 

Tel: 011 783 7190
Fax: 086 556 0842

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