South Africa: Employment Equity Amendment Act Complicates Business Operations

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By Edwin Naidu

Aug. 19—The Employment Equity Amendment Bill, which came into effect Aug. 1, has expanded the grounds on which an employer can be charged with discriminatory treatment of employees by (for example) giving the Commission for Conciliation, Mediation and Arbitration more authority to address sexual harassment and salary inequities, while a new section of the law details prohibitions against the disparate treatment in wages and other terms and conditions of employment of employees doing “the same or similar work or work of equal value.”

Employer affirmative action obligations have also been clarified and tightened by amending the definition of “designated groups” to include only persons who were citizens of South Africa before the democratic era or would have been entitled to citizenship but for the policies of apartheid and their descendants. In addition, foreigners who became citizens after April 1994 may not be taken into account for the purposes of affirmative action targets.

Procedures have been streamlined to promote more effective and efficient enforcement, and the maximum fines that may be imposed for contravention of the act have been increased threefold to reflect the change in the value of the rand since 1998.

According to Masilo Lefika, deputy director of employment equity in the Department of Labour, the amendments give effect to such constitutional guarantees as the right to equality, fair labor practices and protection against unfair discrimination.

“Most importantly,” Lefika said, they introduce “the concept of equal pay for work of equal value.”

Attorney Johan Botes, a director in the employment practice at Cliffe Dekker Hofmeyr, warned that the Department of Labour is likely to be active in assessing employers' compliance with the amended law in the months to come.

U.S. Employers Affected

Several U.S. firms operating in South Africa have through their umbrella body, the American Chamber of Commerce (AMCHAM), complained that the amended legislation will impose significant regulatory burdens on employers, although they have been reluctant to directly criticize the government for fear of retaliation.

Rella Bernardes, a spokesman for U.S. automaker Ford, acknowledged that the company has found that some South African laws have “created regulatory burdens” for employers.

“In those instances,” Bernardes said, “we have actively engaged with government to address these concerns and put forward solutions. That is, after all, our role as a social partner, and we are happy that the government does create the space for us to play that role.”

Ford has made significant improvements in employment equity the past three years, Bernardes said, noting that “at a senior level we are becoming more reflective of the demographics of the regions in which we operate. Our development program to fast-track the development of previously disadvantaged individuals and employees is yielding results and will continue on a greater scale.”

Ford is on track to achieving compliance with the new regulations, Bernardes said, following a strategy developed in close collaboration with the government.

According to Ian Nicholls, vice president of General Motors' South Africa operations—which employ around 1,800 people and handle some of the best known vehicle brands in the country, including Chevrolet, Isuzu and Opel—“we would like to see a greater focus being placed on reducing [regulatory] complexity and promoting the establishment of an environment which will retain and grow business.”

To contact the reporter on this story: Edwin Naidu in Johannesburg at

To contact the editor responsible for this story: Rick Vollmar at