- In May, the Department of Labour published regulations setting numerical transformation targets for 18 industries.
- Opposition party the DA responded by warning that as many as 600 000 people could stand to lose their jobs as a result.
- But law firm Werksmans says an employer cannot retrench or fire someone simply because they want to employ a person of a different race.
- For more financial news, go to the News24 Business front page.
Leading law firm Werksmans has poured cold water on the Democratic Alliance’s assertion that the recently promulgated transformation target amendments of the Employment Equity Act will cause hundreds of thousands of job losses.
According to Werksmans, retrenching or firing an employee in order to hire someone of a different race would be unlikely to pass muster in court.
In May, the Department of Employment and Labour published regulations that set numerical transformation targets for 18 industries to comply with over the next five years.
The amendments require companies operating to meet transformation targets that will reflect a fair representation of the population dynamics in the areas of their operations over the next five years. For national companies, this will be the national population dynamics. Local companies need to reflect the provincial demography.
Click here for the Employment Equity Act numerical targets.
As an example of the draft targets, in a manufacturing company operating nationally, the “top management” must be comprised of 35% African, 8% white, 4% coloured and 1% Indian people while “senior management” level of the said company has to employ 43.5% Africans, 8% white, 5% coloured and 1.5% Indian people. These include specific targets for female representation on each level, and for people living with bodily disabilities.
Companies that employ fewer than 50 employees, irrespective of their annual turnover, are excluded from the targets.
Members of the public and interested stakeholders have 30 days from the date of the publication of the draft targets to submit comments on the numerical targets, after which the minister of labour and employment will publish the final targets.
The DA responded by sounding the alarm and alleged that more than 600 000 people would lose their jobs should the targets become law.
While no challenge has been laid against the draft numerical targets, trade union Solidarity has already lodged its court challenge against the Employment Equity Amendment Act, on the grounds that this would be discrimination against other groups of employees.
Intimating it would oppose the amendments in court, the DA claimed that more than 405 000 white, 117 000 Indian, and 72 000 coloured people could lose their jobs in the next five years due to the new sector employment equity targets.
The government has denied this.
Sandile July, director and head of employment at Werksmans, said in an interview:
That people are going to lose their jobs as a result of this is totally nonsensical. Our courts have rejected the idea that you can retrench or fire someone because you want to employ a person of a different race.
Dismissing employees on the basis that the employer needs to meet the numerical targets set by the regulations would be in violation of the Labour Relations Act of 1995, said July and his colleague, Nonkosazana Nkosi, a senior associate at Werksmans, in a recent paper.
“It would be unlawful to compel employers to retrench employees as a means of meeting numerical targets.”
Werksmans encouraged its clients to keep in mind whether the targets strike a “critical balance between promoting representivity and retaining meaningful flexibility”.
Can the targets be challenged?
Asked whether there was anything in the new regulations that is vulnerable to a legal challenge, July said there was very little. “Generally speaking, there is nothing wrong with the targets. What can be wrong with a plan that requires a change in five years’ time?”
July said there is nothing legally wrong with the law as it seeks to redress the ills and inequalities of the past in employment relations. As such, July and Nkosi insist:
Certainly, these ideals are the cornerstone of our employment equity regime and serve as a guiding light as we navigate the seas of economic and social transformation in the workplace.
Further, the government has to set the transformation targets as a benchmark, rather than as a threshold, as a rigid threshold can result in the exclusion of members of the non-designated groups.
“You can’t put them as a threshold. That would be unlawful. Benchmarks are not discriminatory and are the most legally acceptable way of doing it (the redress),” said July.
The major imperative, according to the Werksmans practitioners, is that the beneficiaries of affirmative action must be equal to the task at hand, and that “efficacy and competence should not be sacrificed at the altar of remedial employment”.
Employers in those industries that do not have the required skills in the designated employee groups can obtain an exemption from the targets. “The act is not prescriptive on the grounds for exemption,” said July.
“The government wants you to state your case as to why you can’t comply.”
While the process to obtain a compliance certificate is still unclear, law firm Cliffe Dekker Hofmeyr says an employer may include in its application reasonable grounds to justify its failure to comply with any requirements. These justifiable grounds for not complying with the targets must include “insufficient recruitment or promotion opportunities of individuals in the target designated groups with the relevant qualification, skills and experience”, among others.
The department would then have to decide whether to accept the justification or to reject the application for exemption.
Nadeem Mohamed, Cliffe Dekker Hofmeyr’s professional support lawyer for employment, says an employer may be able to institute review proceedings against the department should it disagree with the department’s reasons on the justifications provided by the employer.
Werksmans believe the justification for non-compliance presents employers with a opportunity to produce employment equity plans that “progressively implement the targets over a five-year period based on availability of qualifications, skills and expertise of financial feasibility”.