New Draft Regulations on the Proposed Numerical Sectoral Targets

On 1 February 2024, a second round of draft regulations on the Proposed Numerical Sectoral Targets ("February 2024 Regulations") were published for public comment in the Government Gazette. The February 2024 Regulations are currently open for comment for 90 days from the date of publication (ending on 2 May 2024).

Under these regulations, the Minister of Employment and Labour ("Minister") can classify different national economic sector targets that will define which companies, that operate in South Africa, will be deemed "designated employers". The classification of a designated employer will be made without considering their annual turn-over using industry-specific thresholds, but rather using numerical sectoral targets which were initially intended to be flexible employment guidelines. Both drafts however seem to indicate otherwise.

The proposed sectoral targets affect a now eighteen (18) economic sectors (as opposed to the previous eleven (11) sectors identified). 

These are:

1.  Accommodation and Food Service Activities;
2.  Administration and Support Activities;
3. Agriculture, Forestry and Fishing;
4. Arts, Entertainment and Recreation;
5. Construction;
6. Education;
7. Electricity, Gas Steam and Air Conditioning supply;
8. Financial and insurance Activities;
9. Human Health and Social Work Activities;
10. Information and Communication;
11. Manufacturing;
12. Mining and Quarrying;
13. Professional, Scientific and Technical Activities;
14. Public Administration and Food Services Activities;
15. Real Estate Activities;
16. Transportation and Storage;
17. Water Supply; and
18. Wholesale and Retails Trade, Repair of Motor Vehicles and
    Motorcycles.

While the intention of the proposed targets could be seen as admirable, as employers falling within the identified sectors will have to reflect these targets as a minimum in their employment equity plans and account for previously disadvantaged persons across various job levels in a different and more transparent manner, there is undoubtedly significant questions that remain as to whether this intention will be achieved. 

The February 2024 Regulations make it clear that the numerical sector targets form the minimum basis for employers but maintain that "no absolute barrier may be placed upon any employment practise affecting any persons from any group as per section 15(4) of the EEA". The Regulations further reconfirm that "no employment termination of any kind may be effected as a consequence of affirmative action." 

A proposed consequence of not complying with the numerical sector targets without justifiable reasons, is that employers may become ineligible for government contracts and/or may be fined between 2% and 10% of their annual turn-over. 

What remains to be seen is whether the February 2024 Regulations will achieve the purpose behind removing those employers with less than 50 employees, but with a high turnover and whether the numerical sector targets will have the desired impact of tangible transformation within the workplace. In the interim, designated employers are encouraged to carefully consider the February 2024 Regulations and make written submissions prior to 2 May 2024.