The BMF Rejects Aspects Of The S53 Amendment Of EE Act

Office Of The Presidency

April 23, 2023

It is common cause that Section 53 of the EE Act of 1998 relates to designated employers who seek to do business with any organ of the State, that they will have to apply for a certificate from the Minister confirming their compliance with the provisions of the Act – this in relation to the prohibition of unfair discrimination, and the implementation of affirmative action measures for designated groups to achieve employment equity. 

The above assertion gave the BMF hope that the government is prioritising transformation, however looking at the current trajectory, it does not seem to be the case. 

Recently, President Cyril Ramaphosa signed into law the Employment Equity Amendment Bill of 2020. The Amendment Bill purported to advance the transformation of South Africa’s workforce by setting equity targets for economic sectors and geographical regions and requiring enterprises to develop transformation plans. The Bill amends the Employment Equity Act of 1998 (Act No 55 of 1998) with new measures to purportedly promote diversity and equality in the workplace, but does the exact opposite. 

Among its key provisions, the Amendment Bill empowers the Minister of Employment and Labour to set employment-equity targets for economic sectors, as well as regions where transformation is lagging. The amendment Bill also empowers the Minister of Employment and Labour to regulate compliance criteria to issue Compliance Certificates as per Section 53 of the Employment Equity Act. 

Even though it all appears as a progressive move, there is however a sting in the tail. What is unpleasing is the omission by the Department of Employment and Labour on the turnover threshold for employers who employ less than 50 employees. This exclusion creates a back door escape mechanism for companies who do not want to employ black professionals. 

In terms of this new dispensation, a company turning over R100bn, as an example is deemed a small company, and therefore undesignated because it employs less than 50 people and thus exempted from the compliance expected from designated employers who employ more than 50 employees. This further creates a loophole for companies not supporting transformation to unbundle into subsidiaries that employ less than 50 people. 

The BMF rejects the exclusion of the turnover threshold in defining small employers, as it reverses the transformation gains achieved thus far. We call on the Department of Labour to tighten all loopholes that can be used to derail this important agenda of transforming workplaces. Lessons learned thus far indicate that those against this agenda will use any hole to hide. The amendments to the Act must strive to close these as far as possible.