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November : Employment Equity Amendment Bill

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2 December, 2013

Employment Equity Bill


SA Politics

November 21st, 2013

Labour Race quotas

Zille-bashing obscures essence of new law

Claims in some media outlets that organised business and Business Unity South Africa (BUSA) specifically, is rubbishing Democratic Alliance leader, Helen Zille's, race quota charges against the Employment Equity Amendment Bill, obscures some serious implications of the bill.

BUSA was party to the negotiations that preceded the passing of the bill by both houses of parliament.

It is claimed that "several leading labour lawyers" rejected Zille's view that the bill will enforce "rigid racial quotas" and is "draconian".

However, no official BUSA statement to this effect could be found and this seems to be based solely on a statement made by a single BUSA negotiator, Tanya Cohen and only one labour lawyer is referred to. Glossed over is that many labour lawyers and BUSA still have a number of serious criticisms and concerns relating to amendments in the bill.

On the "racial quotas" Cohen and the lawyers reportedly said the bill has not really changed anything and goes no further than the previous Act.

The contested amendment in this regard has however narrowed down compliance criteria to be considered by Department of Labour officials to national demographic criteria. Previously the Act allowed other criteria also to be considered, including: regional demographic criteria; the pool of suitably qualified people available; and sectoral economic and financial circumstances.

But, according to Cohen and the unnamed lawyers, these criteria are still available when the Labour Court - as opposed to the Department officials - assesses compliance and looks at "the reasonable steps taken by an employer to appoint and promote people from designated groups".

What goes unsaid is that this broader range of criteria are by implication only available at a dramatically increased cost after a lengthy and very costly legal process in an already backlogged and over-burdened Labour Court system.

This will raise the barrier frustratingly high for business. If a business seeks to avoid this costly route, it will be judged by departmental officials on race-based national demographic criteria - Zille's "racial quotas" - to make assessments.

Zille may have gone overboard in her choice of language in the fever of an approaching election, but she and many other South Africans and business do have every reason to be concerned. So do many other.

Cohen is also quoted as saying "... we are hopeful that all the other criteria will be taken into account in regulation and when a court applies its mind."

Hopeful, but not sure. It creates no certainty. In the end it will be a matter of interpretation that could go any direction.

And, when it comes to interpretation, the bill itself is woolly and ambiguous at best. It says an ordinary official in his/her assessment of compliance must strictly consider national demographics; and when a Labour Court decides compliance it "can" go further and "may" also consider the reasonable steps taken by a business towards this end.

But, to what extent will the latter be considered, and who gets to decide the range and nature of these "reasonable steps?" Why subject business to this substantial additional administrative-, legal- and cost burden to achieve what was achievable under the existing law?

The government's aim of speeding up transformation through stepped up compliance and enforcement is unlikely to be met, as companies seeking to avoid the hefty fines and other punitive measures, could find themselves tied up in Labour Courts for many months or years.

What gets lost in the "Zille-bashing," are other serious criticisms and concerns relating to amendments aired by amongst others Cohen.

In addition they reportedly said the amendments are "fuzzy" and that the intentions of the legislators are hard to discern in some of them.

How do you interpret a law when the intentions of the original lawmakers are so obscure?

It makes for even more uncertainty when business and investors are crying out for exactly the opposite.

Meanwhile three other major areas of contention were not resolved by negotiations in the National Economic Development and Labour Council and found their way into the approved bill:

  • The scrapping of the compulsory requirement that the Department of Labour must obtain an undertaking from employers;
  • Removal of employers' right to appeal against compliance orders; and
  • The introduction of fines based on company turnover for breaches of the act. 

All of these aspects may be detrimental to business and investment and will considerably increase the administrative, legal and cost burdens for businesses trying to prove their compliance.

What amounts to a messy attempt at more social-engineering will most likely prove to be counterproductive for all parties concerned, especially those who are supposed to benefit from it. While government says all it wants is for businesses to comply it makes no sense to try and kill the goose that lays the golden eggs in the process.

by Stef Terblanche