The 2020 Employment Equity (‘EE’) Act Amendment Bill is being introduced to speed up the pace of Employment Equity transformation in the Private Sector. In terms thereof, any Designated Employer (over 50 employees) that in future wants to do business with any organ of State will require a “Certificates of Compliance”.
In order to obtain a Certificate of Compliance, an employer needs to achieve the EE Numerical Goals set by it that comply with its Sector or Sub-Sector’s Sector Targets in respect of the Top Four Occupational Levels, and for People with Disabilities (PWD), or advance ‘reasonable Grounds” justifying non-compliance.
The Department of Employment and Labour (DoE&L) recently proposed sector targets for the four highest Occupational Levels and Persons with Disabilities to the Accommodation and Food Services Activities Sector that effectively are the same targets as those of the B-BBEE Generic Management Control Scorecard.
This means that there are 9 specified percentage targets (for each Black (African, Coloured and Indian) Race and Gender Group, Black Male and Female Group, as well as for Blacks), in each of these Occupational Levels that need to be complied with by an employer when setting EE Goals for its EE Plan, and implementing its EE Plan.
“The Hospitality Sector is totally behind transforming the sector and is in alignment in this regard with the DoE&L”, says Rosemary Anderson, Chairperson of FEDHASA. “However, the Targets that the DoE&L are proposing have fatal flaws when it comes to the practical implementation – both with the setting of EE Goals and the achievement thereof.”
“As honourable as the DoE&L’s objectives are, its proposed targets are not practically or legally implementable. The first flaw is that the Targets do not take into account that the exact target percentages required are not aligned with a business’s number of employees in a level – one can’t break up a person into a fraction, which is what is required to comply with the Targets (quotas) proposed. It will as a result not be possible for Members to set Numerical Goals that comply with the proposed exact African, Coloured and Indian percentage Sector Targets in the Top 3 Levels, as, on average, Sector members have between 0.2 and 5 employees in these Levels.’
What happens if a business employs 10 employees in the Professionally Qualified level, for which the proposed % African, Coloured and Indian Male and Female Targets are 32.0%, 3.9% and 1.1% respectively, and the Black Target 75%? In attempting to comply with these Targets in setting its EE Goals, as it will be obliged to do, its resultant African, Coloured and Indian Male and Female EE Goals will be 3.2, 0.4, and 0.1 respectively (and 7,5 Backs), which is not possible’.
‘Furthermore, even where the numbers are bigger in a level, it is not possible to set (or achieve) EE Goals, as required, in cases where the EE Goals result in an odd number of Blacks, or unequal number of Black Males and Females Groups, or where the % Black Target multiplied by the Head Count does not result in a whole number.
An analysis of our Sector’s EE Data has also shown that the proposed Targets are unachievable for the vast majority of our Members in each of these Occupational Levels.
If lack of movement, or too low a start month profile, can be advanced as reasonable grounds justifying non-compliance, our fear is that our members will focus on finding reasons for non-compliance, as opposed to focusing on accelerating the appointment of Blacks in relation to opportunities that arise.
These are just a few of the impractical aspects of the DoE&L’s proposed Sector Targets that in my view will disincentivise employers in our Sector to embrace Sector Targets as required for them to work ”.
Advocate Jan Munnik, an experienced EE Consultant who conducted the Analysis on behalf of FEDHASA and its members, has proposed an alternative option for the Sector, which is not only transformative but, which will also be practical, simpler and easier to implement and achieve, and will compel employers to focus on the achievement of their EE Goals. His proposals below have
been accepted by Sector members and proposed to the DoE&L in response to its above proposed Targets.
What he and the Sector has proposed is that Sector Targets be expressed and measured, with reference to an agreed upon % of Blacks, African and Females appointments vs opportunities (as a result of growth/shrinkage, attrition, retirements and promotions) anticipated to arise during the EE Plan period, and which do in fact arise during an EE Reporting period, respectively.
‘As there is a direct correlation between the % Blacks to be appointed vs anticipated Opportunities and the % Black Goal when setting EE Goals, and employers are required to multiply their % Black goals by the applicable Economically Active Population percentages of the different race and gender groups (and can select an appropriate % Female Goal) when setting their EE Numerical Goals in any Level, such Sector Targets can readily be complied with when Numerical Goals are set. These % appointment Targets which will need to be agreed upon between the Sector and DoE&L are then the Sector Targets for the Sector.’
‘This will result in achievable EE Goals being set for all members irrespective of the % Blacks, Africans, and Females in their Top 4 levels at the commencement of Sector Targets. As their resultant EE Goals will be achievable (albeit stretched), present resistance to the DoE&L proposed Sector Targets is very likely to dissipate, and they will be left with no choice but to focus on the achievement of their resultant EE Goals. The introduction of the systems and processes necessary to achieve their EE Goals will follow, paving the way for the achievement of the DoE&L’s objective in introducing Sector Targets’.
The % Targets proposed for Blacks for the different levels for example are:
· Top Management: 70%
· Senior Management: 73%
· Professionally Qualified: 80%
· Skilled Technical: 90%
The African Targets are proposed to be determined with reference to its applicable Male and Female EAP percentages.
The % Female Targets proposed are higher than what the DoE&L is proposing, as there are more female than male employees in the industry.
With small proposed adjustments thereto, the EEA2 can be used as primary instrument to determine compliance, and, insofar as it can be determined with reference to the data submitted in an EEA2 Report, whether the reasons advanced for non-compliance (such as lack of opportunity) are factually based.
It has lastly been proposed by the Sector that members be entitled to apply to the DoE&L for the issuing of a Compliance Certificate where a Certificate has not been issued pursuant to the EEA2 submission process, and that questionnaires be used by the DoE&L to establish whether defined justifiable grounds advanced for non-compliance exists.
“The above proposals will address all the above flaws in the DoEL proposed Sector Targets and pave the way for the willing participation of Sector Members in the acceleration of Transformation in the Sector” Adv Munnik concluded.