June 2025
Employment Equity has long followed a structured approach, but recent regulatory changes introduce a more defined framework for compliance.
Employers must now adapt to sectoral numerical targets and stricter enforcement mechanisms, ensuring equitable representation across industries.
These updates reinforce accountability while shaping a more inclusive workplace, making proactive planning essential.
Introduction
Employment Equity (EE) regulations are evolving, and staying compliant requires proactive adaptation. The recently published Employment Equity Regulations and Sectoral Targets, effective from 15 April 2025, signal a significant step toward workplace transformation and inclusiveness. As regulations shift, designated employers must ensure alignment with new compliance measures to avoid penalties and maximise equitable representation.
THE EMPLOYMENT EQUITY ACT AND ITS PURPOSE
South Africa’s history of structural and political exclusion on the basis of race, has led to long-lasting social and economic disparities. In response to these challenges, the Employment Equity Act (EEA) was introduced four years after the country’s transition to a democratic government. The Act is designed to uphold the principle of equality by ensuring fair treatment and equal opportunities for all employees in the workplace.
A key aspect of the EEA is its emphasis on employment equity and affirmative action, aimed at correcting the injustices of past discrimination. The Act applies to all employers and employees within South Africa, with exceptions for entities such as the South African National Defence Force, National Intelligence Agency, and South African Secret Service.
While the EEA sets broad guidelines for all employers, specific provisions (sections 12 – 27) are applicable only to designated employers. The recent Amendment Act has refined the definition of a “Designated Employer”, to restrict the application of these sections to a reduced group of employers. This adjustment helps relieve the administrative burden on smaller employers.
UNDERSTANDING THE CHANGE
Reduced Burden on Small Employers
The amended Employment Equity Act (EEA) brings significant relief to businesses with fewer than 50 employees, exempting them from several administrative requirements, including the development of employment equity (EE) plans and submission of EE reports. The revised definition of “designated employer” now excludes organisations with fewer than 50 employees, regardless of their annual turnover. This exemption allows smaller organisations to focus on job creation and business growth without additional regulatory obligations.
While these smaller organisations are not required to submit EE reports, they can still obtain an EE compliance certificate under section 53 of the EEA. To qualify, employers must ensure they have not been found guilty of unfair discrimination by the Commission for Conciliation, Mediation and Arbitration (CCMA) or a court within the past 12 months. They must also have no outstanding awards for failure to pay the minimum wage under the National Minimum Wage Act, 2018 (Act 9 of 2018).
Introduction of Sectoral Numerical Targets
The amended Employment Equity Act (EEA) introduces sectoral numerical targets aimed at ensuring equitable representation of historically disadvantaged groups, including race, gender, and disability, across 18 national economic sectors. The Minister of Employment and Labour is now empowered to set five-year numerical targets for each sector, in consultation with the Employment Equity Commission, to address disparities at all occupational levels in the workforce.
For transparency, all proposed sectoral targets were published for public comment for at least 30 days before finalisation. This process is now complete and on 15 April 2025, the Minister officially published the final sectoral targets. These targets focus primarily on top and senior management, professionally qualified and skilled levels, and persons with disabilities.
For semi-skilled and unskilled level employees the Employer must make use of the Economic Active Population (EAP) to set targets.
The five-year sector targets establish minimum benchmarks that employers are expected to achieve in advancing employment equity. Targets are primarily differentiated by gender, while the disability target applies universally, regardless of race or gender. The designated groups, as defined in the EEA, include black people (Africans, Coloureds, and Indians), women, and people with disabilities who are South African citizens by birth or descent. It also includes black people who obtained South African citizenship through naturalization under specific conditions before 27 April 1994, or those who would have qualified for naturalization before that date but were prevented by apartheid policies.
Employers falling short of these targets must provide justifiable reasons for non-compliance.
Enhanced Compliance
The amended Employment Equity Act (EEA) introduces stricter compliance requirements for designated employers. Employers who fail to meet the sectoral targets without valid justification risk financial penalties of up to R1.5 million or 2% of annual turnover. Compliance with the EEA is now a mandatory condition for conducting business with the state, meaning employers must obtain an EE Compliance Certificate issued by the Department of Employment and Labour to qualify for government contracts.
Compliance will be measured against annual numerical targets, aligned with the applicable five-year sectoral targets. However, designated employers may avoid penalties if they can justify non-compliance based on specific criteria outlined in section 53(6)(b), read with section 42(4) of the EEA. The 2025 Regulations provide justifiable grounds for an employer’s inability to meet these targets, including:
- Insufficient recruitment opportunities.
- Insufficient promotion opportunities.
- Insufficient target individuals from designated groups with relevant formal qualifications, prior learning, relevant experience or capacity to acquire, within a reasonable time, the ability to do the job, as contemplated by sections 20(3) to (5) of the EEA.
- The impact of CCMA award or court order.
- A transfer of business.
- Mergers and acquisitions.
- The impact of economic conditions on the business.
The EEA amendments further empower the Minister to regulate compliance enforcement. While labour inspectors can issue compliance orders for violations of certain sections of the EEA (sections 16, 17, 19, 22, 24, 25, and 26), they cannot penalise employers through a compliance order for failing to meet sectoral numerical targets (sections 15 and 15A).
If an employer fails to comply with these targets, the Director-General may apply to the Labour Court to enforce compliance or, if the employer cannot provide reasonable justification, impose a fine as stipulated in Schedule
1.In effect, non-compliance with sectoral targets carries the same consequences as non-compliance with an employment equity plan.
Employment Equity Compliance Certificates
Although section 53 of the EEA has not yet been fully operationalised, the 2025 Regulations introduce a framework for its implementation, outlining the process for obtaining a compliance certificate and the circumstances under which non-compliance may be justifiably excused.
Employers must submit requests for compliance certificates online via the Department of Employment and
Labour’s website. The application process differs depending on employer designation:
- Designated employers can apply for a compliance certificate after submitting their annual Employment Equity (EE) report in accordance with section 21 of the EEA.
- Non-designated employers may also apply, provided they declare compliance with Chapter 11 of the EEA and the National Minimum Wage Act, 2018, by completing the EEA15 form
If a designated employer has not met all certification requirements, they must explicitly state the grounds for justification in the EEA15 form, including:
- Non-compliance with a requirement for certification, as outlined in section 42(4) of the EEA.
- Non-compliance with a sectoral target, as stipulated in section 53(6)(b) of the EEA.
Once approved, the Employment Equity Compliance Certificate will be issued in one of two forms:
- EEA16A for designated employers.
- EEA16B for non-designated employers.
Each certificate remains valid for 12 months from the date of issue.
Expanded Definition of People with Disabilities
The definition of “people with disabilities” has been revised to align with the United Nations Convention on the Rights of Persons with Disabilities (2007). This amended definition now includes intellectual and sensory impairment, providing a more inclusive interpretation of disability.
Under the revised framework, people with disabilities are defined as individuals with long-term or recurring physical, mental, intellectual, or sensory impairments, which, when combined with various barriers, may significantly limit their access to employment opportunities or career advancement. This broader definition reflects an internationally recognised standard, ensuring greater inclusivity in workplace policies and practices.
Impact on Broad Based Black Economic Empowerment
The process of B-BBEE assessment, compliance, and measurement is separate from employment equity compliance as outlined in the Employment Equity Act (EEA) and its regulations. However, the EEA remains highly relevant when evaluating compliance with the management control element in the B-BBEE Codes, as it provides the framework for employee classifications, demographic categorisations and race group definitions.
While the targets set under the B-BBEE Codes do not necessarily align with those in the EEA, compliance with employment equity objectives still plays a significant role in B-BBEE assessments. Despite differences in targets and weighting, adherence to EEA regulations remains relevant in determining B-BBEE compliance. The achievement of the numerical targets prescribed under the EEA regulations contributes to recognition within the B-BBEE framework, positively influencing a company’s B-BBEE score.
With the new Employment Equity regulations now in effect, your HR Consultant has attended the recent EEA roadshows to gain first-hand insights and updates directly from industry experts and Department of Labour officials.
Equipped with the latest information, your Consultant will work closely with you throughout June and July to ensure your organisation is both compliant and strategically aligned for success in achieving equitable workplace representation.
Should you have any questions or need support in implementing these updates, please do not hesitate to reach out. We’re here to guide you every step of the way.
REFERENCES
Employment Equity Act, 1998 (Act 55 of 1998 as amended) Determination on Sectoral Numerical Targets | Repeal of Employment Equity Regulations, 2014
