Employment equity: Companies warned to comply or pay a hefty price

Johannesburg - The 1 400 companies that face steep fines – in the millions of rands – for not complying with employment equity laws deliberately ignored regulations that seek to address the imbalances of the past, according to Thobile Lamati, labour department director-general. 

Lamati’s comments come after the Commission for Employment Equity released its 2014 report, which showed that whites held 70% of top management positions in the country, despite accounting for 10.3% of the population. 

Next month, the department will ask the labour court to approve fines imposed on errant companies, some of which are listed on the JSE, that have broken the law by not tabling their employment equity reports with the department. 

Lamati said all the companies had been given enough time to report on their employment equity plans to improve transformation, but failed to do so. 

“There are three things we do: we educate employers; we go to employers and analyse their plans, and establish whether companies comply; and we enforce. Enforcement is the last resort. 

“The first two pillars are the most important because we believe that if companies say to us ‘we know we’ve transgressed the law, we are prepared to comply’, then we can give them enough time to do so,” said Lamati. 

This is the first time the department is implementing fines to improve transformation in the workplace. 

“Companies know they have to report to shareholders on a particular date and they know what will happen if they don’t report to shareholders.

They don’t miss those meetings. 

“If they were to attach the same importance to employment equity targets, we would not be imposing fines. 

“They do not comply because they see this [employment equity] as not adding any value to their companies and they have shown us that they are prepared to pay the fines,” said Lamati. 

The department would not name the companies until the matter reaches the court next month. 

But Peggy Droskie, acting CEO of the SA Chamber of Commerce, argued that while some companies had not complied because they were “not prepared” to do so, others may have valid reasons for not doing so. 

“We need to interrogate why companies do not comply. From my experience with our members, there are problems with finding the appropriate staff to fill vacancies because we are faced with a lot of skills shortages. 

“We have not seen the report, but our members are also struggling with their budgets to train staff at lower levels and they have difficulty allocating resources to training with a difficult economic situation that is impacting on their companies,” said Droskie. 

Contrary to the department’s views that there was a lack of willingness by companies to meet equity targets, “equity is uppermost in our members’ minds and that’s what we are picking up from our members”. 

The companies face fines of between R1.5 million and R2.7 million, or between 2% and 20% of their annual turnover, depending on which is higher. 

According to the equity report, “African and coloured females continue to bear the brunt of low-skilled jobs and tend to be confined to the lower occupation levels, especially in the private sector”. 

Women held 20.9% of top management jobs, while men held 79.1%. 

Black people, the majority being males, were most represented at top management in all tiers of government, being 74.3% in national departments, 88.5% in provincial and 87.7% in local government. Black males also held 77.8% of top management jobs in state-owned enterprises. 

Tabea Magodielo, acting chairperson of the Commission for Employment Equity, said the results showed that the private sector was not willing to change. 

“We cannot hope to pick up momentum unless there is passion for transformation. Employers have to come to terms with the fact that such better representation among the designated groups makes business sense,” said Magodielo.

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