Employment Equity 'delinquents' face stiff fines

Companies that fail to comply with aspects of the Employment Equity (EE) Act could soon find themselves embroiled in a legal battle. Following the release of the 15th Commission for Employment Equity (CEE) 2014/2015 Annual Report late last month – showing that more than 70% of top management positions are held by whites, 13.6% by blacks, 4.7% by coloureds and 8.4% by Indians – the department of labour (DoL) is set to sue over 1 400 companies for failing to report on their targets. Chief director of labour relations at the DoL, Thembinkosi Mkalipi, was cited in several media reports last week as saying that companies could be fined up to R1.5 million, or 2% of their annual turnover, for failing to report on their targets. Financial publication, Fin24, quoted a senior DoL official as confirming that cases against 77 employers had already been filed at the Labour Court. Reportedly, a further 1 400 cases would soon follow in the Western Cape, Gauteng and KwaZulu Natal. And sources contacted by FTW warned that the court battles would not necessarily stop at reporting alone. “The legislation contains sections that set out how compliance with the act will be sought by authorities. These steps have to be followed and eventually, should a breach remain, compliance can be forced through the courts,” said Michael Maeso, partner in the Employment Law Department at Shepstone & Wylie. He told FTW that taking the matter to court was a last resort for the DoL. “Inspectors appointed by the department would first issue a compliance order compelling the employer to comply with the regulation. It is only if the employer ignores the compliance order that the matter will be called to court,” he said. According to Maeso, employers can avoid litigation and expensive fines by ensuring that they are compliant with all aspects of the EE Act. “If they are unsure what their obligations are, they should consult experts to conduct an audit of their businesses to assess any risk.” Acting chairperson of the CEE, Tabea Magodielo, said that the latest report showed that there appeared to be no real commitment to the kind of transformation required in the country, which could be why government was taking this stand for the first time since the EE Act came into effect in 1998. She conceded that employment equity was a “highly emotive” subject but added that it was unrealistic to expect current inequalities in the South African labour market to be addressed without statutory imperatives. “It is the only way to enforce compliance given that people are not embracing what is necessary,” Magodielo said.