Employment Equity Act Amendments: What Employers need to know

On 01 January 2025, significant amendments to the Employment Equity Act (EEA) came into effect, introducing new obligations and compliance requirements for South African businesses. These changes aim to enhance fairness, diversity, and inclusion in the workplace while refining how employment equity (EE) targets are set and enforced. Employers, particularly medium to large businesses, must now reassess their EE strategies to ensure compliance to avoid potential penalties.

Revised definition of a "Designated Employer"

A key amendment is the removal of the turnover threshold for designated employers. Previously, companies that exceeded a certain annual turnover were automatically classified as designated employers, meaning they had to meet EE reporting and compliance obligations. Now, only businesses with 50 or more employees are classified as designated employers, regardless of turnover.

This change relieves small businesses of EEA-related administrative burdens, while ensuring that medium to large enterprises remain responsible for drafting EE Plans, reporting progress, and meeting numerical targets.

Sector-specific employment equity targets

The Minister of Employment and Labour now has expanded authority to set sector-based EE targets. By consulting with industry stakeholders, the Minister can determine realistic and measurable employment equity goals for different industries. These targets take into account the demographics and skill requirements of each sector to promote fair representation across race, gender, and disability.

For businesses, this means greater scrutiny of recruitment, promotion, and training practices. Employers must ensure alignment with their sector’s targets, as failure to do so may result in penalties or reputational risks.

Employment equity compliance certificate: A prerequisite for government contracts

A valid Employment Equity Compliance Certificate is now a requirement for companies seeking government contracts. To obtain this certificate, businesses must:

• Show that they are meeting their sector’s EE targets or making meaningful progress toward them.

• Maintain accurate EE records and demonstrate ongoing compliance with the EEA.

• Ensure that they have no outstanding claims of unfair discrimination or unresolved labour law violations.

For employers engaged in public sector procurement, compliance is now critical, as failure to obtain a Compliance Certificate could result in the loss of lucrative business opportunities.

Stronger enforcement and increased inspections

With these amendments, labour inspectors now have expanded enforcement powers, including the ability to conduct frequent workplace audits to assess compliance. Non-compliance penalties can be severe, ranging from substantial fines to exclusion from government tenders.

Beyond legal and financial consequences, failure to adhere to EE obligations can also damage a company’s public image and brand reputation. As a result, businesses must take proactive measures to ensure compliance.

The importance of proactive compliance

The EEA amendments emphasise the need for employers to create truly inclusive and representative workplaces. For many businesses, these new regulations present an opportunity to re-evaluate hiring, promotion, and workforce development strategies.

By regularly conducting workforce audits, maintaining transparent EE Plans, and actively engaging employees, businesses can minimise legal risks while benefiting from a more diverse and inclusive team.

Deregistration of Designated Employers

Although the Employment Equity Amendment Act is now in effect, employers considering deregistration should wait for the publication of the revised Regulations before proceeding. Expected by March 2025, these Regulations may introduce automatic deregistration for companies with fewer than 50 employees or modify the existing process. Additionally, smaller employers may face restrictions on submitting EE reports, particularly once the online reporting system becomes available in October 2025.

For companies pursuing deregistration, the process requires submission of the EEA14 form. Non-designated employers must also provide a formal motivation along with their latest audited financial statements. The EEA14 form must be signed by either the Accounting Officer or the CEO.

How we can assist

Navigating these EEA amendments requires a strategic approach. Our firm’s Employment Law team is well-equipped to help businesses adapt, ensuring full compliance with new EE obligations. We offer:

• Comprehensive audits to assess your EE status and risks.

• EE Plan reviews to align with sector-specific targets.

• Strategic guidance on meeting compliance while optimising business operations.

• Workshops and training to ensure your HR and management teams are well-informed.

If you need assistance in updating your EE policies, revising your compliance strategy, or preparing for labour inspections, our team is here to help. With the right support, your business can stay ahead of these regulatory changes while fostering a fair and diverse workplace.