A legal eagle sheds light on the proposed amendments to the Employment Equity Act

The long anticipated amendments to the Employment Equity Act 55 of 1998 (“the Act”) were published for comment in December last year. The amendments seek to align the Act with International Labour Organization principles and to tackle the discussions and debates that have long surrounded the lack of enforcement of employment equity in the workplace, resultant sanctioning for non-compliance, black economic empowerment as well as unfair discrimination.

To whom do the amendments apply?

The Act applies to employers who employ 50 or more employees, or employers who employ less than 50 employees, but have an annual turnover that exceeds the diverse thresholds for various sub-sectors.

The amendments to the Act now include local spheres of government under the definition of “designated employer”; furthermore, the position of foreign employees has been elucidated under the definition of “designated groups”.

In the result, the definition of “designated employees” has been widened to include all black people, women and disabled people who would have, but for apartheid, obtained citizenship by 27 April 1994.

Foreign nationals who would not have been entitled to obtain citizenship pre-April 1994, will remain unprotected as employees in terms of the amendments.

Equal pay for equal work of the same value

Employers that fall within the category of designated employer are under a positive duty to put into operation employment equity policies in the workplace to address historical disparities and to increase economic development and diversity. The amendments extend Section 6 of the Act to incorporate disparate treatment in terms and conditions of employment under the guise of unfair discrimination.

Discriminatory treatment of employees in the same workplace who are employed to do substantially the same work or work of substantially the same value, is prohibited.

The notion of equal pay for work of equal value will feature more prominently.

Differentiation in remuneration will therefore only be justifiable by an employer if the employer can demonstrate that such differential treatment is based upon skill, responsibility, qualification or experience of the employee.

A further obligation

In terms of section 27 of the proposed amendments, it will be obligatory for employers to take active steps to reduce income disparities in the workplace in order to subscribe to the ethos of equal pay for work of equal value.

In the circumstances, employers will be obligated to examine income differentials actively in their workplaces and to reduce any such disparities progressively.

Schedule 1 of the amendments allow for fines of up to 10% of annual turnover to be levied against employers who fail to take such steps.

A determined planning strategy will have to be undertaken by employers in order to address any such disparities that currently exist in their workplaces, as the proposed fines are hefty.

Burden of proof

Section 11 of the current Act states that an employer, against whom an allegation of unfair discrimination is made, must establish that the discrimination is fair.

The amendments introduce an evidentiary burden on the employee so that a mere allegation of discrimination will no longer suffice. Rather, an employee will have to make out a prima facie case of discrimination. An employer will have to rebut the allegation by proving discrimination did not take place as alleged or that the conduct is not based on one or more of the listed grounds (race, gender, sex or pregnancy).

Discrimination will be unfair if it is based upon a listed ground or if it “perpetuates systematic disadvantage in the workplace, undermines human dignity or adversely affects equal enjoyment in a way that is comparable to discrimination on a listed ground”.

As with any instance in which legislation fails to define a concept clearly, it is likely that employers will bear the brunt of lengthy litigation to clarify these guidelines; and this evidentiary burden is currently being questioned on the basis that it is unfair to the employee who is alleging unfair discrimination.

Compliance

Section 36 of the current Act makes provision for an undertaking to be given by an employer whose workplace has been inspected by a labour inspector and found to be wanting.

In terms of the amendments to the Act, the procedure for enforcing compliance will be streamlined – undertakings by employers have been removed and compliance orders may be issued on the spot by labour inspectors.

The amendments remove appeals and objections in terms of section 39 and 40 of the Act by employers to the director-general.

Employers will only be able to challenge or defend against compliance orders by approaching the Labour Court.

Workplace demographics and BEE

Section 42 of the current Act prescribes that the director-general, in assessing compliance with the Act, must take into account all the factors listed to determine compliance with employment equity. One of these factors is the “demographic profile of the national and regional economically active population”.

In terms of the amendments to the Act, the absolute “must” and the qualifier of “national and regional” have been removed.

Workplace demographics can be tested against the unqualified measure of “the economically active population”.

It has been argued that this amendment amounts to a radical social engineering programme, and many trade unions are up in arms.

In July 2010, Statistics South Africa published its annual mid-year population release and estimated the South African population to be approximately 49.99 million. Demographically, approximately 79.4% of the total population is African; 8.8% is coloured, 2.6% is Indian or Asian and 9.2% is white.

Read literally, the amendments propose that workplaces would have to mirror national demographics.

It is highly unlikely that enforcement of this proposed amendment would be found to be constitutional, as sanctioning mass social restructuring will not pass muster under our constitutional regime.

Subsequent to the public uproar that ensued, the Presidency noted that the removal of “national and regional” will rather grant employers the flexibility to decide whether to apply national or regional race demographics rather than bending over backward to try and execute national and regional demographics – a mere impossibility in some provinces.

Conclusion

Business owners are cautioned to keep abreast of these amendments and to review existing employment equity policies and test them against the proposed amendments.

Forethought, financial planning and test and measure programmes will have to be undertaken by employers to reduce the risk of non-compliance with equal pay for work of equal value, as fines are hefty and potentially devastating to business.

Compliance orders issued by inspectors must be taken seriously, as non-compliance can be a costly litigious process; business owners who cannot comply, must submit sound and justified reasons for non-compliance.

It seems unlikely that national demographics will play a great part in assessing demographic compliance in the workplace, and cautious optimism in this regard is warranted.

Laura Haude

Robyn Hey & Associates