Latest news with #EEPs
IOL News
4 days ago
- Business
- IOL News
Preparing for new employment equity targets in South Africa's financial sector
Explore the recent amendments to South Africa's Employment Equity Act and discover how financial institutions must adapt to new sector-specific targets to ensure compliance and drive transformation. Image: Freepik The transformation imperative in South Africa's financial services sector has reached a critical juncture with the recent amendments to the Employment Equity Act 55 of 1998 (EEA), which came into effect on 15 April 2025. These legislative changes signal a transition from a discretionary compliance model to a more prescriptive and measurable approach. Employers in the financial services sector are now required to actively drive change through clearly defined numerical targets and strategic employment equity planning. This is particularly important given the slow pace of transformation across all sectors, including the financial services sector. The sector faces challenges such as the underrepresentation of historically disadvantaged individuals in executive roles, skill shortages, and complex corporate structures. As a result, the financial services sector is under increased pressure to demonstrate concrete transformation outcomes. Sector-specific targets: What employers in the financial services sector must achieve The key driver behind these heightened obligations is the introduction of section 15A into the EEA. This provision grants the Minister of Employment and Labour the authority to determine sector-specific numerical targets applicable to designated employers. The amendments introduce five-year sectoral targets tailored to, amongst other sectors, the financial and insurance sector. Designated employers operating within this sector are required to incorporate these into their Employment Equity Plans (EEPs). For the financial and insurance sector specifically, the sectoral targets require that 63.1% of top management positions be held by members of designated groups. Of these, 27.8% should be occupied by males from designated groups, and 35.3% by females from those groups. At senior management level, the target increases to 77.0%, with 31.7% allocated to males and 45.3% to females within designated groups. For the professionally qualified and middle management category, the target is set at 86.8%, broken down into 40.7% male and 46.1% female representation among designated groups. For skilled technical positions, 95.6% of these are expected to be held by designated groups, comprising 49.5% male and 46.1% female representation. In addition to these occupational level targets, there is a universal requirement across all levels that at least 3% of positions be filled by persons with disabilities. These targets are not merely aspirational, they are enforceable. Employers are expected to report progress annually, and a failure to meet these thresholds may result in scrutiny, penalties, or loss of access to state contracts. While the legislation allows employers to justify non-compliance with sectoral targets, these justifications will be rigorously assessed. Acceptable grounds may include a lack of suitably qualified candidates from designated groups, limited promotion or recruitment opportunities, the impact of business transfers, mergers, CCMA awards, court orders, or adverse economic conditions. Importantly, these reasons must be thoroughly documented. The onus is on the employer to prove their validity, and unsupported or vague justifications are unlikely to be accepted. Therefore, employers must maintain detailed records and internal analyses to substantiate any departure from their EEP commitments. For effective implementation, organisations must strengthen their internal employment equity structures. This includes training line managers and employment equity forum representatives, particularly those involved in recruitment and promotion decisions. These forums must be empowered to act as transformation champions within the business. Additionally, employers should upgrade administrative processes to support accurate data collection, timely reporting, and robust monitoring. Record-keeping is particularly critical where employers rely on justifications for not meeting targets.
Mail & Guardian
24-04-2025
- Business
- Mail & Guardian
Employers get more responsibilities amid equity amendments
Employers must prepare and implement their Employment Equity Plans and set numerical goals aligned with five-year sectoral targets by 31 August 2025. The department of employment and labour has intensified its efforts to ensure that workplace transformation and employment equity remain at the forefront in South Africa's labour landscape. In light of recent amendments to the Employment Equity Act (EEA) and the sectoral numerical targets which became effective on 15 April, employers are required to implement more robust measures to remain compliant with the new legislative framework. The department has identified 18 national economic sectors and set specific numerical Employment equity planning and reporting Designated employers are obligated to prepare and implement their Employment Equity Plans (EEPs) and set numerical goals aligned with five-year sectoral targets by 31 August 2025. The revised reporting cycle for sector targets will then run from 1 September 2025 to 31 August 2030. Employers who become designated employers after 1 April 2025 must prepare an EEP for the remainder of the period until 31 August 2030. A designated employer must refer to the relevant codes of good practice issued in terms of section 54 of the Act when preparing an EEP. New EEPs must be informed by both qualitative and quantitative analyses, with affirmative action measures designed to achieve the numerical goals and sectoral targets. Recruitment, promotions and workforce planning should be aligned accordingly. Justification of non-compliance The 2025 regulations outline the reasonable grounds an employer can rely on to justify non-compliance with sectoral numerical targets. But the burden of proof rests with the employer. Should non-compliance be challenged, the employer must be able to substantiate its position with clear, documented evidence. The following are recognised as justifiable reasonable grounds for non-compliance: Insufficient recruitment opportunities; Insufficient promotion opportunities; Insufficient target individuals from designated groups with the relevant formal qualifications, prior learning, relevant experience or capacity to acquire, within a reasonable time, the ability to do the job; Effect of a Commission for Conciliation, Mediation and Arbitration (CCMA) award or court order; Effect of a transfer of business; Effect of a mergers or acquisitions; and Effect of economic circumstances affecting the business. It is unlikely that grounds for non-compliance will be accepted at face value. Companies should expect an interrogation on whether the grounds are reasonable to justify non-compliance. Unjustified non-compliance might result in disqualification from state contracts, financial penalties and potential reputational harm. Employers are therefore encouraged to maintain comprehensive records and strengthen administrative processes to support any defence of non-compliance. Compliance certificate: State contracts Amendments to section 53 of the EEA introduce enhanced compliance obligations for employers doing business with the state. Designated employers must obtain a certificate of compliance from the minister of employment and labour to qualify for state contracts. The minister can issue such a certificate only if satisfied that the employer has: Complied with applicable sectoral targets; Provided a reasonable justification for any target not met; Submitted the required report in terms of section 21; Not had a finding against it by the CCMA or a court in the past 12 months that the employer breached the prohibition on for unfair discrimination under Chapter 2; and Not had a CCMA award issued against it in the past 12 months for failing to pay the minimum wage under the National Minimum Wage Act of 2018. Administrative oversight and record-keeping Given the stricter compliance framework, employers must enhance their administrative processes and maintain detailed records of all documentation, analyses and implementation efforts. This is especially critical where an employer might rely on justifiable grounds for non-compliance. Upskilling forums and line management Effective employment equity implementation relies on well-informed and empowered decision-makers. Employers must prioritise the training and upskilling of line managers and employment equity forum representatives, particularly those involved in recruitment and promotion processes. It is equally important to establish and support representative forums with adequately trained members. These forums play a key role in championing diversity, inclusion and meaningful transformation within the workplace. Expanded definition of disability The definition of 'people with disabilities' has been expanded to include people with long-term or recurring physical, mental, intellectual or sensory impairments that might substantially limit their prospects of entry or advancement in the workplace. In line with this, the proposed employment equity target for persons with disabilities has been increased to 3%. Employers might need to update their EEA1 declaration forms and internal processes to ensure accurate self-identification and representation in their EEPs. Next steps for employers Given the scope and implications of the recent amendments, employers are advised to: Begin reviewing and updating their EEPs; Enhance record-keeping and administrative oversight to prepare for audits and compliance reviews; Proactively upskill line managers and forum representatives; Align workforce planning strategies with sectoral targets; and Ensure systems are in place to meet the compliance certificate requirements. The amendments send a clear message — employment equity is not a tick-box exercise but a fundamental element of doing business in South Africa. Employers must act now to future-proof their compliance and support meaningful workplace transformation. Dhevarsha Ramjettan is a partner, Kanyiso Kezile a trainee attorney and Mufaro Sambaza a candidate attorney at Webber Wentzel.
