SARS Updates
November 7, 2013
Allowances and fringe benefits: Part II
November 7, 2013

Employment Equity

ASL_November nuus3The Employment Equity Act 55 of 1998 (EEA), as amended, is the primary statute that regulates equality and discrimination in employment. It was introduced following South Africa’s readmission to the International Labour Organisation (ILO) after the 1994 election. The ILO oversees international labour standards and to become a member a state must subscribe to their rules and regulations.

The Act gives effect to sections 8 and 9 of the Constitution, which on the one hand require every person to be treated equally and fairly in comparison to others, and on the other hand require those who have been disadvantaged in the past to be treated differently to the extent of their past disadvantage or current inequality. The following extract from a speech made by Nelson Mandela in October 1991 is significant in this regard:

The primary aim of affirmative action must be to redress the imbalances created by apartheid. We are not asking for hand-outs for anyone, nor are we saying that just as a white skin was a passport to privilege in the past, so a black skin would be the basis of privilege in the future. Nor … is it our aim to do away with qualifications. What we are against is not the upholding of standards as such, but the sustaining of barriers to the attainment of standards; the special measures that we envisage to overcome the legacy of past discrimination are not intended to ensure the advancement of unqualified persons, but to see to it that those who have been denied access to qualifications in the past can become qualified now, and that those who have been qualified all along but overlooked because of past discrimination, are at last given their due. The first point to be made is that affirmative action must be rooted in principles of justice and equality.

The Act has four focus areas:

  • Non-discrimination
    The aim of this focus is to eliminate past discrimination and prevent future discrimination. This focus is a right and is enshrined in our Constitution
  • Affirmative Action
    Affirmative Action is defined as the preferential treatment of those disadvantaged by past discrimination. Affirmative action measures are not a right, but an obligation enforced by bureaucratic means
  • Equal Opportunity
    This is directed especially to those employees with special needs and / or disabilities.
  • Promoting Diversity
    The aim is to promote diversity within the workforce and ensure that employees become sensitive to cultural differences

To whom does the Act apply?

The legislature requires that “designated employers” are those bound by this Act. Designated employers have been defined as those employers that employ 50 or more employees and have an annual turnover equal to or above the annual turnover for small businesses of their class (Schedule 4 of the EEA); also an employer who has been declared a designated employer in terms of a collective agreement.

However, all employers must promote equal opportunity in the work place by eliminating unfair discrimination in an employment practice or policy.

What does this mean to you as an employer?

The following measures have to be put in place in order for an employer to comply with the requirements of the law and to pass an EE audit by a labour inspector:

  • An Employment Equity Plan
    – The purpose of the plan is to enable the employer to achieve reasonable progress towards employment equity
    – The Employment Equity Plan is not submitted to any authority but needs to be kept on file and produced to a labour inspector from the Department of Labour during an EE audit
    – Guidelines for the formulation of such a plan can be found on the government’s labour website under the heading Code of Good Conduct for Employment Equity (
  • Annual Employment Equity Report
    – This report consists of two documents, namely the EEA2 and the EEA4
    – Designated employers are required to submit their first report within 12 months of becoming a designated employer
    – Designated employers with fewer than 150 employees are required to submit follow-up reports every two years, and larger ones every year (manually by the 1st of October of every year or electronically by the second week of January) at
  • An Employment Equity Analysis
    – An Employment Equity Analysis can be done by having all employees complete an EEA1 form and then collating all the information and reporting on the findings in the Employment Equity Plan
  • Proof of receipt of submission
    – Letter sent by the Department of Labour confirming submission of report
  • Records of consultation with employees
    – Minutes of meetings will suffice and must be kept with all other Employment Equity related documents in an Employment Equity File

Eight things every employer must do to make sure they comply with the EE Act:

  • Clearly display a copy / poster of the following Acts in the workplace:- Summary of the Employment Equity Act 55 of 1998
    – The Occupational Health & Safety Act 85 of 1993
    – Summary of the Skills Development Act 97 of 1998
    – Summary of the Basic Conditions of Employment Act 75 of 1997 (BCEA)
    – Not displaying summaries of the EE Act and BCEA in the workplace is punishable by law – a labour inspector could order you to stop working immediately.
  • Consult with employees concerning the preparation and implementation of the EE plan
  • Elect an EE Committee
  • Assign a manager who will take responsibility for implementing and monitoring the EE plan
  • Conduct an analysis of your employment practices, procedures and the working environment, to identify employment barriers
  • Conduct an analysis of the occupational categories and level of employees, and their racial and gender representivity
  • Prepare an EE report in the prescribed format
  • Report (either manually of electronically) to the Director-General of Labour on progress made in implementing the EE plan

Please feel free to contact the writer at or 021 840 1600 should you require further information on employment equity reporting.

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