The Employment Equity Amendment Act has resulted in several key changes to the Employment Equity Act, including the introduction of an Employer Equity Certificate of Compliance and sectoral targets that are more closely aligned to the BBBEE scorecard.
The sectoral targets are challenging and, in some sectors, black participation needs to more than double. This could make it difficult for businesses to achieve the targets, especially in an economy that is not growing.
Smaller companies may be disincentivised to grow their workforce due to the challenging targets. Employers who fail to comply with the amended regulations may be subject to fines.
Whether these proposed employment equity sectoral targets will hamper or enhance growth is dependent on how stakeholders plan for and approach it.
Here are some of the key implications of the employment equity sectoral targets for BBBEE strategy:
Companies will need to carefully consider their sectoral targets and develop strategies to achieve them. The targets are challenging and will require businesses to make significant changes to their recruitment, promotion, and termination practices.
The targets could make it difficult for businesses to participate in state contracts, as they will need to have an Employment Equity Certificate of Compliance. This could have a negative impact on businesses that rely on state contracts for a significant portion of their revenue.
The targets could have a negative impact on smaller businesses, as they may be disincentivised to grow their workforce. This is because the targets are more challenging for smaller businesses to achieve, and they may not have the resources to invest in the necessary changes.
Companies will need to carefully document their recruitment, promotion, and termination practices to demonstrate compliance with the targets. This could be a significant administrative burden for businesses, and it could also make them more vulnerable to legal challenges.
Overall, the employment equity sectoral targets are a significant change to the Employment Equity Act and will have a major impact on BBBEE strategy. Companies will need to carefully consider the implications of the targets and develop strategies to comply with them.
Here are some additional considerations for businesses:
The targets are not static, and they may be adjusted in the future.
Targets are only one factor that is considered in BBBEE. Other factors, such as ownership, management control, and skills development, are also important.
Businesses that can successfully comply with the employment equity sectoral targets will be well-positioned to benefit from the opportunities that BBBEE offers.
Article by: Francois Le Sueur - Executive Consultant