Reviewing Employment Equity compliance

Employment equity (EE) has become a common feature of employment practices in South Africa, especially for big employers, or the so-called designated employers. The law requires designated employers to adopt special measures to improve the participation of designated groups in their employment opportunities. These employers are expected to have an EE plan and to file regular reports with the Department of Labour (DoL).

The DoL ensures compliance with the EE Act. Labour inspectors and the Director General (DG) are empowered to enforce compliance through inspections, recommendations or court orders where employers have failed to comply with the DG’s requests or recommendations.

If the Labour Court finds that an employer has not complied with the Act, it may impose fines on the employer. While the fines may or may not be prohibitive, the negative publicity surrounding the DG’s referral of the matter to the Labour Court may be far more damaging to the reputation, and thus the business, of the employer concerned.

The seriousness of the consequences of the DG’s decision was recognised by the Labour Court in the much-publicised case of the Director General of the Department of Labour v Comair Ltd (J2326-07). It is because of these far-reaching consequences that the DG’s power must be exercised with care and be subject to review by the Labour Court.

The court in Comair confirmed that, when assessing compliance the DoL officials must take into account the affirmative action measures in terms of section 15 and all the factors listed in section 42 of the Act. The factors are:

(a) The extent to which suitably qualified people from and amongst the different designated groups are equitably represented within each occupational category and level in that employer’s workforce in relation to the-

(i) demographic profile of the national and regional economically active population;

(ii) pool of suitably qualified people from designated groups from which the employer may reasonably be expected to promote or appoint employees;

(iii) economic and financial factors relevant to the sector in which the employer operates;

(iv) present and anticipated economic and financial circumstances of the employer; and

(v)  the number of present and planned vacancies that exist in the various categories and levels, and the employer’s labour turnover;

(b)  progress made in implementing equity by other designated employers operating under comparable circumstances and within the same sector;

(c) reasonable efforts made by a designated employer to implement its employment equity plan;

(d) the extent to which the designated employer has made progress in eliminating employment barriers that adversely affect people from designated groups; and

(e) any other prescribed factor”.

The factors are comprehensive, and perhaps deliberately so. The DoL officials must consider all and not merely some of them. If they fail to do so, as the DG did in Comair, the Labour Court is likely to review and set aside the decision about an employer’s alleged non-compliance.

While designated employers should strive to comply with their obligations under the Act, they can take comfort in the knowledge that the DoL’s powers may not be exercised arbitrarily in assessing their compliance. The DoL officials exercise a public power, which, as such, is subject to review by the Labour Court.

Lessons:

• Non-compliance with the EE Act has serious consequences.
• Assessing compliance should not be done lightly.

Information provided by Kaizer Moyane, Chief Consultant: Labour Relations, Sanlam Personal Finance