Draft employment equity regulations an incoherent mess, but criticism largely based on false claims

Employment equity legislation helps to ensure that black applicants are treated fairly and to limit the appointment of less talented white applicants over more talented black applicants. Utilised well, it is a powerful tool in the fight against intellectual mediocrity and stagnation.

The recent publication of draft regulations setting out compulsory employment equity targets at senior occupational levels for employers with more than 50 employees in targeted sectors of the economy attracted harsh criticism from, among others, DA leader John Steenhuisen and leaders of the Solidarity trade union (read here and here).

While the draft regulations are, quite frankly, an incoherent mess, much of the above criticism is based on misleading or demonstrably false claims about the legislation.

Let me start by showing my hand. While employment equity legislation can be exploited to justify nepotism and unlawful instances of “cadre deployment”, it is part and parcel of the pursuit for equality and a requirement for its achievement.

As the Constitutional Court held in Minister of Finance v Van Heerden, it is wrong to depict redress measures as a form of “reverse discrimination”. Without taking positive action (including in the workplace) to “eradicate socially constructed barriers to equality and to root out systematic or institutionalised under-privilege”, we cannot eradicate discrimination.

To this, I would add a personal insight, based on stints as the chair of the faculty transformation committee and as head of an academic department at a South African university, about the pivotal role employment equity legislation can play in levelling the playing field when appointments are made, and in enhancing the quality of teaching and scholarship in a university.

In my experience, employment equity legislation plays a pivotal role in limiting the impact of racial bias in appointment decisions. It helps to ensure that black applicants are treated fairly and to limit the appointment of less talented white applicants over more talented black applicants. Utilised well, it is a powerful tool in the fight against intellectual mediocrity and stagnation.

It is from this perspective that I view the draft regulations recently issued by the minister of labour in accordance with newly inserted provisions of the Employment Equity Act (not yet brought into force).

Currently, the act requires all employers who employ more than 50 people to prepare an employment equity plan for periods of up to five years to “achieve reasonable progress towards employment equity in that employer’s workforce”. The plan must set out, among others, the employment equity targets adopted by an employer to be achieved for each year of the plan, as well as the affirmative action measures to be implemented as required by section 15 of the act.

Before the adoption of the amendments, an employer was free to choose its targets (based on race, gender and disability), as long as its plan would make reasonable progress to correct the effects of past and ongoing discrimination in the employment sphere.

Because many private sector employers made very slow progress in addressing the effects of past (racial) injustice, Parliament amended the act last year to force employers to adopt more aggressive employment equity targets.

The new section 15A of the act allows the minister of labour to identify specific economic sectors (such as agriculture, mining, manufacturing, education and construction) and to set numerical employment equity targets for these sectors at all occupational levels in the workforce.

Designated employers in these sectors are required to use the sectoral targets set by the minister in their employment equity plans, and their progress will (partly) be assessed based on these “imposed” targets.

These targets are to be set nationally as well as for each province, and employers have to follow either the national targets or the targets set for their province. The minister has now issued draft regulations identifying the relevant economic sectors and proposing the equity targets for each sector as envisaged by section 15A of the act.

In response, DA leader John Steenhuisen complained that this would impose “forced quotas” in “every workplace, in every economic sector, in every province”; would “restrict” the employment of “Indians” and “coloureds” in a severe manner; claimed that “if companies don’t comply, they are severely punished”, and called on “companies, big and small, to defy a law that prevents them from hiring skilled people”.

Solidarity claimed that the adoption of the regulation would result in 71,518 “coloured” people, 116,934 “Indian” people and 404,608 “white” people losing their jobs nationally.

It also provided numbers for each sector, claiming, for example, that 50,363 “white” people (69.5%), 25,275 “Indian” people (79.4%) and 18,450 “coloured” people (45.4%) working in financial services would have to vacate their jobs in the next five years.

None of this is true.

First, the new targets do not impose “forced quotas” as claimed. Section 15(3) of the Employment Equity Act makes clear that in seeking to achieve its equity targets, employers are permitted to give preferential treatment to underrepresented groups and to set numerical targets to be achieved, but “may not impose quotas”.

South Africa’s Constitutional Court highlighted this in its judgment in South African Police Service v Solidarity obo Barnard, and noted the act requires employment equity plans to be flexible and inclusive and that a “designated employer may not adopt an employment equity policy or practice that would establish an absolute barrier to the future or continued employment or promotion of people who are not from designated groups”.

It is true that section 42 of the act empowers the director-general of the Department of Labour to assess whether a designated employer is implementing employment equity in compliance with the act by considering a wide range of factors which now includes (in terms of section 42(aA) “whether the employer has complied with a sectoral target as set out in terms of section 15A” of the act. But it would be unlawful for the DG to order the employer to meet its sectoral target if this was not reasonable in the circumstances.

In any event, if the DG determines that an employer had failed to implement an employment equity plan because it had not met the sectoral targets, he or she would not be empowered to impose a fine or to order the employer to implement the targets.

In terms of section 45 of the act, the DG will have to approach the Labour Court for an order directing the employer to comply with the request or recommendation; or to impose a fine. The DG bears the onus of proof that the employer had not complied with the provisions of the act.

This is an important safeguard against possible abuse or misapplication of the law by politically aligned functionaries. This is well illustrated by the 2009 Labour Court judgment in Director General of the Department of Labour v Comair (one of the few reported cases in which the DG had concluded that the employment equity plan of an employer did not comply with the provisions of the act), where the court concluded that the DG had failed to take into consideration all the factors set out in section 42 of the Act, and dismissed the application.

In the only reported case I could find where the Labour Court had fined an employer for non-compliance (the 2007 judgment in Director General, Department of Labour v Win-Cool Industrial Enterprise (Pty) Ltd), the court imposed a penalty of R300,000 on the employer, of which R200,000 was suspended on condition that the employer complied with its obligations within a specified period.

As far as I can tell, the vast majority of cases of non-compliance brought to the Labour Court involve cases where an employer had failed to comply with the formal requirements set out in the act, and not where there was a failure to achieve targets set out in an existing employment equity plan.

Not only does the evidence not back up Mr Steenhuisen’s claims of draconian enforcement, it suggests that since 2009, the department of labour has been extremely lax in holding companies to account for their failure to achieve even modest employment equity targets.

It is also not clear what the legal basis is for the claim by Solidarity that many hundreds of thousands of people would lose their jobs if the new provisions of the act were implemented. The law currently does not provide for this, as the Labour Court held in Robinson & Others v PricewaterhouseCoopers that “affirmative action is not, and never has been legitimate ground for retrenchment”.

While codes of good practice allow employers to consider their employment equity targets when offering voluntary retrenchment packages to employees — and also suggest that an employer could moderate the impact of mass retrenchments on its employment equity plan by using it as one of several considerations when identifying who should be retrenched — this does not allow an employer to dismiss an employee on the sole ground that this was required for the employer to meet sectoral targets set by the minister, as Solidarity suggests.

That said, the draft regulations issued by the minister are a shoddy piece of work, and largely incomprehensible. There is no explanation provided to help us understand what the various targets for each sector and each occupational level might mean and how they would have to be applied. The targets are given in percentage format, but they do not add up to 100% or even close to 100%, and we do not know why this is so. Do the compilers of these tables know how percentages work, or is there a secret explanation for this oddity? It is also worrying that some of the targets are clearly impossible to meet, no matter how aggressively employers pursue these targets.

For example, in the table for “top management” in the agriculture, forestry and fisheries sector, the proposed national targets are set as follows: “African” (30.4%), “coloured” (3.5%), “Indian” (1%), and “white” (8%) – thus a combined 43%. What happened to the other 57% of the workforce? Impossible to say.

Given that the current workforce profile for this sector is given as “African (9.1%), “coloured” (5.8%), “Indian” (1.2%) and “white” (83.1%) – the latter is not a typo; 29 years after the advent of democracy, a full 83% of top managers in the field remain white – it is not clear that the compilers of this document took any notice of reality and considered what could optimistically be achieved.

Unfortunately, this tardiness provides much ammunition for individuals and groups who oppose any measures aimed at correcting the effects of past and ongoing injustice or deny the impact of race on systemic and entrenched inequality in the workplace and in the broader society.

But, fortunately, much of this criticism has been so over the top and so misleading, and even false, that the critics have just as much egg on their faces as the drafters of the regulations.

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