Government’s BEE warning to businesses in South Africa

The Department of Employment and Labour has warned businesses to obey the country’s new Employment Equity laws and prepare their plans for 1 September 2025.

The department has just concluded a spate of national Employment Equity workshops this month where it tried to educate employers and employees on the mechanics of the the new laws.

The Employment Equity Amendment Act came into operation on 1 January 2025 and stipulates that all designated employers in the country should have workforces that reflect the racial, gender and disability makeup of the population.

To achieve this, the Act empowers the minister to set specific percentage-based quotas on businesses across 18 different sectors, giving them five years to meet the targets.

These targets set percentage-based targets for how much of a business’ workforce should be made up from ‘designated groups’ across different levels.

Designated groups refer to black people (African, coloured and Indian), women and people with disabilities.

As a practical example, by 2030, designated employers in the accommodation and food service sector should have 56.7% of top management from ‘designated groups’—38.1% of which should be female.

In the same industry, 78.3% of senior management should reflect these groups.

84.7% of professional and middle-management positions and 95.9% of skilled technical employees should also reflect individuals from designated groups.

White men are not included in the percentage calculations and are assumed to represent the balance.

From 1 April 2025, all businesses employing more than 50 people have become ‘designated employers’ under the laws.

Designated employers are now expected to to develop Employment Equity Plans that will outline their five-year strategy to hit the new targets.

The targets in business plans should reflect either the national or regional makeup of the economically active population, the department said.

Businesses who have under 50 employees are exempt. These businesses are also no longer expected to submit their EE Reports in terms of legislation.

“The objective of excluding employers below 50 is intended to allow the growth of small businesses and enable them to focus on job creation instead of administrative burdens,” the department said.

Racial “quotas” challenged

Because of the set numbers and figures in the laws, the targets are widely referred to as quotas by opponents and critics.

This has underpinned legal action brought against the laws by business interest groups, who are challenging the implementation of the Act, including the 1 September deadline.

Business group Sakeliga and national employers’ association NEASA have jointly filed an urgent application for an interdict against implementing the targets and accompanying administrative regulations.

They are also calling for the judicial review of the laws with the aim of having them set aside.

The application challenges the legality and constitutionality of the framework, which they say introduces rigid race and gender quotas.

They also flagged various objections with the way the laws were introduced, including:

• The government failed to identify and gazette the economic sectors, which required public consultations.
• Failure to consult appropriately with stakeholders;
• Unlawful publication of the sectoral targets, which differ greatly from previous versions, with no public consultation.
• The quotas introduced are arbitrary, irrational and lack rational consideration of the pool of skills available in the country;
• No economic impact studies were conducted to determine the effect of the laws.
• The laws are unconstitutional in that they go against the ideals of non-racialism, equality and justice.

The department has denied that the targets constitute quotas, saying that they are too flexible to meet the definition, with various “outs” for businesses to justify not meeting them.

This includes exemptions granted on reasonable grounds like not enough positions being available, not enough skills being available, and economic conditions at large.

The department also stressed that the laws do not allow for workers to be fired or dismissed randomly, so that the targets can be met.

It said that, with the workshops and education sessions now concluded, it is up to designated businesses to ensure they comply with the laws and get ready to submit their plans for 1 September 2025.