Employment Equity Act, and the certificate state contracts now depend on
The 2022 amendments tied a compliance certificate under section 53 to eligibility for state contracts, and introduced sectoral numerical targets. That moved employment equity from an annual reporting chore to something with direct commercial consequence.
What the Employment Equity Act requires
The Employment Equity Act 55 of 1998 does two things. Chapter II prohibits unfair discrimination in employment policy and practice, and applies to every employer regardless of size. Chapter III imposes affirmative action duties, and applies only to designated employers, which turns on employee numbers or turnover against the thresholds in Schedule 4.
For a designated employer the obligations are concrete. You must consult with employees and any representative trade union, conduct an analysis of policies, practices and procedures and of the workforce profile, prepare and implement an employment equity plan with numerical goals and timetables, assign a senior manager responsibility for it, and report annually to the Director-General on the prescribed forms. Section 27 also requires disclosure of income differentials to the Employment Conditions Commission.
The Employment Equity Amendment Act 4 of 2022 changed the character of this. The Minister may set sectoral numerical targets for national economic sectors, and section 53 makes a compliance certificate a precondition for concluding contracts with the state. An employer that cannot obtain a certificate is excluded from public procurement, which for many organisations is a larger consequence than the fine ever was.
The obligations Dimeri tracks
Dimeri holds designated employer status, the plan, the consultation record and the reporting calendar as connected obligations rather than an annual scramble.
Designated employer status
Whether Chapter III applies at all, determined by employee numbers or annual turnover against the sectoral thresholds.
- Headcount and turnover tracked against the threshold
- Status recorded with the basis and the date
- Change in status flagged before the reporting cycle
- Non-designated employers still tracked for Chapter II
Unfair discrimination
The prohibition on unfair discrimination in any employment policy or practice, which binds every employer whether designated or not.
- Policies reviewed against the prohibited grounds
- Equal pay for work of equal value assessments held
- Complaints logged with outcome and reasoning
- Harassment policy and training tracked to individuals
Analysis and the employment equity plan
An analysis of policies, practices, procedures and the workforce profile, and a plan with objectives, numerical goals, timetables and accountability.
- Workforce profile by occupational level and designated group
- Barriers identified in the analysis recorded
- Plan objectives with owners and target dates
- Progress against numerical goals tracked through the year
Consultation and the EE committee
Consultation with employees and representative unions, through a committee that reasonably represents the workforce.
- Committee composition recorded against representativity
- Meeting dates, attendance and matters raised logged
- Consultation on the analysis and the plan evidenced
- Responses to representations recorded
Reporting
Annual reporting to the Director-General on the prescribed forms, and disclosure of income differentials.
- Reporting calendar with statutory deadlines
- Report data drawn from the live workforce profile
- Income differential statement prepared and retained
- Submission evidenced with its acknowledgement
Sectoral targets and the compliance certificate
Sectoral numerical targets set by the Minister, and the compliance certificate that conditions eligibility for state contracts.
- Applicable sectoral targets held per occupational level
- Gap to target visible during the year, not after it
- Certificate status and expiry tracked
- Justifiable reasons for shortfall documented as they arise
How Dimeri covers Employment Equity Act
Employment equity is measured annually but earned continuously. The organisations that struggle are the ones that look at the numbers in month eleven.
Gap to target during the year
Numerical goals and sectoral targets are tracked against the live workforce profile, so the shortfall is visible when recruitment decisions can still affect it rather than when the report is due.
Consultation you can evidence
Committee composition, meeting records, what was consulted on and how representations were answered are held against the sections that require them. Inadequate consultation is a frequent finding and an easy one to avoid.
Justifiable reasons recorded as they happen
Where targets are not met, the Act contemplates justifiable reasons. Those are far more credible recorded contemporaneously than assembled afterwards to explain a number.
Shared data with B-BBEE
The management control element of the B-BBEE scorecard uses the same headcount by level and designated group. Maintained once, it serves both rather than being rebuilt for each.
Getting Employment Equity coverage in place
- 1
Confirm designated status
Employee numbers and turnover are checked against the Schedule 4 thresholds and the result recorded with its basis, since Chapter III only bites for designated employers.
- 2
Run the analysis and build the plan
The workforce profile and the review of policies and practices produce the barriers, and the plan sets objectives, numerical goals and timetables with a senior manager accountable.
- 3
Stand up the consultation
The committee is constituted to reasonably represent the workforce, and consultation on the analysis and the plan is recorded as it happens.
- 4
Track through the year and report
Progress against goals and sectoral targets is visible continuously, and the annual report is produced from the live profile rather than reconstructed.
Employment Equity Act questions
Are we a designated employer?
It depends on employee numbers or annual turnover measured against the thresholds in Schedule 4, which vary by sector. Employers below the threshold are still bound by Chapter II, the prohibition on unfair discrimination, but not by the affirmative action duties in Chapter III. Your advisers should confirm the current thresholds, which have been amended.
What changed in the 2022 amendments?
Two things matter most. The Minister may set numerical targets for national economic sectors, which sit above an employer's own plan goals. And section 53 makes a compliance certificate a condition of contracting with the state, so a shortfall now carries a procurement consequence rather than only a penalty risk.
What happens if we miss our numerical targets?
The Act contemplates justifiable reasons for not meeting targets, and the assessment is not purely arithmetic. What matters is whether the reasons are genuine and documented. Recording them as they arise, rather than assembling an explanation once the number is known, is the difference between a defensible position and a rationalisation.
How does this relate to B-BBEE?
They are separate instruments with overlapping data. The management control element of the B-BBEE scorecard uses headcount by occupational level and designated group, which is the same profile the EE analysis produces. Dimeri maintains it once and reports it to both.
Is this a substitute for legal advice?
No. Thresholds, sectoral targets and the certificate regime have all changed recently and continue to develop. Your employment law advisers should confirm what applies to your organisation.
Go further on Employment Equity Act
Put Employment Equity Act on one register
Every requirement mapped to a control with a named owner, the evidence held against it, and one view of where you stand.