Fines of up to R900 000 await defaulting employers

BY lvan lsraelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on 011 888 7944 or 082 852 2973 or on e-mail address: [email protected]. Go to:

Recently a major airline operating in South Africa was reported to have been fined R900 000 for failing to comply with Employment Equity Act (EEA). This penalty highlights the seriousness with which the Department of Labour (DOL) takes non-compliance and shows that they will not hesitate to bring the maximum penalty against defaulters. If you are a designated employer you have only a few weeks to submit your Employment Equity Report. Designated employers are those that either:

  • Have more than 50 employees OR
  • Have fewer than 50 employees but have an annual sales turnover that exceeds the threshold for their sector.

Employers are warned that, while submitting the EE Report in time is crucial this is not enough. Employers are also legally bound to ensure that the Report’s contents is true and correct and that they can show that they have made sufficient progress with affirmative action as required by the EEA. It is clear that prosecutions in the Labour Court and potentially bankrupting fines can result if employers fail to comply. This means that designated employers will have to:

  • Shift from merely putting together ‘impressive looking’ reports for the DOL
  • Do a detailed employment equity (EE) Analysis
  • Set affirmative action targets that are achievable on the one hand but substantial enough on the other hand to satisfy the Director General of Labour
  • Prepare and implement a detailed EE Plan. This is a comprehensive strategy for recruiting, ‘accommodating’ and developing members of designated groups. That is, each employer must devise an action plan aimed at ensuring that it has the right proportion of black, coloured, Indian, female and disabled people working in all departments and at all levels of the organisation including the very top. For example, if you have fifty members on your board of directors then you must aim to have approximately 35 black, 5 coloured, 4 Indian and 5 white directors. Of these, 25 should be female and 2 should be disabled.
  • Ensure that these plans are implemented effectively and in tune with the EEA’s procedural requirements
  • Consult with a full cross-section of their workforce and representative trade union on the devising and implementation of the above mentioned analysis, report, plan and target.
  • Make available to employees all the documents referred to above.
  • Make special arrangements to ensure that black, coloured, Indian, female and disabled employees are able to remain with the organisation, cope with their duties and work environment, fit into the organisation and to advance in the organisation.
  • Eliminate barriers to employment of members of designated groups.

While none of these requirements are impossible they will be very much more difficult to achieve with the DOL inspectors breaking down your door. It is important to bear in mind that, once you have set up your EE system based on your own level of resources and circumstances, the task of EE compliance becomes very much easier.

While potential investors are being deterred by South Africa’s labour law requirements the Director General is charged with implementing the law as regards affirmative action. He therefore has no option but to police employers that do not comply and to prosecute those that do not heed his instructions to implement affirmative action meaningfully.

Unfortunately the EEA does not sufficiently take into account the fact that the number of jobs available in South Africa are not increasing. This makes it extremely difficult for you to increase your numbers of employees from designated groups even if you want to.

However, as long as you can prove that you are doing everything possible to normalise the demographics of your organisation and that you have been completing the compulsory analyses, reports and plans the DOL is unlikely to take action against you.

You therefore have everything to gain and nothing to lose by using the help of a labour law expert to devise your EE analysis, report, plan, target and consultation system. Otherwise, at Labour Court, you will not only be forced to implement EE and to pay crippling fines; you may also be faced with having to meet imposed EE targets.

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