Crunching the numbers: The 2024 new draft regulations on the proposed sectoral numerical targets

On February 1, 2024, the Minister of Employment and Labour published new draft regulations in terms of section 55(1) of the Employment Equity Act, 1998 (EEA). These new draft regulations address the proposed 5-year sectoral numerical targets within the 18 sectors identified by the Minister.

The new draft regulations relate to the coming into effect of section 15A of the Employment Equity Amendment Act, 2022 (EEAA) which empowers the Minister to identify sectors within the national economy and, after consultation with the relevant sectors and advice of the Commission for Employment Equity, set numerical targets within those sectors. The objective is to ensure the equitable representation of suitably qualified people from amongst the designated groups at all occupational levels within the workplace. The new draft regulations are open for public comment for 90 days as of February 1, 2024.

The new draft regulations set out revised numerical targets within the following 18 sectors:

• Agriculture, Forestry & Fishing
• Mining and Quarrying
• Manufacturing
• Construction
• Financial and Insurance Activities
• Transportation and Storage
• Information and Communication
• Water Supply, Sewerage, Waste Management and Remediation Activities
• Electricity, Gas Steam and Air Conditioning Supply
• Human Health and Social Work Activities
• Arts, Entertainment and Recreation
• Real Estate Activities
• Professional, Scientific and Technical Activities
• Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles
• Accommodation and Food Service Activities
• Public Administration and Defence; Compulsory Social Security
• Education
• Administrative and Support Activities

The new draft regulations have been published almost 9 months after the Minister published the initial draft sectoral numerical targets on May 12, 2023 (the 2023 draft regulations), in relation to which the public was afforded 30 days within which to comment. The 2023 draft regulations raised various questions in relation to which the new draft regulations provide clarity and guidance including an explanation of the factors taken into consideration in setting the proposed 5-year sectoral numerical targets. These factors include the extent to which suitably qualified people from amongst the designated groups are equitably represented within each occupational level within an employer’s workforce when compared to the demographic profile of the national and provincial economically active population (EAP). Other factors taken into consideration include the latest 2022 employment equity workforces profiles reported by designated employers in their 2022 employment equity reports, the various Sector Codes and Charters under the Broad-based Black Economic Empowerment Act, 2003, and unique sector dynamics (e.g. scarcity of skills and market forces) raised during the consultations conducted within the sectors.

The new draft regulations expressly state that the proposed 5-year sectoral numerical targets are minimum targets and that the targets are not intended to add up to 100% (as, for example, they exclude foreign nationals from the workforce profile).

Guidance is also provided as to factors which designated employers must consider when developing their employment equity plans including their workforce profile, the relevant 5-year sectoral numerical targets and the applicable EAP. When setting annual numerical targets designated employers must set targets for all underrepresented (when compared to their EAP) population groups in each of the 4 top occupational levels. If a designated employer has exceeded the target for a race or gender within an occupational level it must set targets towards achieving the EAP.

While the definition of designated employer has been amended in the EEAA to exclude employers with less than 50 employees, the new draft regulations clarify that an employer with between 1 and 49 employees remains a designated employer if they are an organ of state or if they are bound by a collective agreement which appoints it as a designated employer in terms of the EEA.

The new draft regulations and the 2023 draft regulations differ in several important respects. One of the most significant differences is that while the 2023 draft regulations set numerical targets for each race (African, Coloured, Indian and White) and for each binary gender (male and female) within the 4 top occupational levels (top management, senior management, professionally qualified and middle management, and skilled) at both national and provincial level, the new draft regulations do not include separate numerical targets for African, Coloured, Indian and White employees. Instead, the new draft regulations include one percentage target for “designated groups” (defined as black people, women and people with disabilities who are citizens of South Africa by birth or descent, or who became citizens of South Africa by naturalisation before April 27, 1994 or after April 26, 1994 and who would have been entitled to acquire citizenship by naturalisation prior to that date but were precluded by apartheid policies) for each binary gender within each of the 4 top occupational levels. A percentage target is also set for employees with disabilities – which is not broken down across the 4 top occupational levels or genders.

Unlike the 2023 draft regulations the new draft regulations only contain a target at national level, and separate provincial targets have been removed. Following the publication of the 2023 draft regulations the position in relation to the national and provincial targets was unclear. While employers were required to use the national target if they operated nationally and provincial targets if they operated provincially, the application of the provincial targets to employers operating in multiple provinces was unclear. The new draft regulations remove the provincial sectoral numeral targets and provide welcome clarity on the application of the provincial EAP. A provincial EAP applies to designated employers who operate within that province. If a designated employer operates in more than one province, the EAP of the province with the majority of employees may be selected. If a designated employer operates in more than one sector, the economic sector with the majority of employees should be selected.

The new draft regulations also provide guidance on the implementation of affirmative action measures, including that the EAP statistics is only one of several factors taken into account in determining compliance.

When assessing compliance, the new draft regulations set out examples of reasonable/justifiable grounds for failing to comply with targets set by a designated employer including insufficient promotion opportunities, transfer of business and insufficient candidates from designated groups with the relevant qualifications. These grounds are significant as they relieve designated employers of the liability to pay costly penalties for non-compliance.

Whilst the new draft regulations are not yet in force and are open to public comment until May 2, 2024, it appears that the Minister and the Department of Employment and Labour may be gearing up for the coming into effect of the EEAA and the sectoral numerical targets.

Designated employers are encouraged to make use of the opportunity to comment on the new draft regulations. If you would like assistance in doing so, please contact our employment team.