How To Navigate the Loopholes in the New EE Act

New EE Act

Yes, you can get your EEA compliance certificate, even if you are unable to comply

Companies that are concerned they won’t be able to comply with the new Employment Equity Act needn’t be. According to human capital specialist CRS Technologies, there is a legal way around the Act’s new requirements.

The Employment Equity Amendment Act (EEA) 4 of 2022 was recently signed into law by President Cyril Ramaphosa. The Act contains new measures geared to promoting diversity and quality in the workplace and is expected to be promulgated on 1 September 2023.

The most notable changes to the EEA include a new definition for the term “designated employer”, and that companies must comply with sector-specific EE targets set by the Minister of Employment and Labour.

Depending on the size of your company, and whether you plan to do business with state-owned entities, these changes could signify good news or bad news, says Nicol Myburgh, Head: HCM Business Unit at CRS Technologies.

“The good news for smaller businesses – those with fewer than 50 employees – is that they are no longer defined as “designated employers”, and as such do not have to develop and implement EE plans or submit EE reports to the Department of Employment and Labour,” he explains. “They will, however, still be able to obtain a certificate of compliance if they wish to do business with the government, provided they comply with Chapter 2 of the EE Act on the Prohibition of Unfair Discrimination, and the National Minimum Wage Act, 2017.

“For those companies that are defined as designated employers, the bad news is that they will only receive a compliance certificate if they meet the sectoral EE targets set by the Minister of Employment and Labour. Companies will not be able to trade with the state without this certificate, which could have a devastating impact on their business operations, especially if the bulk of their revenue comes from state contracts.”

Legal loophole

Myburgh points out, however, that a legal loophole in the new Act makes it possible for employers to obtain a compliance certificate if they can provide legitimate grounds for not meeting their sectoral targets.

These may include:

  • A lack of adequate recruitment and advancement opportunities;
  • An inadequate pool of qualified, skilled and experienced individuals from designated groups;
  • Court-ordered obligations;
  • Mergers and acquisitions;
  • Unfavourable economic circumstances faced by a company.

“But claiming legitimate grounds for non-compliance with the Act is one thing, proving it is where it becomes complicated, as the specific requirements for proving justifiable grounds may vary, depending on the company’s business operations,” Myburgh continues.

“This is where consulting with an HR services provider such as CRS, who is well-versed in EE legislation, is essential. We have the experience, expertise and resources to guide companies on the specific requirements and best practices for proving justifiable grounds for non-compliance. This is the best way for organisations to ensure they not only meet their EE obligations legally, but do so in the best interests of their business,” he concludes.

New EE Act Compliance

Legal Loopholes in the New EE ActDownload infographic!

    Contact us for assistance

    Do you require help navigating the requirements of the new EE Act or need help in complying? You can reach us on:

    +27 11 259 4700
    info@crs.co.za

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