As stated in our previous article, the legislative framework governing employment equity in South Africa experienced a significant transformation with the enactment of the Employment Equity Amendment Act 4 of 2022, which officially came into effect on 1 January 2025. 

This pivotal Act introduces several key amendments that are poised to reshape the regulatory landscape for employers operating within the country. The amendments represent a determined effort by the government to accelerate the pace of transformation within the South African labour market and to address the persistent underrepresentation of designated groups in crucial sectors and at higher levels of employment.

They impose some new obligations and considerations that employers must now navigate to ensure compliance and contribute to the broader national objectives of employment equity. We discussed the challenges that these obligations and consideration pose to businesses, and in this article, we examine ways to navigate this shift in the field of employment equity.

Changes introduced by the Amendment Act

One of the most notable changes brought about by the Amendment Act is the significant empowerment of the Minister of Employment and Labour to establish legally binding numerical targets for the representation of designated groups within specific sectors of the economy and across various occupational levels. Following a period of consultation with relevant stakeholders, the final sector targets were officially released on 15 April 2025.

These targets encompass 18 distinct national economic sectors, providing specific benchmarks for the desired demographic composition of workforces within each industry. The overarching aim of these sector-specific targets is to ensure a more equitable representation of suitably qualified individuals from designated groups at all levels of employment, from entry-level positions to top leadership roles through gradual milestones in efforts to eventually achieve the Economically Active Population representation.

Crucially, the Amendment Act now mandates that employers classified as "designated employers" must align their internal employment equity plans with these externally determined sectoral targets. Failure to meet these targets will likely lead to increased scrutiny from the Department of Labour, and employers will be required to provide justifiable reasons for any deviations from the prescribed benchmarks.

The Amendment Act has also refined the definition of a "designated employer." Previously, an employer was classified as designated if they employed 50 or more individuals or if their total annual turnover met or exceeded a specific threshold set for small businesses within their sector. However, the amended Act removes the turnover criterion entirely. Under the revised definition, an employer is now considered a "designated employer" solely based on the number of employees they have – specifically, if they employ 50 or more individuals, regardless of their annual turnover.

The primary intention behind this change is to reduce the regulatory and administrative burden associated with employment equity reporting and planning for smaller businesses which, although potentially having a substantial turnover, might have limited human resource capacity to manage complex compliance requirements. While this reduced scope offers relief to many smaller enterprises, it concentrates the responsibility for actively driving employment equity through affirmative action and adherence to sectoral targets on larger organizations that employ 50 or more individuals.

A significant new provision introduced by the amended EEA is the mandatory requirement for any employer to possess a valid Employment Equity Compliance Certificate to qualify for contracts with the State (including government departments, state-owned entities, and municipalities). The issuance of this certificate is contingent upon the employer meeting several key criteria. These include:

• demonstrating compliance with the applicable sectoral numerical targets,
• having submitted their annual Employment Equity reports to the Department of Employment and Labour, and
• maintaining a clean record with no recent findings of unfair discrimination or violations of the national minimum wage by the Commission for Conciliation, Mediation and Arbitration (CCMA) or the Labour Court.

Failure to obtain this Compliance Certificate can render an employer ineligible to bid for or be awarded government contracts, potentially impacting their business opportunities and revenue streams. This requirement establishes a direct link between an employer's commitment to employment equity and their ability to access business opportunities with the state.

A Clear and Concise Approach to Navigating EE Moving Forward

It is important to note that the newly introduced sector-specific numerical targets are not intended to be met overnight. Rather, they serve as progressive benchmarks that are to be achieved incrementally over a defined five-year period, culminating on 31 August 2030. This extended timeframe allows organisations to adopt a more strategic and sustainable approach to the complex process of workforce transformation.

It should also be noted that the ultimate long-term objective remains the creation of a workforce that accurately reflects the demographic composition of South Africa's economically active population (EAP) across all sectors of the economy and at every level of occupational responsibility. Whereas the new sectoral targets provide a crucial interim framework and specific milestones to work towards, the overarching and enduring vision is that of a truly representative workforce that embodies the diversity of the nation. While the final five-year sectoral targets establish the ultimate benchmarks for success, it is advisable for employers to concentrate on setting realistic and, importantly, measurable annual or interim targets within their own internal employment equity plans.

These carefully considered interim targets should clearly demonstrate a consistent and upward trajectory of progress towards the achievement of the longer-term, five-year goals established at the sectoral level. Adopting this step-by-step approach not only renders the overall objective of meeting the sectoral targets more attainable and less daunting but also empowers employers to regularly monitor their progress and make any necessary strategic adjustments to their implementation strategies as they move forward.

This iterative process facilitates a culture of continuous improvement and adaptation, ensuring that transformation efforts remain effective and on track. By breaking down the ambitious five-year targets into smaller, more manageable annual milestones, employers can cultivate a sense of positive momentum within their organizations and track their advancement towards the broader goals of employment equity in a more tangible and less overwhelming manner. The incremental strategy allows for timely course correction and ensures that transformation initiatives are consistently moving in the desired direction, rather than waiting until the culmination of the five-year period to conduct a comprehensive assessment of progress.

The amended Employment Equity Act recognises that there may be legitimate circumstances that prevent attaining the sectoral targets within a specific reporting period, and makes provision for them. In the final article in our series, we’ll examine how the Act deals with these circumstances.

Written by Kyle Wesemann, Transformations Exec at Labournet