Employment Equity Amendment Bill – A route to seeing more women in paid work?

The Employment Equity Amendment Bill (the “EEA Bill”) was recently introduced and currently sits before the National Assembly for consideration when it next convenes after the South African Local Government Elections. The rationale behind the introduction of the EEA Bill was elucidated clearly by Labour Minister Thulas Nxesi in June 2021, when speaking at the launch of the Commission for Employment Equity:

“The CEE report is a wake-up call to government that self-regulation by employers to achieve the objectives of EE legislation has not worked. We now need a more aggressive strategy including a review of legislation. The EE Bill currently in Parliament is a catalyst to expedite transformation in the workplace. We have heard the cries of the vulnerable groups – women and the people living with disability”.(1)

This central question considered in this piece is whether the proposed amendments to the Employment Equity Act (the “EEA“) through the Employment Equity Amendment Bill (the “EEAB“) will work further towards eradicating the hurdles which remain in place for women(2) in the workplace, or if it will simply fall into the category of further legislative reform, that is, another tick-box exercise with little to no societal transformation. In considering the role of legislative reform as a tool for women’s workplace empowerment, other international jurisdictions and their legislative interventions, or lack thereof, are also looked at.

As a starting point, what effect has the EEA had on women’s representation in the workplace?

The EEA was promulgated in 1998 and to fully understand its effect on women in the labour market, one must compare the pre-1998 statistics with the succeeding years. According to a paper titled Employment and Inequality Outcomes in South Africa,(3) the working-age population (persons aged 16 to 64) increased from 23 million people in 1995 to 29 million in 2008. The labour force participation rate increased from 49% to 55%. This resulted in an additional 5 million people entering the South African labour market over this period. As a result, there was an increase in women’s engagement with paid work. The South African labour market saw an increase in the share of employment by women from about 38 percent in 1994 to 44 percent in 2019 – a mere 6 percent increase over a 25 year period in which legislative reform specifically targeted disenfranchised groups, including women.

While legislative transformation may not have achieved the ethically and legally required equity in the workplace, it has contributed to some progression. The SA-TIED (Southern Africa – Towards Inclusive Economic Development) observed that as a company becomes compliant with the EEA, the diversity of sectors (for example, Agriculture, Mining and Quarrying, Manufacturing, Construction, amongst others) from which female workers are hired increases (termed, the “female inflow diversity”).(4) In addition, through compliance with the EEA, it was observed that the company’s average female wage increases. Interestingly, it was observed that in more male-dominant industries, where companies are compliant with the EEA, there is a greater inflow of female diversity and a smaller wage gap than in those companies with higher female representation. Legislative reform has therefore had an impact on representation and an indirect effect on wages. However, it remains inconclusive whether companies are incentivised by an inherent desire for equality, or rather compulsory compliance with the EEA to avoid the incurrence of penalties.

The South African labour market is still socially inequitable, as women are under-represented in better-paying occupations and sectors, often those that are male-dominated, and over-represented in low-paid occupations and sectors (with domestic work accounting for a large portion of this category). Race and gender show strong correlations with occupations within particular economic sectors.

What amendments are proposed by the EEA Bill?

To combat continued inequality, the EEA Bill controversially introduces Section 15A, which empowers the Minister, by notice in the Gazette, to identify national economic sectors(5) for the purposes of the Act (having regard to any relevant code contained in the Standard Industrial Classification of all Economic Activities published by Statistics South Africa). The Minister may, after consulting with the relevant sectors inter alia set numerical targets for any national economic sector, for the purposes of ensuring the equitable representation of suitably qualified people from designated groups at all occupational levels in the workforce. These numerical targets can differ for occupational levels, sub-sectors or regions within a sector, or on the basis of any other relevant factor.(6) In this regard, designated employers will need to comply with the numerical targets set out in their employment equity plans, part of which will require designated employers to comply with sectoral targets set by the Minister.

Failure to comply with these targets will result in a designated employer being liable to pay a fine as set out in Schedule 1 of the EEA, which in the least serious case of no previous contravention is R1 500 000, and in the most serious case of four previous contraventions in respect of the same provision within three years, is R2 700 000.

Does the discretion afforded to the Minster assist women in workplaces?

This provision introduces a discretion on the part of the Minster to set numerical targets to ensure equitable representation in the workplace. The proposed amendment does not set out the parameters within which he must utilise this discretion, or the factors which must be considered, other than consultation with the relevant sectors. As to whether the Minister will take into account geographic location and the availability of skills as per the statistics of the SETAS and the Department of Higher Education and training, remains to be seen. It is arguable that owing to this lack of clearly defined considerations, it is likely that the way the Minister utilises his discretion will be subject to challenge within the court system. Potentially, the more prescriptive the Minster becomes, the closer to legislation that enforces targets, not very dissimilar to a quota system we become. It should be noted that quotas are unconstitutional in South Africa and have been declared unconstitutional in other jurisdictions such as the United States of America.(7)

Another consideration in relation to the Minister’s discretion is whether greater focus will be placed on certain historically disadvantaged groups over others, and whether compliance with numerical targets in respect of race will be prioritised over those in relation to women. This uncertainty further renders it difficult to say whether the EEA Bill is a definite win for female representation in the workplace.

Ideally, the proposed numerical targets will be aimed at increasing the participation of black women in paid work, as the unemployment rate of black African women in South Africa is the highest at 41% per cent, more than 4 percentage points higher than the national average.(8) As recently as 4 October 2021, President Cyril Ramaphosa recognized in his weekly letter to the nation that a number of sectors, such as the automotive, agriculture, mining and energy sectors should commit to enhance the participation of women-owned businesses through the Black Economic Participation Act. Should this not be the case though, based on the lack of women in trade union structures and the patriarchal nature of engagement within these structures,(9) (very few women are seen on the frontlines of the protests and trade unions still have a “male face”, effectively excluding women from collective bargaining structures) it seems unlikely that the “mantle” to fairly represent women in workplaces will be taken up at trade union level.

What concerns arise for women’s representation in relation to the EEA Bill?

Currently, the EEA applies to designated employers, who are defined as a person who employs 50 or more employees, or a person who employs fewer than 50 employees but has a total annual turnover that is equal to or above the applicable annual turnover of a small business (which turnover is sector-specific but ranges from R6 million to R75 million). This means that the scope of the Act extends to smaller companies with higher turnover.

As a form of relief for what some have argued as being onerous regulatory burdens on employers,(10) (especially smaller companies) the Bill proposes to amend the definition of ‘designated employer’ by removing the requirement that businesses who employ fewer than 50 employees but who meet the annual turnover threshold are designated employers, effectively removing them from the category of designated employer. This means that smaller enterprises (irrespective of annual turnover) are exempt from complying with the affirmative action provisions in the EEA. This is arguably a counter-intuitive act that may have an adverse effect on the advancement of women in micro to small to medium enterprises, as a significant number of employees will no longer be subject to the affirmative action measures from which they previously derived benefit.

On the legislation versus societal reform debate: where do comparative jurisdictions fall?

The introduction of strict compliance legislation to increase the representation of women is not a concept novel to South Africa. In Australia, as early as 1986, the Affirmative Action (Equal Opportunity for Women) Act(11) came into effect after which, gender equity was governed by the Equal Opportunity for Women in the Workplace Act, 1999 (the “EOWWA”) and subsequently, the Workplace Gender Equality Act, 2012 (the “WGEA”).

In an inquiry undertaken by the Australian Human Rights Commission (published on 30 October 2009), the Commission observed that notwithstanding the EOWWA, gender equality continued to be a “significant problem in Australia”, as Australia ranked first on women’s education attainment but only fiftieth for women’s workforce participation, women were at that stage only paid 83 % of the pay of men for work of comparable value and women held only 8.3 % of Board Directorships, 2 % of CEO Roles and 10.7 % of Senior Executive Positions. The evidence accordingly suggested that strict compliance legislation was not having the desired effect. This, coupled with concerning statistics regarding sexual harassment experienced by Australian women in workplaces, arguably makes a case for the reduced efficacy of legislation where societal transformation is lacking.

In further support of this, and despite the introduction of the Affirmative Action (Equal Opportunity for Women) Act and later the EOWWA, a significant difference between men and women in the national labour force remained. Australia then introduced the WGEA which replaced the EOWWA. The WGEA imposed on employers several obligations which were designed to promote and improve gender equality (including equal remuneration between women and men) and to support employers to remove barriers to the full and equal participation of women in the workforce.

The requirements for compliance with the WGEA by employers are arguably onerous, in that it requires various employers to lodge reports each year containing information relating to various gender equality indicators (for example, equal remuneration between women and men). These reports are available to the public, subject to exceptions relating to the protection of personal information. In addition, the WGEA provides that if a relevant employer fails to comply with the WGEA, the Workplace Gender Equality Agency (“the Agency”) may name the employer in a report given to the Minister or by electronic or other means (for example, on the Agency’s website or in a newspaper).

An employer who has not complied with its obligations under the Workplace Gender Equality Act may be disqualified from competing for Commonwealth government contracts under the Commonwealth procurement framework. This provision is similar to Section 53 of the EEA, which requires compliance with certain chapters of the EEA before an offer can be made to conclude an agreement with any organ of state for the furnishing of supplies or services to that organ of state.

Whether the WGEA has translated to better representation of women in Australian workplaces and accurate reporting by companies to the Agency is questionable. For example, in October 2017, Westpac Bank of Australia announced that over half of its 6 000 management positions were at that stage filled with women. Westpac’s position at the time was that increasing women in leadership can boost corporate profitability by more than 2% “on the back of improved teamwork, culture and engagement with stakeholders”,(12) suggesting that compliance with gender reform in their company was driven by profitability, as opposed to a moral imperative.

The difficulty with this rationale (often labelled a “business case argument”) for pursuing gender equity in the workplace is “that a politics of change and a feminist social justice agenda is stripped out of equality and replaced with corporate-friendly strategic plans and key performance indicator (KPI) reports”, which may not be equipped to effectively address gender disparity in the labour market – as is the case with the South African model.

This is not to say that a positive impact has not in some way been achieved. In its Public Report submitted to the Agency for the 2019/2020 year, Westpac reported that out of 2704 employees in management positions, 1328 of those employees were female and 1376 were male.(13) Equally, 126 female managers were promoted, over 119 male promotions. 120 non-managing female employees were promoted as compared to 19 male non-managing employees.(14) There is of course a compelling business case to be made that economic transformation is preferred to legislative enforcement and that Westpac has shown the positive results of such an approach especially in a growing business environment. The position however still remains that companies are reluctant, in the absence of a compelling business case, to implement equity policies.

Conversely, in Malaysia, increased participation of women in the economy has seemingly been driven by the introduction of socio-economic policies which created job opportunities across both genders. Employment equity in Malaysia must be considered with reference to a plural society, in a sense similar to South African society. At the time of independence in 1957, native Malays accounted for 52 percent of the population and dominated politics but in turn were considered relatively poorer, being involved mostly in low-cost agricultural activities. The ethnic Chinese accounted for 37 percent of the population and enjoyed greater economic power through access to most modern-sector activities. Accordingly, economic policies were integral to promote development whilst preserving communal harmony and political stability.(15)

Unemployment emerged as a public issue in Malaysia in the early 1960s with the unemployment rate having been estimated as 6 % at that time. This rate fluctuated from 1970 to 1995, where it fell to only 2.8 percent. The impressive drop in this rate was attributed to a rising number of individuals participating in the labour force (as was the case in South Africa, as discussed above). Women accounted for 47 percent of participation in the labour force in the mid-90s, an increase from 47 percent in the early 80s. This increase in female participation coincided with a decline in the incidence of poverty in Malaysian households (measured by the number of total households below the poverty line) from 18.4 percent in 1984 to 9.6 percent in 1995, because, amongst other reasons, female participation in the workforce created dual-income households.(16)

Interestingly, and perhaps the lesson from the Malaysian approach is that enhanced representation can only be achieved once a greater portion of the workforce has access to paid work, which would require an effective economy policy in addressing unemployment and the socio-economic conditions of the poorest populations in South Africa, which are made up in the majority by historically disadvantaged individuals.

Where do women stand now?

While legislative reform has had some form of positive impact on female and women empowerment in workforces across the world, this development remains limited owing to the socio-economic conditions women across the globe are in, be it in South Africa, Australia or Malaysia. Societal perceptions of women in the workplace have not been changed and women are still expected to play more domestic roles, as is evidenced by the rapid loss in jobs by women during the Covid-19 pandemic. Women accordingly continue to face a “slow violence” in workspaces, which carries the weight of trauma and degradation but lacks the political salience needed to afford significant outrage.(17)

In the circumstances, the success of the proposed EEA Bill in the current South African socio-economic climate remains to be seen. Where employers are hesitant to comply with gender reform in the absence of legislation requiring them to do so, influence from other sources towards reform, such as religion or culture, would need to intervene. Given that these other sources of influence are likely to be more stubborn than the support of employers, the EEA and similar transformation legislation has a definite role to play in workplace gender transformation. However, the Bill, in its current form will not promote women’s employment across the board and instead only have bearing on medium to large employers with 50 or more employees. In addition, the workplace implementation focus of the Bill is likely to prioritise diversity categories such as race before the intersection of gender with race. Ultimately, South Africa needs a growing economy and a genuine openness towards women’s inclusion and empowerment to avert strict legislation mandating all employers to transform workplaces.

Prof. Hugo Pienaar

Professor Hugo Pienaar is the Director of Employment Law at Cliffe Dekker Hofmeyr Inc. He has vast experience in employment law, litigation, and dispute resolution, and represents many major corporations in South Africa. Hugo Pienaar has acted as a judge in the Labour Court, and lectures employment law part-time to postgraduates at various tertiary institutions and for the Law Society of South Africa.

Abigail Butcher

Abigail Butcher is an Associate in Dispute Resolution practice at Cliff Dekker Hofmeyr. During her articles and subsequent practice in the field of dispute resolution, Abigail gained experience in the fields of Labour, Employment and Human Rights, as well as general commercial and construction disputes, the regulation of medical devices and medicines, product liability and contractual litigation.

Asma Cachalia

Asma Cachalia is an Associate in Employment Law practice at Cliffe Dekker Hofmeyr. Asma has experience in all employment law related matters ranging from industrial action to retrenchments and restructures. Asma was admitted as an attorney in 2016 where she worked as an Associate in a small firm before joining CDH as an Associate in 2020. Asma was also admitted as a conveyancer in 2019.


Women's Report

The annual Women's Report is aimed at HR practitioners and line managers and aims to share knowledge between higher education and the business world. The report is co-sponsored by the University of Stellenbosch Business School and the University of Johannesburg and supported by the South African Board for People Practices (SABPP).