Companies failing to prepare employment equity plans may shortly incur the wrath of the Labour Court. The Department of Labour announced that it was taking six companies to court over breaches of the Employment Equity Act (EEA).
The EEA is the primary South African legislation dealing with the prohibition on discrimination and affirmative action measures in the workplace.
Not all South African companies are obliged to prepare employment equity reports. However, once an employer triggers a headcount or turnover threshold it has to comply with the obligations of Designated Employers under the EEA.
The EEA also allows non-designated employers to comply voluntarily with the affirmative action provisions of the EEA. The affirmative action measures aim to address the ails of the past that still hamper equality in the workplace.
Designated Employers who do not prepare employment equity plans (a requirement stipulated in section 20(1) of the EEA) may be referred for prosecution by the Department's Inspection and Enforcement Services branch. Similarly, the department has named (and shamed) six companies who it alleges reported on plans that do not exist. It also issued recommendations on contraventions to a further five companies and gave them 60 days to comply.
The Department announced further that it will continue with the inspection it commenced in July 2017, of 72 JSE securities-listed companies to ensure compliance with employment equity. In July the Department initiated a National Director-General Review, which involves a process of interrogating company’s EE plans to assess whether the plan complies with legislation and is able to transform when put to test. It intends finalising inspections in in December 2017.
Employers should heed the timeous warning issued by the Department. Failure to comply with the affirmative action provisions of the EEA can result in fines (up to R1.5 million for failing to prepare EE plans). Non-compliant companies can also expect to attract sanction in the court of public opinion.
Businesses should ensure they allocate this important role to a designated manager and that they comply with the required affirmative action measures. The successful implementation of affirmative action in the workplace is a critical component of addressing inequality in our society. Irrespective of whether employers comply with the EEA because of conviction or fear of sanction, businesses should address this critical workplace imperative.
Johan Botes is a Partner and Head of the Employment & Compensation Practice at Baker McKenzie in Johannesburg.