In a drive to push the Employment Equity (EE) mandate aimed at increasing transformation in local business, the Department of Labour has increased their efforts relating to labour audits and the relevant compliance regulations.
November 2017
Employment Equity is aimed at promoting fairness in the labour market and, as such, labour inspectors have been tasked with evaluating EE plans to assess whether the plan complies with legislation and drives transformation.
Department of Labour; Chief Director, Statutory & Advocacy Services, Advocate Fikiswa Mncanca said: “We have been talking about transformation and nothing seems to be happening. Transformation should not just end in paper. Also, the transformation should not happen just because the Department of Labour is conducting national Director General Reviews”.
According to Mncanca “The department ‘has arrived’ to enforce compliance with EE legislation”.
The impact on your business
Failure to adhere to Employment Equity could land you in hot water. With a massive shift in focus and resources, you can expect to face significant fines and time in court as the Department of Labour pushes its transformation agenda.
Companies, as first-time offenders, may be subject to a fine of R1 500 000 or 2% of the employer’s annual turnover. If the employer is a second-time offender, then the fine may be the greater one of R1 800 000 or 4% of the employer’s annual turnover. Repeat offenders will face even harsher penalties.
The Department of Labour’s Inspection and Enforcement Services (IES) branch has announced it is taking six companies to court for various offences, including: their failure to prepare employment equity plans as per the provisions of Section 20 (1) of the Employment Equity Act; and reporting to the Director-General on plans that do not exist which amounts to misrepresentation.
The six companies referred for prosecution are Gooderson; Clientele Legal; Clientele Life; Mazor Aluminium; Mazor Steel; and Spanjaard Limited. The companies are to be referred for breach of Section 20 of EE legislation.
Who should report on Employment Equity?
Not all companies in South Africa are bound to the Employment Equity Act. Rather, EE is aimed at all employers deemed as designated by the Department of Labour who must report their EE status and are required to comply according to legislation.
As per the Department of Labour’s standards, a designated employer is an employer with 50 or more employees or one which has a total annual turnover per the following industry sectors:
| · Agriculture | R 6.00m |
| · Mining and Quarrying | R 22.50m |
| · Manufacturing | R 30.00m |
| · Electricity, gas and water | R 30.00m |
| · Construction | R 15.00m |
| · Retail and motor trade and repair services | R 45.00m |
| · Wholesale trade, commercial agents and allied services | R 75.00m |
| · Catering, accommodation and other trade | R 15.00m |
| · Transport, storage and communications | R 30.00m |
| · Finance and Business services | R 30.00m |
| · Community, special and personal services | R 15.00m |
In cases where previously designated employers do not meet the requirements for EE, they will have to de-register from the Employment Equity Public Register portal using an EEA14 document as provided by the Department of Labour.
When should a designated employer report?
Designated employers are required to report to the Department of Labour based on certain criteria:
- An employer with less than 150 employees must submit its first report within 12 months and thereafter every year on the first day of October or before 15 January if they are reporting online.
- An employer with more than 150 employees must submit the first report within 6 months and thereafter every year on the first day of October or before 15 January if they are reporting online.
It is advisable to ensure that the online submission is done before the year-end period to guarantee that the deadline of 15 January each year is not missed.
What does the reporting process entail?
The process requires that designated employers report on the following criteria:
- Company demographics
- Employee remuneration
- Employee personal details including sex, race, gender and disability
- Permanent and temporary staff per annum
- Skills development
- Terminations
- Promotions
This information is then used to establish the company’s equity targets and goals each year, as well as to compile the employment equity plan which the employer is required to submit to the Director-General. The reporting process will also require an employer to display evidence of equal pay for work of equal value.
What you will need to be able to submit a report
In order to submit a sufficiently detailed report, employers will need to include the following information:
- Proper job descriptions which are graded;
- Current workforce demographics;
- Workplace skills plans and training reports
This will allow the Department of Labour to set realistic Employment Equity goals for each company and help drive transformation and equality in South Africa.
