Duties of a designated employer

By Frik Boonzaaier, Human Capital Specialist at The BEE Chamber

According to the Employment Equity Act No. 55 of 1998, as Amended (EEA), if an organisation fits the definition of a ‘Designated Employer’, it is obligated to perform the duties outlined in sections 16 through to 26 of the Act. Failure to do this puts a Designated Employer at risk of having a fine imposed according to Schedule 1 of the EEA. Fines can range between R1,5m and 10% of an organisation’s turnover, depending on the type and number of contraventions. 

Currently, the EEA defines a Designated Employer as an organisation with 50 or more employees; or a business with less than 50 employees but a turnover that exceeds a specified threshold based on the sector it falls within.

The gazetting of the Draft Amendments to the EEA is imminent. Following this, the only criterium for being a Designated Employer will be 50 or more employees as the turnover thresholds will be removed. 

During an inspection, the DoEL will assess whether a Designated Employer complies with the following duties in line with the EEA requirements:

Sections 16, 17 and 18 outline the duty to consult with employees. For this purpose, a Forum must be established with a membership that includes representatives of recognised trade unions and nominated staff representatives from all EE levels. The role of the Forum is to assist in the analysis of a Designated Employer’s current situation (section 19 that follows). It provides a platform for consultation on the Designated Employer’s EE Plan (section 20 that follows), and the EE Report (section 21 that follows). 

• During an inspection, a Designated Employer must provide proof of the consultation which must incorporate the nomination process, how members were nominated and the minutes of meetings occurring at least quarterly.

Section 19 obligates a Designated Employer to:

• Identify any barriers in policies, procedures or practices which may adversely impact Designated Groups, namely African, Coloured and Indian People, as well as women and persons with disabilities, both of which include White People;
• Identify Affirmative Action measures to overcome any barriers identified;
• Ascertain the degree of alignment of its employee profile across each EE level with the most recently published Economically Active Population (EAP) statistics. A Designated Employer must record the results of the analysis on the EEA12 template. (The EEA12 but must be available if requested during an inspection.)

Section 20 stipulates that a Designated Employer must develop an EE Plan to address any barriers and under-representation of specific groups identified during the analysis required in section 19. An EE Plan guides transformation and should follow the format of the EEA13 template as a minimum requirement, as follows:

• The duration of the EE Plan must be between one and five years and include the barrier analysis and Affirmative Action measures. It must indicate the time frames and the positions of the employees responsible for implementing the measures.
• A Designated Employer must set numerical goals and targets to include the aspirational racial, gender and disability profile per EE level for each year and must indicate strategies to achieve these goals and targets.,
• An EE Plan must include the process to monitor achievements against the objectives as outlined in the plan.
• Furthermore, a transparent process is required to resolve disputes arising from the interpretation and implementation of the EE Plan. It must further highlight the senior manager appointed in terms of Section 24 that follows

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As with the EEA12, the EEA13 does not accompany the annual submission to the DoEL, but must be available upon request.

Section 21 requires a Designated Employer to report its EE progress to the DoEL annually. The deadline is 1st October if submitting the report manually; or 15 January the following year for online submissions.

For reporting, a Designated Employer must complete and submit an EEA2 and an EEA4 form. The information necessary is as follows:

• A snapshot of the workforce profile on the last day of the Designated Employer’s chosen EE reporting period, categorised by EE level, race, gender and disability status.
• Workforce movement for the reporting period, including recruitments, promotions and terminations, per EE level, race and gender.
• A breakdown of the Beneficiaries of Skills Development interventions.
• A summary of identified barriers, including an estimate of the dates when Affirmative Action measures are earmarked for implementation. The EE Plan must include the persons responsible for implementing such Affirmative Action measures.
• An Income Differential Statement – EEA4. The aim is to identify unfair discrimination in employment terms and conditions.

Sections 22 through to 26 stipulate that a Designated Employer must:

• Publish a summary of its EE Report – in the EEA10 format – in its Annual Financial Report as section 22 indicates.
• Develop a successive EE Plan before the current plan expires, as per section 23.
• Officially assign and provide a formal mandate to at least one Senior EE Manager overseeing the implementation of the EE Plan as per section 24.
• Inform employees about the provisions in the EEA, as well as the content of the EE Plan and EE Report. Such communication must include any legislative actions against the Designated Employer concerning the provisions of the EEA as per section 25.
• Keep accurate records of all EE related documents and data as per section 26.

There are various fines ranging from R1.5m to R2.7m for different contraventions of the above sections and it is important to note that fines imposed are per contravention. 

The following 12 steps guide Designated Employers in remaining compliant.

1. Appoint an EE Manager; 
2. Establish an EE Forum; 
3. Perform an analysis; 
4. Develop an EE Plan;
5. Consult on the EE Plan with the EE Forum; 
6. Finalise the EE Plan;
7. Prepare the EE Report;
8. Consult on the EE Report with the Forum;
9. Report the progress in implementing the EE Plan to the DoEL;
10. Publish a summary of the EE Report in the Annual Financial Statements. (This only applies to publicly listed Designated Employers);
11. Communicate Employment Equity-related information to employees throughout the process; and
12. Keep accurate records relating to every aspect of the implementation processes.

Following these steps will provide peace of mind that a DoEL inspection will go smoothly, with limited findings and recommendations; thereby lessening the risk of penalties.

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