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DRG Outsourcing - Employment Equity Audits & Compliance

Do you have 50 or more employees in your company? Or is your company's annual turnover higher than Schedule 4 of the Employment Equity Act? If so, then you're labelled a 'designated employer'. And with that label comes a lot of legal responsibilities, the most important of which is to comply fully with the Employment Equity Act. If you don't comply with it completely, then you'll face heavy non-compliance penalties, alongside costly legal procedures for you and your business.


So, the message is clear: You have to comply with the Employment Equity Act!

Reports from The Department of Labour’s Inspection and Enforcement Services (IES) branch announced that it is taking 6 companies to court for prosecution for failure to prepare employment equity plans as per the provisions of Section 20 (1) of the (EEA) and reporting to the Director-General on plans that do not exist which amounts to misrepresentation. The 6 companies affected are Gooderson, Clientele Legal, Clientele Life, Mazor Aluminium, Mazor Steel, and Spanjaard Limited.


The Department of Labour also reported that 72 JSE-listed companies are being inspected for employment equity compliance. The initiative, undertaken by the Department’s Inspection and Enforcement Services (IES) branch, started with the inspections in July 2017 that will continue until December 2017. The inspection process entails “interrogating” companies’ employment equity plans to see if they comply with legislation.


Labour Minister Mildred Oliphant stated that “It is very concerning that there are just too many JSE listed companies that are completely ignoring (employment equity law),” she said at the time, adding that 21 JSE-listed companies had been fined for non-compliance, while "several others" would follow.


In terms of Section 20(7), the Director-General may apply to the Labour Court to impose a fine in accordance with Schedule 1 if a designated employer fails to prepare or implement an employment equity plan in terms of this section. For a first-time offence, an employer will be subject to a fine, the greater of R1 500 000 or 2% of the employer’s turnover. If the employer has contravened the provision once before the fine shall be the greater of R1 800 000 or 4% of the employer’s turnover. The fine increases depending on the repetition of the contravention. In addition, companies that falsely reported on employment equity plans while not having such plans in place, will be criminally prosecuted.


Section 20(1) of the Employment Equity Act requires a designated employer to prepare an employment equity plan which will achieve reasonable progress towards employment equity in that employer’s workforce. This employment equity plan must include the affirmative action measures to be implemented, the procedures used to monitor and evaluate the implementation of the plan, the timetable setting out the plan, objectives, duration, procedures and internal management of disputes regarding the plan and the numerical goals to be achieved of the appointment of underrepresented persons from designated groups (“black people, women and people with disabilities”) in order to achieve equality in the workplace.


Steps ensuring Employment Equity Compliance?

Step 1: Appoint an EE Manager and form an EE Committee

Step 2: Educate and Train staff on their Role and Responsibility as Committee Members

Step 3: Conduct a workplace analysis with Income Differential Statements

Step 4: Conduct an internal audit on the Barriers and Affirmative Action

Step 5: Discuss and Plan Goals and Target for the next 5 years

Step 6: Develop an EE Plan in relation to compliance if there is a deviation from the norm

Step 7: Structure the EE Plan to accommodate for the Goals and Targets to be reached

Step 8: Engage in a meaningful consultation process with the Committee to ensure agree

Step 9: Verify and Document Statistics for Reporting

Step 10: Submit an annual EE report to the Department of Labour – signed off by the EE Manager and the CEO


Important Sections of Compliance

a) Consult with employees as required by section 16;

b) Conduct an analysis as required by section 19;

c) Prepare an employment equity plan as required by section 20;

d) Implement its employment equity plan;

e) Submit an annual report as required by section 21;

f) Publish its report as required by section 22;

g) Prepare a successive employment equity plan as required by section 23;

h) Assign responsibility to one or more senior managers as required by section 24;

i) Inform its employees as required by section 25; or

j) Keep records as required by section 26. “


If the Department of Labour inspects your company, you will need to show the Inspector the

following things:

An Employment Equity File, containing:

• Your company’s current EE Plan, signed by CEO

• Copies of previous plans

• Records showing how plan has been communicated

• Evidence of Employment Equity Committee nominations, acceptance and the process followed

• Evidence of the appointment of an EE Manager with a signed letter of responsibility

• List of EE Committee members

• Employment Equity Committee’s Constitution with a code of conduct, signed by all members

• Minutes of EE Meetings

• EE related complaints and records of actions taken

• Qualitative analysis of the workforce

• Workplace Profile and numerical goals and targets, as well as previous Reports

• Latest Workplace Skills Plan and Training Report


The Department of Labour Inspectors can also interview Committee members and ask them to

explain the Committee’s role.


Annual Reporting

The Department of Labour online reporting portal opens on the 01st October, and closes on the 15th January each year.


The Department of Labour head office will schedule national advocacy events during September

every year to coincide with the commencement of the report date of 1 October.

Employment equity announcements in the press will aim to raise awareness and thus ensuring high levels of compliance. There will also be national events to coincide with the launch of new

regulations, codes of good practice, the public registry and reports by the Commission for

employment equity.

DRG Outsourcing - Employment Equity Audits & Compliance
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