SMEs and Employment Equity

SMEs and Employment Equity


South Africa faces many challenges regarding inequality, namely poverty, education, health care, unemployment, housing, gender issues and so on. Employment equity aims to promote fairness and to ensure that past actions responsible for such inequalities are dealt with.

It was for these reasons that the Employment Equity Act, No. 55 of 1998 (“the Act”), was established. The ultimate goal is to remove unfair discriminatory barriers of the past and to promote equity in the workplace.

The Act affects all employers and workers, with a few exceptions. All employers who employ more than 50 employees or who have a turnover in excess of the amounts specified in the Employment Equity Act are legally obligated to comply with Chapter III of the Employment Equity Act. In addition, all employers (regardless of their size and turnover) are obligated to comply with Chapter II of the Act. Employers and employees from the National Intelligence Agency, the South African National Defence Force and the South African Secret Service, are not affected by the Act.

Responsible employers

Through implementation of the Act, employers become responsible for the development of the Employment Equity Plan. It serves to promote equal opportunities in the workplace. This is done by removing unfair discrimination based on the grounds of race, gender, sexual orientation, pregnancy, marital status, family responsibility, ethnic or social origin, colour, age, disability, religious belief, political opinion, language or HIV status. For example, it would be illegal for a woman and a man doing the same job to get different salaries.

On the other hand, there is also what is called ‘fair discrimination’. This entails discrimination taking place if it forms part of an affirmative action programme, which is in line with the Act. Fair discrimination is also allowed if it is an intrinsic requirement for the job. For example, a job as a company accountant could require a degree in accounts, while a job as a French translator would require the applicant to be fluent in French.

The Act also aims to promote affirmative action. In other words, larger employers are required to take the necessary steps to improve the workplace situations of Black people (Africans, Coloureds and Indians), women and people with disabilities.

Developing the plan

So how does one go about developing the Employment Equity Plan? Development of the plan is the responsibility of a designated employer. It should take place in consultation with the workers. Once the consultation process is agreed on, the plan should be made available to the workers.

After consulting with the employees, the employer should conduct an analysis, prepare the Employment Equity Plan and report any progress regarding implementation to the Director-General.

The contents of an Employment Equity Plan should include the following:

  • objectives to be achieved during each year
  • The affirmative action measures to be implemented
  • Information on where under-representation of people from designated groups has been identified, the numerical goals, a timeframe and strategies to reach these goals
  • The timetable for each year of the plan outlining achievement of goals and objectives other than numerical goals
  • The duration of the plan (It may not be shorter than one year or longer than five years)
  • The procedures that will be used to monitor and evaluate implementation and whether reasonable progress is being made
  • The internal procedures followed to resolve any dispute about the interpretation or implementation of the plan
  • The workforce, including senior managers, responsible for monitoring and implementing the plan
  • Any other prescribed matter or measures that are consistent with the purpose of the Act

If employers fail to comply, the Department of Labour could issue compliance orders. If non-compliance continues, the Labour Court could be approached to enforce the orders. The Labour Court could also issue financial penalties ranging from R100 000 to R500 000 for first time offenders and up to R900 000 for repeated non-compliance.

Designated employers are required to report on Employment Equity by sending an Employment Equity Report to the Employment Equity Registry. This should be done by the legislative reporting deadline, which is the first working day of October.

Reports should be posted to:

Employment Equity Registry

Department of Labour

Private Bag X 117



Tel: +27 (0)12 309 4043/4330/4423/4898/4738

Fax: +27 (0)12 309 4737/4188/4739

Reports could also be handed in at the Department’s Provincial Office or Labour Centre in an envelope clearly marked ‘Employment Equity Registry’.

Denvor Phokaners
Denvor Phokaners spent 15 years in business development in South Africa and abroad before launching his enterprise development consultancy, Enterprise Development Essentials.