Most of the provisions of the Employment Equity Amendment Act (EEA) came into effect on 1 January 2025 and introduced several changes. This article briefly highlights the changes small business owners should anticipate following the enactment of the amendments.

Prior to the amendments, designated employers included employers who employ fewer than 50 employees but with a total annual turnover that is equal to or above the applicable annual turnover of a small business in terms of Schedule 4 of the EEA. This meant that businesses with a relatively small number of staff, but with a turnover that equaled or exceeded the turnover thresholds in the EEA, were regarded as designated employers. Following the amendments, irrespective of annual turnover, small business employers with less than 50 employees will no longer be classified as designated employers. This is an important relief for small businesses that would otherwise, based solely on turnover, have had to comply with the requirements of Chapter 3 of the EEA, which includes compiling and submitting employment equity plans and reports to the Department of Labour.

It should however be noted that employers, including those of small businesses, wishing to conclude or enter into an agreement with an organ of state must comply with section 53 of the EEA. Section 53 of the EEA requires employers conducting business with an organ of state to attach a certificate of compliance or a declaration as, conclusive evidence, that the requirements of Chapter 2 (all employers) or Chapters 2 and 3 of the EEA (only designated employers) have been met. Such a certificate is obtained from the Department of Employment and Labour and is valid for 12 months. Failure to comply with the conditions set out in section 53 is sufficient grounds to reject an offer to conclude an agreement or to cancel the agreement with an organ of state.  

Significantly, the Minister of Labour is now empowered by the new Section 15A, to set sectoral numerical targets for designated employers. These are minimum targets of equitable representation of designated groups at different occupational levels that a designated employer is expected to achieve. According to the Draft Regulations on Proposed Sectoral Numerical Targets the factors that the Minister must consider in setting the targets, include but are not limited to the following:

1. the extent to which suitably qualified people from designated groups are equitably represented; 
2. the dynamics within a sector; 
3. demographics of employees; and, 
4. sector charters published under the BBBEE Act. 

Employers must ensure that their annual targets align with the five-year sectoral numerical targets as failure to comply may invite penalties, ranging from R1.5 million to R2.7 million or 2% to 10% of an employer’s turnover depending on previous contraventions. 

Finally, to ensure compliance with the new changes, labour inspectors will be deployed to ensure adherence by designated employers. A labour inspector will be mandated to issue a compliance order against a defaulting employer of which, non-adherence can result in costly litigation in the Labour Court.


Disclaimer: This article is the personal opinion/view of the author(s) and is not necessarily that of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever and no action should be taken on the basis thereof unless its application and accuracy has been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken on the basis of this content without further written confirmation by the author(s).