In more detail
On 15 April 2025, the Department of Employment and Labour (the "Department") published and implemented revised Employment Equity Regulations 2025 and the Determination on Sectoral Targets. The regulations and determination were published in terms of the 2022 amendments to the Employment Equity Act, 55 of 1998, which became effective on 1 January 2025 (the "EEA").
Introducing mandated sectoral targets marks a significant shift in South Africa's employment equity landscape. Historically, the EEA has always required designated employers to implement affirmative action measures and work towards ensuring equitable representation of previously disadvantaged designated groups in its workforce.
In order to comply with the regulations, designated employers across the identified sectors must revise their employment equity plans to align with the specified sector numerical targets, which aim to achieve equitable representation of designated groups across all occupational levels, with sectoral targets for the four upper occupational levels determined for each of the 18 economic sectors identified. Designated employers are required to implement the revised five year employment equity plans from 1 September 2025.
Designated employers must use the new forms (EEA 12 and EEA13) published on the Department's website to prepare their revised employment equity plans and to report on their progress of implementing their plan annually. Designated employers who are unable to comply with the sectoral targets must be able to show reasonable grounds for non-compliance as detailed in the regulations. Reasonable grounds include insufficient recruitment/promotion opportunities and insufficient target individuals from designated groups with relevant formal qualifications, prior learning, relevant experience or capacity to acquire the ability to do the job within a reasonable timeframe.
Designated employers who fail to comply with their obligations without justifiable reasons, may be issued a compliance order by the Department. Compliance orders will provide designated employers an opportunity to rectify their non-compliance, or a fine may be imposed. Fines for first offences range between the greater of ZAR 1.5 million or 2% of the employer's annual turnover, up to the greater of ZAR 2.7 million or 10% of the employer’s annual turnover for their fourth offence.
Businesses may be questioning why the Department has taken this stance in the recent amendments to the EEA. In a statement, the Minister described the set of regulations as a "pivotal step toward advancing transformation and inclusivity in the South African labour market."
The Quarterly Labour Force Survey published by Stats SA on 13 May 2025 provides important insights. In Q4 2024, Black Africans faced an unemployment rate of 37% which is higher than the national average of 32.9% and higher than other population groups. Black African woman were reported to have the highest unemployment rate at 39.8%, while White males continued to have the lowest unemployment rate at 8.6%. The unemployment rates in the Q4 2024 survey reflect the same trend established over the past 10 years. These disparities highlight why it is necessary for employers to take affirmative action steps.
If the statistics don't convince businesses that workplace transformation is crucial in South Africa, the potential to increase financial returns and retain top talents provides an additional motivation. McKinsey's 2023 report titled "Diversity matters even more: The case for holistic impact" indicates that companies with diverse leadership teams, in terms of both ethnicity and gender, are more likely to outperform their peers financially. Diversity within a business's leadership also bolsters its reputation and attractiveness as an employer, attracting top talent from various backgrounds.
With the financial and employee benefits highlighted acting as the carrot, the EEA certainly provides the stick. For designated employers, the sectoral targets present both challenges and opportunities. On one hand, the stringent requirements necessitate a thorough review of current employment practices and the implementation of comprehensive measures to meet the sectoral targets. This may involve significant changes in recruitment, promotion, and workforce planning. On the other hand, focussing on workplace transformation will lead to a more diverse and inclusive workforce. This is not only necessary to redress past discriminatory practices but has been shown to enhance business performance.
Committing to sustainable and meaningful implementation of affirmative action measures will assist businesses to comply with the EEA, attract top talent and potentially increase profitability. Investing time and resources in preparing an effective employment equity plan in terms of the 2025 regulations and sectoral targets will ensure that businesses transform their workforce.
