By Lauren Salt, Zinhle Ngwenya and Ernst Müller; Cliffe Dekker Hofmeyr
A host of amendments to the Employment Equity Act, No 55 of 1998 (EEA) came into operation on 1 August 2014.
Among the amendments, are the amendments made to s21 of the EEA. Section 21 is concerned with the report detailing the employment equity plan and progress made in implementing the plan.
Prior to its amendment, s21 distinguished between employers who employed more, and employers who employed less, than 150 employees. This distinction no longer applies. All employers who employ more than fifty employees, or have an annual turnover higher than the amount identified in Schedule 4, are required to submit the report annually.
If the employer, for the first time, exceeds the threshold on a date between the first working day of April and the first working day of October, then the employer would not be required to submit its first report in that year. An employer, in this regard, would then be required to submit its first report on the first working day of October of the following year.
The content of the first report is required to detail the initial development of, and consultation processes surrounding, the employer’s employment equity plan.
Employers who previously met the threshold, and who have submitted the first report, are still required to submit a report to the Director-General of the Department of Labour (Director-General) annually on the first working day of October. As such, employers who previously employed more than 150 employees, are not affected by the amendments, and the frequency of submissions remains the same. In contrast, employers who employ less than 150 employees now need to submit reports annually, as opposed to once every 2 years, as the EEA previously required.
If an employer anticipates that they will not be able to submit the report in time, the amendment now requires that the employer notify the Director-General in writing of this anticipated failure. Such notification must be submitted before the last working day of August. The written submission, in addition, must clearly set out the reasons why the employer anticipates that they will not be able to comply with the time periods imposed by the EEA.
If an employer fails to follow the EEA in accordance with any of the requirements, the Director-General is empowered to approach the Labour Court for an order to have the employer fined. Failure in this regard is identified as the complete failure to submit a report, failure to notify the Director-General of late submissions, and/or providing false or invalid reasons.
The fines which could be imposed are identified in Schedule 1 of the EEA and are dependent on whether the employer is a first time or repeat offender. A first time offender, as an example, could be fined the greater of either R1,5 million or 2% of the employer’s annual turnover. Repeat offenders, in relation, could face fines equal to the greater of R2,7 million or 10% of the employer’s turnover.
It is advised that employers identify whether they have reached the thresholds identified in the EEA to determine whether they are required to submit annual reports. If they now fall within this threshold and anticipate that they will not be able to submit a report in time, it is advisable that the employers notify the Director-General as a matter of urgency of their anticipated failure to submit timeously.