New BlackEconomicEmpowerment bills forces companies to fire many more whites or face stiff fines - Anthea Jeffery Description The meaning of the BEE and EE Amendment Bills Anthea Jeffery 12 November 2013 CHANGING THE EMPOWERMENT GOALPOSTS: Major changes to employment equity and black economic empowerment (BEE) rules are soon to take effect. Far from providing redress for apartheids wrongs, these will damage the poor majority by imposing penalties and overall compliance costs high enough to drive many small firms out of operation. This will reduce jobs, deter entrepreneurship and investment, and further hobble the economy. Apartheids victims would be far better served by putting economic growth before redistribution, as a different way of dividing up the existing economic pie will never be enough to meet the needs of a growing population. Tracking the changes in the pipeline Changes to employment equity and black economic empowerment (BEE) rules have been coming so thick and fast that many people find it difficult to keep track of them all. Summarised below, thus, are the most important shifts in: -- the Employment Equity Amendment Bill of 2012 (the EE Bill); -- the Broad-Based Black Economic Empowerment Amendment Bill of 2012 (the BEE Bill); and -- the revised generic codes of good practice of October 2013 (the revised codes). Both the EE and BEE Bills have been approved by the National Assembly and are continuing to make their way through the parliamentary process. Once this has been completed, both Bills will need the assent of President Jacob Zuma and will then promulgated in the Government Gazette. The revised codes were published in the Government Gazette on 11th October 2013 and are intended to replace earlier codes which came into operation in 2008. The new codes are not scheduled to come into effect until 10th October 2014, but firms may choose to have their BEE status measured under the new codes with immediate effect. 1 The Employment Equity Amendment Bill of 2012 The EE Bill not only strips away key defences for businesses battling to meet unrealistic racial quotas but also more than triples current fines. In addition, it cuts short the enforcement process so as to make prosecutions easier and faster. Background to the EE Bill The Employment Equity Act of 1998 (the EE Act) requires ‘designated employers (those with 50 employees or more, or with annual turnover above specified thresholds) to ‘achieve employment equity by increasing black representation at management and other levels to the point where this matches the proportion of black people (Indians, coloured people, and Africans) in the countrys economically active population (EAP). Since Africans make up 75% of the EAP, this is the target for African representation at all management levels which employers are expected to meet. However, the African population is both youthful and, for a variety of historical and other reasons, poorly skilled and experienced. Relatively few Africans (4.1%) thus have the tertiary qualifications often appropriate for management posts, while only 25% fall within the 35-64 age cohort from which managers are usually drawn. As a result, the 75% target is virtually impossible to attain. The EE Act partially recognises the difficulties firms face in meeting racial targets in these circumstances by allowing employers who fail to do so to cite the skills deficit in their defence. However, these provisions, which provide at least some level of protection for employers against the unrealistic expectations of the EE Act, are to be removed under the EE Bill approved by the National Assembly in October 2013. Fewer defences Under the current EE Act, the director general of labour or the Labour Court (or anyone else seeking to enforce fulfilment of racial quotas) must take account of the severe skills shortage in the country by noting the size of ‘the pool of suitably qualified people from designated groups from which the employer may reasonably be expected to promote or appoint employees. They must also consider relevant economic factors in the sector, along with the financial circumstances of the employer and ‘the progress made by other designated employers operating under comparable circumstances. The EE Bill repeals these provisions. Instead, it puts the onus on the employer to show what ‘reasonable steps he has taken to appoint, promote, and train black people and implement his employment equity plan. He is also entitled to ‘raise any reasonable ground to justify his failure to comply, but may in practice battle to convince the Department of Labour (DoL) of the salience of the skills shortage. This may be particularly difficult for firms to do when, according to the ‘skills demand list 2012-2013, compiled by the DoL from data supplied by Sector Education and Training Authorities (Setas), the private sector has a shortage of 128 managing directors and chief executives, 1 174 finance managers, 819 human resource managers, six financial services and bank managers, and 58 policy and planning managers. More realistically, according to the DoL, business is also short of 30 320 ‘production and specialised services managers and 21 492 ‘manufacturing, mining, construction, and distribution managers. Though little credence can be attached to data of this kind, the DoL may see it differently......
Posted on: Thu, 14 Nov 2013 20:55:11 +0000
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