ATC210708: Report of the Portfolio Committee on Employment and Labour on the Public Hearings held on the Employment Equity Amendment Bill, Dated 7 July 2021
REPORT OF THE PORTFOLIO COMMITTEE ON EMPLOYMENT AND LABOUR ON THE PUBLIC HEARINGS HELD ON THE EMPLOYMENT EQUITY AMENDMENT BILL, DATED 7 JULY 2021
The Portfolio Committee on Employment and Labour, having conducted public hearings on 13, 14 and 15 April 2021 on the Employment Equity Amendment Bill, reports as follows.
The Employment Equity Amendment Bill (the Bill) was referred to the Portfolio Committee on Employment and Labour (the Committee) on 21 July 2020. The Committee was briefed on the proposed amendments by the Department of Employment and Labour on 28 October 2020. In accordance with section 59 of the Constitution, the Committee resolved to conduct public hearings as an initiative to test public opinion on the proposed amendments to the Employment Equity Act. The public hearings were held on the zoom platform on 13, 14 and 15 April 2021.
The following entities made oral submissions before the Committee: 13 April 2021
Mr. Piet Le Roux and Mr. Martin van Staden
South African Institute of Race Relations
Ms. Anthea Jeffrey
Commission for Gender Equality (CGE)
Mr. Dennis Matotoka
Congress of South African Trade Unions
Mr. Matthew Parks
14 April 2021
Mr Anton Van der Bijl
The South African Medical Technology
Industry Association (SAMED)
Ms Tanya Vogt
Agri Western Cape
Mr Louis Wessels
Banking Association of South Africa
Ms Ayanda Baepi, Mr Sibanyoni, Mr
Masindi and Mr Lukhele
15 April 2021
Ms Sethusha Lebogang, Mr Christo van der
Mr Kaizer Moyane, Ms Sino Moabalobelo
Mr Siyabonga Mahlangu, Dr De Beer
South African Forum of Civil Engineering
Ms Ingrid Campbell
Payroll Author’s Group of SA (PAGSA)
Mr Rob Cooper
The following section of this report is a summary of oral presentations made by organised formations as well public institutions during the public hearings.
2.Summary of Oral Submissions
The Committee received oral submissions from organised formations as well as from public institutions over a period of three days, namely from 13 to 15 April 2021.
Summary of oral submissions made on 13 April 2021
Sakeliga (Mr. Piet Le Roux and Mr. Martin vanStaden)
Sakelika expressed objection to the following clauses of the Bill and suggested what they perceive as remedy to the situation:
- Clause 4/ Section 15A
- The new section 15A empowers the Minister to set numerical targets for any national economic sector. Sakeliga proposed that guidelines for exercise of this power must be included in the legislation.
- Subsection 2 of the new section empowers the Minister to prescribe criteria that must be taken into account in identifying sectors and sub-sectors for the purpose of determination of numerical targets. Sakeliga is of the view that the criteria must be prescribed by Parliament, not the Minister.
- Sakeliga proposed that the entire clause 4 be removed from the Bill.
- Clause 12/ Section 53
- New subsection 6 of section 53 state that the Minister may only issue a certificate of compliance if the Minister is satisfied that some conditions are met. Sakeliga view satisfaction of the Minister as a subjective criterion.
- Socio-Economic Impact Assessment
- Sakeliga pointed out that the 2015 policy of the Department of Policy Monitoring and Evaluation (DPME) requires every legislation that is published to include the socio-economic impact assessment. The entity requested that SEIA be made available or be conducted if it was not done.
- The entity is of the view that the Bill is not compatible with these sections of the Constitution: Section 9 and section 195(1)(i). Section 195(1)(i) states that public administration must be broadly representative of the South African people. Subsection 2 identify entities to whom this apply as (a) administration in every sphere of government, (b) organs of state and (c) public enterprise. Sakeliga pointed out that the private sector is not mentioned.
Sakaliga General Comments
Some conceptual problems raised includes that:
- The Bill limits employment to racial representativity.
- The Minister can set sector targets not based on the economically active population.
- Since employers are compelled to comply to sector targets set by the Minister, they amount to quotas.
- The Bill introduces a drag factor or red tape in doing business in South Africa at a time when the economy is very vulnerable, as shown by the GDP.
- Success in implementation of the Bill will mean failure for society to flourish. Success in implementation of the Bill will result in social destabilisation as people will have to seek employment in areas where they are less concentrated in terms of race.
- The Bill strengthens something that the government should be moving away from, which is racial classification. It is prudent for the state to avoid racial classification.
South African Institute of Race Relations (Dr Anthea Jeffrey)
The South African Institute of Race Relations (SAIRR) objected to the following clauses and suggested replacement of the entire Employment Equity Act.
- Clause 4/ Section 15A
South African Institute of Race Relations (SAIRR) is of the view that the new section gives unrestricted discretion to the Minister, since there are no guiding parameters provided. Therefore, they believe this section undermines supremacy of the rule of law.
- Clause 12/ Section 53
SAIRR believes that this clause is likely to add to state’s procurement costs.
- Socio-Economic Impact Assessment
SAIRR pointed out that the SEIA was not published with the Bill. They highlighted the importance of SEIA in view of the current economic situation, including GDP shrank by 7%,
1.4 million jobs lost, tax revenues went down and public debt went up.
SAIRR pointed out that the Constitutional requirement for the public service to be broadly representative, is not the same as strict demographic representativity. Further, they pointed out that this section does not apply to the private sector. The Bill fails the Constitutional Court test in Van Heerden case of 2004, according to SAIRR.
SAIRR General comments
- The Bill overlooks key barriers to upward mobility, including low growth, high joblessness, poor schooling high crime rate, family breakdown, etc.
- The Bill assumes demographic representativity is the norm.
- People are not “blank slates”.
- Black population is youthful and therefore lack work experience while high level jobs require more experience.
- Businesses cannot afford loss of competitiveness.
- The Bill will stall economic recovery, prompt further flight of scarce skills and capital, leave more people unemployed, add to poverty, etc.
- Employment Equity helps a relatively small elite of the previously disadvantaged persons. SAIRR recommended that EEA be replaced with Economic Empowerment for the Disadvantaged (EED). This, according to SAIRR, will include provision of tax funded vouchers for schooling, health care and housing to low income households to empower them directly.
Commission for Gender Equality (Mr. Dennis Matotoka) Commission for Gender Equality (CGE) made the following comments: CGE General Comments
- Commission for Gender Equality (CGE) supported the Bill.
- However, they pointed that the Bill must not only focus on race inequality.
- They emphasised women participation in workplaces.
- They want gender barriers to be addressed including provision of breastfeeding facilities and flexitime.
- CGE identified gaps in implementation of EEA.
- CGE noted that upward mobility continues to be a challenge for the previously disadvantaged.
- We need to have measures in place to ensure that the private sector complies with the EEA, according to the CGE.
- CGE supports clause 6, which amends section 20 to ensure that the numeral goals of the employer comply with sectoral targets set by the Minister in terms of the proposed new section 15A.
- CGE believes that the exemption of small employers from meeting EE targets is a reversal of the gains achieved.
- CGE support clause 12, which amends section 53 that deals with issuing of compliance certificates by the Minister for the purpose of State contracts.
COSATU (Matthew Parks)
COSATU commented as follows:
- COSATU supported the Employment Equity Amendment Bill. They were of the view that it is in line with the Constitution.
- COSATU is familiar with the Bill since it participated in drafting of the Bill at NEDLAC and therefore did not have a problem with any of the clauses.
- It is a fallacy that the market will address the legacy of apartheid that is still haunting us.
- The Bill excludes employers that employ less than 50 employees from compliance to EE targets.
- The Bill provides flexibility for the Minister to set provincial, regional and sectoral targets. This, according to COSATU, is essential since not all sectors are the same e.g. financial services and mining sectors are behind in terms of EE compliance. Therefore, we don’t need a “one size fit all” approach.
- COSATU supported clause 9, which seeks to amend section 36 in order to empower labour inspectors to secure written undertakings from designated employers on preparation of EE plans.
- COSATU supported clause 12, which seeks to amend section 53 by adding a new subsection 6 in order to clarify that the Minister may only issue a compliance certificate to an employer that comply with labour laws and good labour practice.
- COSATU urged the Department to work with National Treasury to ensure that section 53 is operationalised.
Summary of oral submissions made on 14 April 2021
Solidarity emphasised a consensus seeking process in their comments. The submitted as follows:
- The South African Human Rights Commission’s (SAHRC) equality report dated 12 July 2018 recommended that Employment Equity Act must be amended to target more nuanced groups on the basis of socio-economic needs rather than race. Solidarity submitted that the Employment Equity Amendment Bill (EEAB) is in direct contrast to this recommendation of the SAHRC.
- Solidarity asserted that fairness should be achieved through a consensus seeking process between employers and employees. Further, imposition of sector targets by the Minister or
the Department must be rejected out of hand because it does not consider the context of individual companies. The organisation is of the view that imposition of targets amount quotas.
- Solidarity concluded that the proposed EEA amendments are not only unconstitutional and unlawful, but are in direct opposition to the international convention on elimination of racial discrimination and the SAHRC report that flows from it.
South African Medical Technology Industry Association (SAMED)
SAMED supported the following aspects of the Bill:
- Section 1: Definition “people with disabilities” amended to include “intellectual or sensory” impairment. The disability therefore is no longer required to be the only barrier, nor must it be proven that it hampered access, the fact that it “may” would be adequate.
- Section 8: Various elements that are required to be adhered to before psychological assessment is done are now connected by “and’, meaning that all four criteria must be in place before these assessments can be lawfully done on employees.
- Section 36: Allows an inspector to instruct an employer to prepare an employment equity plan and the employer must issue a written undertaking to that effect.
- On designated employers, the threshold per sector is repealed and only employers with more than 50 employees have to comply with affirmative action provisions of the EEA.
SAMED made the following proposals:
- Consider more refined Standard Industrial Classification (SIC) class levels to ensure similar employers in the medical technology sector face similar regulatory and other requirements.
- More than 30 days to engage on the targets required. Methodology on how targets are to be set has to be published. Minister to consult with relevant sector, recognising SIC groups sectors together, whereas specific and separate consultation with health sector players such as SAMED, would be required. Arbitration to be considered where agreement cannot be reached.
- Practicalities of timing of setting targets to be addressed in the law. The level of compliance has to be set out in the Act.
- The process of compliance certificates, challenges thereto, the issuing authority and the time lines to be set out in the Act
Agri Western Cape
Agri Western Cape expressed support for transformation within the agricultural sector. However, they raised the following points:
- Clause 4 inserts new section 15A, which seeks to empower the Minister to set numerical targets for any national economic sector. Agri Western Cape is concerned about the possible consequences of this new section since the demographics of the Western Cape are different from those of other provinces. They also pointed out that no guidelines were provided for setting of sector targets, which leaves it entirely to the discretion of the Minister.
Agri Western Cape enquired about circumstances under which another person may act on behalf of the labour inspector to serve a compliance order.
Banking Association of South Africa (BASA)
BASA supported the tenor of the Bill, which is aimed at addressing the slow pace of transformation within many South African workplaces. However, BASA raised the following concerns:
- Clause 1, section 1(a) deletion in the definition of “designated employer”
BASA was of the view that the deletion has the unintended consequence of exempting small businesses from the application of affirmative action regardless of their annual turnover.
This, according to BASA, has a potential of creating a loophole for employers who employ 50 or less employees to restructure in a manner that excludes them from the application of affirmative action regardless of their annual turnover.
- Clause 4/ Section 15A
Section 15A (3) gives all powers to the Minister to set targets in consultation with the National Minimum Wage Commission and not the relevant sector. This, according to BASA, is problematic in that it fundamentally alters what was agreed at NEDLAC by business and social
partners. BASA proposes that the Minister should revert to the initial agreement that was negotiated at NEDLAC i.e. to consult with relevant sector bodies when setting sector targets.
Subsection 4 states that: A notice issued in terms of subsection (3) may set different numerical targets for different occupational levels, sub-sectors or regions within a sector on the basis of any other relevant factor.
BASA was of the view that sector targets should be set nationally and not differentiated by region. A business with a national footprint will need to comply with different targets by region. This will place considerable burden in terms of restructuring, planning and managing the compliance requirements for those businesses that operate nationally.
Further, one of the fundamental principles which is part of EEA i.e. section 15(3) is that quotas should be excluded when affirmative action measures are designed. Imposed regional targets simply put, according to BASA, are quotas. These “quotas” will be imposed on a particular industry and companies will be expected to achieve the “targets”. Companies have different challenges and are moving from different basis irrespective of being in a similar industry/sector.
The approach of setting targets without consulting the relevant sector first does not take the individual circumstances into consideration and this will not only be unfair to others and potentially amount to creation of unlevelled playing fields, but also against the principle of equity.
BASA was of the view that the process to set targets should be consultative, fair and transparent.
- Conflating of CCMA and Employment Equity processes
Section 53 of the principal Act was proposed to be amended by the addition of the following subsection:
(6) The Minister may only issue a certificate in terms of subsection (2) if the Minister is satisfied that …
BASA felt that employee disputes are unavoidable, and the outcomes of legal proceedings are often unpredictable. As such to place reliance of outcomes of CCMA or Labour Court decisions to determine whether an employer can be issued with a compliance certificate goes against the spirit of fairness.
The CCMA and Court processes, according to BASA should not be combined with the legislative process otherwise we run the risk of employers being afraid to discipline employees for fear of not being able to obtain a compliance certificate as Court proceedings can be unpredictable.
The CCMA and the Labour Court are there to protect employees and employers and settle disputes between them and therefore the outcome of their processes should not be used against employers.
BASA proposes that this requirement be removed from EE compliance.
Summary of oral submissions made on 15 April 2021
AgriSA commented on the Employment Equity Amendment Bill as follows:
- AgriSA believes that it is imperative for the sectoral targets to be set in partnership with the relevant sectors. The Minister needs to be sensitised to the realities within the agricultural sector and take into consideration what is achievable and at what pace. For the Minister to have unlimited discretion in setting of targets will be highly problematic in that it will be challengeable on various legal grounds.
- In order for the EEA to have an impact on the current disparities in the agricultural sector, the Amendment Bill needs to state that consensus between the Minister and the targeted industries must be reached in terms of the employment equity strategy it seeks to deploy.
- Therefore, the Amendment Bill must specifically express that the Minister has a legislative obligation to consult and plan with the sector when setting any sectoral targets and the criteria applicable.
- Consequently, the Amendment Bill must set out guidelines to resolve any impasse that may result from a situation where agreement cannot be reached between the Minister and the relevant sector.
- The importance of meaningful consultation is to advise the Minister on the level of complexity and differentiation between one agricultural subsector to another e.g. certain subsectors are experiencing economic boom, whilst others are struggling.
Therefore, the imposition of a “one size fit all” approach in terms of target setting for the entire sector will unlikely achieve positive results.
- The Minister need to consider the de facto state and realities faced by farmers in the agricultural sector resulting in farmers being faced with targets that are impossible to attain.
- Therefore, section 15A must read as follows:
“The Minister may, after consulting the relevant sectors and with the advice of the Commission, for the purpose of ensuring the equitable representation of suitably qualified people from designated groups at all occupational levels in the workforce, by notice in the Gazette, set numerical targets for any national economic sector identified in terms of subsection (1)”
AgriSA identified effective sourcing of high-quality students for post-school studies as one of the challenges faced by the agricultural sector, which puts a strain on the supply of skills to the sector. It stated that remains a challenge for the sector to fill top critical positions with experienced and qualified people.
AgriSA identified the following as alternative strategies to drive transformation:
- SARS Employment Tax Incentive Scheme, a scheme aimed at encouraging employers to hire young work seekers.
- AgriSeta Learnership Programme, a vocational learnership and training programme.
- National Skills Fund, a critical national skills development resource that contributes to the national skills development priorities, such as training initiatives, bursaries and scholarships, learnerships and skills programmes, and workplace-based learning.
Business Unity South Africa (BUSA)
As a background to their presentation BUSA stated:
“It is important to note that the version of the EE Amendment Bill tabled at the National Assembly is different to the version of the EE Amendment Bill which was engaged on
at NEDLAC and subsequently published in the Gazette in September 2018 for public comment.”
- According to BUSA, the following version of section 15A wording was agreed to by ALL social partners:
“The Minister may, after consulting the relevant sectors and with the advice of the Commission, for the purpose of ensuring the equitable representation of suitably qualified people from designated groups at all occupational levels in the workplace, by notice in the Gazette set numerical targets for any national economic sector identified in terms of subsection (1).”
- BUSA is of the view that the legislation should reflect that the sector target should be set with the respective industry in a joint consensus seeking approach. The approach of “joint consensus seeking” is entrenched in various processes in the Labour Relations Act, and employers and workers are familiar with it. They believe that this same approach should be adopted in setting sector targets if these targets are to be effective.
- BUSA further believes that the Act needs to make provision for instances where agreement cannot be reached between the Minister and the relevant sector.
- BUSA proposed that the impact of the amendments on foreign organisations must also be factored into the consultations. According to them, the proposed amendments present considerable uncertainty, particularly as some of these organisations may lag in representation of designated persons for justifiable and objective reasons.
- BUSA believes that the fact that labour inspectors have the broad powers to determine compliance under section 42, which includes reference to the factors stated in s15, is incomprehensible given that the result thereof could be the very closure of an organisation and contribute to a further decline in economic growth and unemployment levels increasing. The potential for corruption and abuse of power is also a serious threat in this context.
- The position of BUSA is that section 42(1) (Aa) (dealing with assessment of compliance) should be amended to read:
“whether or not the employer has taken reasonable steps to achieve the applicable sectoral target”.
- BUSA is of the view that giving a Minister or one of his or her officials the power to set targets by decree outside of the legislation promulgated specifically to give effect to section 217(3) of the Constitution without setting a similar legislative framework within which this is to be done, will, in those circumstances, conflict with both sections 217(1) and 217(3), and not be rescued by the proviso in section 217(2), which of itself needs to comply with section 217(3).
- Further, BUSA believes that if the numerical targets which are set constitute an absolute barrier, which the holding of a certificate and with that the opportunity to bid for Government work will do, that would fall foul of section 15(3) of the EEA.
- The consequences of not meeting the sector targets would eliminate organisations from transacting with the State and destroy their revenue lines, resulting in liquidation and job losses. The same consequence would apply to any company exercising its rights to appeal the findings of the inspector, should they choose to do so, as they will have no certificate during such appeal period either.
- If the EEA is amended, it will mean that an employer will be bound to use the sectoral targets fixed by the Minister in its employment equity plan, and consultation with employees would be rendered meaningless. The employer’s hands will be tied, regardless of the input from its employees. BUSA does not believe that this disempowering consequences should be allowed to stand, given its potentially disruptive effect on workplace harmony and labour relations.
- BUSA submitted that to accept the current Bill as it stands will not only undermine the workings of NEDLAC by unravelling agreements reached by social partners, but will also have unintended consequences on businesses and their ability to grow and to create or sustain employment.
Telkom submitted as follows:
- The Bill gives powers to the Minister of Employment and Labour to set numerical targets for representation of black people, women and disabled employees within the different levels of employment in the workplace.
- In terms of the Bill, the Minister is only required to consult with the National Minimum Wage Commission on the proposed sectors and targets before publishing such proposals by means of a notice for comment.
- Telkom stated that the Bill of 2018 formally provided for consultation with the relevant sectors in section 15(2) regarding ensuring the equitable representation of suitably qualified people from designated groups at all occupational levels in the workforce before publication of the notice in the Gazette set numerical targets for any sector. This provision for consultation with sector stakeholders is absent in the current version of the Bill.
- Telkom view this as a unilateral imposition of targets by the Minister, which may not be practically implementable by electronic communications operators and industry stakeholders and they assert that this may have the unintended effect of threatening existing jobs in a difficult economic climate.
- Telkom is of the view that in the tough economic climate it is difficult to make appointments that may be necessitated to meet new numerical targets, as many employers are trying to protect existing jobs.
- According to Telkom, requiring designated employer to meet the targets set by the Minister and assessment on the basis of these criteria, particularly before it may do work for Government, amounts to quotas which may be unenforceable.
- Telkom suggests that there be clear guidelines as to what amounts to compliance with the numerical sectoral targets.
- Telkom wanted clarity on what amounts to a reasonable justification for non- compliance.
- Telkom suggested that the Bill provides an employer with an opportunity to apply for a formal exemption from its provisions.
- Telkom cautioned against the proposed amendment that a designated employer must consult only with a representative trade union regarding matters referred to in section 17 of the EEA because the trade unions do not represent all Telkom employees.
Telkom made the following recommendations:
- That a study be undertaken in order to determine which targets would be practical and plausible for the electronic communications sector prior to publication of the notice setting out numerical targets.
- The study must take into account all relevant factors, including the challenging and unprecedented macro-economic environment.
- The study should provide alternatives that can be considered including targets based on the limited hiring opportunities rather than head count targets and accelerated training of persons in affected groupings aligned to the scarce and critical digital and coding skills that are increasingly in demand.
South African Forum of Civil Engineering Contractors (SAFCEC)
SAFCEC commented on target setting as follows:
The process of setting targets must be defined and regulated per sector to ensure that:
- They do not amount to quotas.
- They are realistic, achievable and fair.
- The process is transparent, rational and includes joint consensus seeking.
- It includes the process of gathering information, public participation, appeals, etc.
- The matter of regional targets within the industry is handled with due consideration.
SAFCEC commented on compliance as follows:
- Compliance certificates potentially barring companies to bid for State work is the incorrect and counter-productive approach.
- The current Act has significant powers assigned to enforce EE compliance.
- Compliance certification is seen as another measure to enforce compliance particularly in the construction industry. All industries should be treated the same as far as impact is concerned.
- The combined effect of both fines and denying certificates are unreasonable.
- The implementation and actions of inspectorate to enforce compliance must be defined and agreed through either the Act or Regulations.
- There is significant concern related to the power assigned to inspectors.
SAFCEC raised the following concerns on the impact of the Bill on the construction industry:
- Strong growth in the industry required to enter employment cycle.
- Job creation through infrastructure investment must take priority.
- Poorly conceived and implemented EE legislation can severely damage the industry and thus denying the country a national asset.
- Ongoing legal processes absorb resources and is counter-productive.
- Bribery and corruption resulting out of inspectorate having “life or death” power over companies.
- Ease of doing business decreases.
- Employment costs escalate.
- Employers avoid employment and employ minimum number of employees.
- Further skills flight of people the industry need as the mentors and drivers of change.
Payroll Author’s Group of SA (PAGSA)
PAGSA commented on the Bill as follows:
- PAGSA fully supports the proposed change to exclude all employers with less than 50 employees by removing the turnover thresholds from the definition of a “designated employer”. This, according to PAGSA, will significantly reduce the administration burden for smaller employers, balanced by allowing compliant smaller employers that are not designated to participate in government tenders.
- With regard to sectoral numerical targets, PAGSA’s impression is that the addition of these targets into the mix of national and regional demographics is complex. It will add to the employer’s administration burden and could possibly result in reduced compliance levels due to misunderstandings and honest mistakes.
- Added to the complexity is that a corporate employer might have branches in different sectors.
- PAGSA trust that the Employment Equity Directorate will create a comprehensive Guide to assist employers with the new requirements. If the Guide is not planned, PAGSA would like to request that this be considered as a matter of importance.
The Employment Equity Amendment Bill was received favourably by the majority of those who made oral presentations during the public hearings. However, the following clause was a source of concern from most presenters:
- Clause 4, which inserted the new section 15A
Section 15A deals with the determination of sectoral numerical targets. Subsection 15 A (3) reads as follows:
“The Minister may, after consulting the National Minimum Wage Commission, for the purpose of ensuring the equitable representation of suitably qualified people from designated groups at all occupational levels in the workforce, by notice in the Gazette set numerical targets for any national economic sector identified in terms of subsection (1)”.
Some presenters stated that the Bill that was discussed at NEDLAC and agreed to by social partners had a provision for consultation with sector stakeholders, which is absent from the Bill that is before Parliament.
The feeling of most parties who objected to this clause was that consultation with only the National Minimum Wage Commission was insufficient.
They want the clause to be amended so as to revert back to the formulation that was agreed to at NEDLAC, which is to make provision for the Minister to consult sector stakeholders.
Having considered the oral presentations, the Committee agreed that the inputs would definitely assist the Committee when deliberating on the proposed amendments to the Employment Equity Act.
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