Following the signing into law of the Employment Equity Amendment Act, various business and labour organisations have voiced their opinions, including urging caution about its impact on businesses and the cost of doing business.

Business lobby Business Unity South Africa (Busa) welcomed the signing into law of the Bill by President Cyril Ramaphosa, saying this ended a long period of uncertainty on the proposed changes and impact of transformation laws.

The step was in line with the position the organisation adopted throughout the Bill process from the National Economic Development and Labour Council to Parliament, it noted.

Busa is further pleased that employment equity targets for sectors will be set by the Minister of Employment and Labour only after consultation with the relevant business and employer bodies in the affected sectors.

“In our view, meaningful consultation on sector targets affirms social dialogue and will ensure the relevance of the set targets,” said Busa CEO Cas Coovadia.

However, Busa is aware that some aspects of the law remain problematic, which the organisation had raised in Parliament during the public hearings process in 2021 and 2022.

For example, it said, measuring compliance and issuing compliance certificates as a licence to do business with the State would depend on whether a company had met its targets and did not have a case of unfair discrimination raised against it at the Commission for Conciliation, Mediation and Arbitration (CCMA) or Labour Court in the previous 12 months.

“What concerns us is treating targets as quotas, which would be against the spirit and letter of the law anyway. Companies should not be subjected to double punishment by the CCMA or Labour Court and the Department of Employment and Labour (DEL) for the same issue, which could lead to unnecessary litigation and derail our objective of transformed workplaces,” he said.

Further, Busa also expressed concerns around the fragmentation of policy objectives and enforcement mechanisms within government, with some companies, because of their sectors, expected to comply with different transformation targets administered by different government departments or entities.

“These complex arrangements increase the compliance burden, which, in turn, may derail transformation, especially at a time when South Africa desperately needs economic growth to generate much-needed employment,” Coovadia cautioned.

Busa would continue constructive engagements with the DEL on the implementation arrangements, which would hopefully resolve some of the concerns it raised, he said.

Meanwhile, trade union Solidarity said the amended Act imposed race targets on all sectors, which it believed would have dire consequences for the economy.

“New definitions of 'designated employers' will force small businesses to remain small and will cost thousands of jobs. Also, any promotion opportunities for those fortunate enough to keep their jobs will be completely stopped,” said Solidarity CE Dr Dirk Hermann.

“This will mean that the skills exodus would merely be accelerated, and South Africa’s economy, like its public service, will become increasingly trapped in a spiral of inefficiency, contraction and imminent collapse.”

Solidarity believes this legislation grants draconian race-focused powers to the Minister of Employment and Labour.

“The Minister can now do central racial planning at his or her own discretion. This would be the most drastic race-manipulating legislation in the world. It is anticipated that the private sector would have to follow the State’s example. Private enterprises will become State-run racial enterprises,” Hermann averred.

In its submissions to Parliament, it contended that the amendments were unconstitutional. Solidarity’s legal team has, therefore, already started to prepare for litigation and has indicated that it will serve its court papers soon.

Further, Solidarity is of the opinion that this Act is unconstitutional and that it is, moreover, directly contrary to an earlier finding of the South African Human Rights Commission, which indicated that, even in its current format, South Africa’s racial legislation was unconstitutional and not in accordance with international norms and values, he added.

“Without intervention, this government will continue to pursue its policy of ineffective centralisation, even going so far as to take over the human resource function in organisations,” Hermann concluded.

Additionally, employer organisation the National Employers' Association of South Africa (Neasa) contended that the amendment of the Employment Equity Act was “yet another ill-conceived idea pulling the country into the abyss”.

"Although this amendment is guised under different terminology, the legislation is nothing other than a race-based quota system forced upon employers," Neasa CE Gerhard Papenfus said.

“This legislation is another step in killing the goose that lays the golden eggs,” he averred.

Further, government did not understand that employing the best person for the job, without exception, is critical for a business to succeed, he argued.

“This principle and employment practice dictates that, when employing a person in a position, various critical factors, but not race and gender, have to be considered,” emphasised Papenfus.

The government simply does not comprehend that not following this golden rule in employment is causing the failure of all government departments and State-owned enterprises, he added.

“A major difference between the old and new Acts is that the Minister will now determine targets for all designated employers, which are those employing more than 50 employees, within a specific sector, whereas under the old Act, these targets were within the purview of individual employers, taking into account the economically active population,” he said.

Employers who fail to comply with employment equity targets will eventually face severe penalties and fines, and will not be issued with a compliance certificate, which is required to tender for government contracts.

“Forcing employers to employ a person from a specific ethnic group will probably deter employers from filling vacancies if the applicant from the designated group is deemed not to be the most suitable candidate."

He suggested that government should rather focus on creating an economic framework that will aid the private sector in growing the economy, increasing employment and, consequently, addressing inequality.