Employment Equity Act Implementation: hearings

Meeting report

LABOUR PORTFOLIO COMMITTEE
11 April 2000
EMPLOYMENT EQUITY ACT: HEARINGS

Documents handed out
Progress on Employment Equity Act implementation– Department of Labour
BSA (Business South Africa) presentation on the Employment Equity Act
Submission by the Community Constituency
Submission by Congress of South African Trade Unions (COSATU)
Submission by the Federation of Unions of South Africa (FEDUSA)
BBC (Black Business Council) submission on Employment Equity Act
NAFCOC (National African Federated Chamber of Commerce) on the Employment Equity Act

SUMMARY
The Department of Labour noted that the purpose of the Act was to promote equal opportunity in the workplace. It enunciated a ‘’ten step process’’ to be followed followed by businesses with more than 50 employees and those businesses with less than 50 employees but with a turnover of between R5M –R25M. Further the Act requires that reports be submitted by businesses to the Department of Labour annually or bi-annually, depending on the size of the business. Reporting requirements also apply to organs of state.

Business and labour organisations then submitted their views on the Act and its implementation. Business South Africa expressed reservations about the section 27 dealing with the closing of wage gaps and section 7(2) dealing with the prohibition of HIV testing. While they supported the essence of the Act these two sections had ‘’unintended consequences’’ which would have a damaging effect on the South African economy.

Black Business Council was concerned about the effectiveness of mechanisms for the monitoring and enforcement of the Act. They suggested that specially trained inspectors be appointed in the workplace to monitor compliance with the Act. They also fear that the Commission for Employment Equity ‘’ has no independence and clout’’ and recommended that it be elevated to the status of an independent national commission such as the Human Rights Commission.

NAFCOC emphasised that the responsibility for steering in the direction of non-racism, non-sexism and employment equity lay with government and not with the judiciary or with management.

COSATU called for increased capacity building within the unions particularly at the "shop-floor level". They stated the need for more focus on enforcement mechanisms to deal with recalcitrant employers, and for the establishment of timeframes for the development of norms and benchmarks to close the wage gap. They also proposed that the Employment Conditions Commission develop a Code of Good Practice on HIV/AIDS testing, instead of amending the Act.

FEDUSA criticised the Bill as not going far enough to ensure equality in employment opportunities for those who had been denied jobs in the past. Concern was raised as to how the Act would be implemented in ways that enhance productivity, efficiency, and good employment practices, without undue cost to the employer. While FEDUSA supported reducing income differentials, they felt that it was "not sound" to address this issue within the context of the Act. They argued that these aspects should be addressed through collective bargaining and not through legislation.

The Community Constituency called for the Act to make it obligatory that employers establish consultative forums as outlined in the Code of Good Practice. They did not support any type of testing for HIV/AIDS, arguing that it would be manipulated to ensure that persons who had contracted the virus were not employed. It was believed, however, that persons working in "dangerous occupations" in terms of HIV/AIDS, should be tested.

MINUTES
The Chairperson, Mr S Manie, noted that the Employment Equity Act had been enacted to deal with the disparities and the inequalities of the past. It was designed to prevent further discrimination in the workplace and to assist with economic development in South Africa.

Department of Labour presentation
Ms Lisa Seftel, Director of the Labour Relations Directorate in the Department of Labour, said that the purpose of the Act is to promote equal opportunity in employment through the elimination of unfair discrimination and to redress the disadvantages experienced by particular groups in the past. The Act specifies instances where the discrimination is fair and where it is unfair. Labour disputes may be dealt with either internally, through the Commission for Conciliation, Mediation and Arbitration (if the parties agree) or finally through the Labour Court.

Employers who have more than 50 employees working for them (and businesses with less than 50 employees but with a turnover between R2M – R25M) must take certain steps to achieve employment equity. These steps are described as ‘’the ten steps’’ and are classified into three broad categories: Preparation (Steps 1 – 4); Implementation (Steps 5 – 8) and Monitoring the plan (Steps 9 – 10).

Phase 1 - Preparation
Step 1 – Assigning responsibility
This relates to the duties and the authority which must be given to employment equity managers (EEM) in the workplace. These managers must have the necessary authority, the appropriate budget and access to required resources to accomplish the key employment equity outcomes. These managers should be permanent employees and they should report directly to the CEO of the company.

Step 2 – Communication awareness and training
The employees should be made aware of the content and the application of the Act and the process to be followed in the event of a complaint. They should be sensitised to anti-discrimination issues and be made aware of the need for participation of all the stakeholders.

Managers should be informed of their obligations in terms of the Act. They should be ‘’given tools to manage employment equity effectively’’. This can be done by training them in diversity management and related skills. They should understand that discrimination can also be indirect through inaction (on their part) or victimisation.

Step 3 – Consultation
A consultative forum should be established. A diverse group needs to be consulted. This includes stakeholders such as representative trade unions, senior managers and employee representatives.

Step 4 – Analysis
Firstly there must be an assessment of employment practices that detract from employment equity and an identification of practices which positively promote employment equity and diversity in the workplace. This involves a qualitative and a quantitative analysis.

An example of a qualitative analysis is for example the way social events in the workplace are organised. The employment equity managers must be alert to the fact that discrimination can be subtle and have the effect of excluding perhaps women or black employees.

The quantitative analysis which has to be done involves certain matters which must be reviewed such as employee benefits arrangements, disciplinary practices, working conditions and any other practices or conditions that are tabled by the consultative forum.

Secondly a workplace profile must be done to determine the extent of under-representation of employees from the designated groups in the different occupational categories and levels of the employer’s workforce.
An employer can then compare his workforce profile with those of organisations of a similar size and to those within the same sector.

Phase 2 - Implementation
Step 5 – Affirmative action measures and objectives
These must be taken to address employment policies and practices which have an adverse effect on the employment and the advancement of designated groups. For each specific practice identified an affirmative action measure or measures need to be formulated and developed.

Step 6 – Time frames
Employers should decide on the duration of their plans in light of their particular circumstances. Generally the duration of a plan should be between one and five years. It may take some companies 3 – 4 periods of five years to have a representative workplace.

Step 7 – Resources
There should be adequate resources such as the proper allocation of budgets infrastructure (project office or meeting rooms) and any other resources that may be appropriate in the circumstances.

Step 8 – Communicate the plan
Stakeholders should be informed who is responsible for the implementation of the plan and where information regarding the plan can be obtained.

Phase 3 – Monitoring
Step 9 – Monitoring and evaluating the plan
Employers should keep records of the plan and implement mechanisms to monitor and evaluate the implementation of the plan at regular intervals. Progress reports should be made to the consultative forum and all stakeholders. The plan must be revised and reviewed through the consultation process.

Step 10 – Reporting
Two reports have to be completed. The Employment Equity Report and the Income Differential Statement (this report includes a progress report).
Workplaces with more than 150 employees or more must report annually to the Department of Labour (the first report by 1 June 2000 and thereafter annually on the first working day of October).

Where there are less than 150 employees they must report bi-annually to the Department on 1 December 2000 and thereafter every second year on the first working day of October.

Organs of state are expected to report like all other employers. In addition to this they are required to table a report in Parliament and the President needs to publish a list of all designated employers within the organs of state by 1 June 2000.

Ms Seftel used the Health Department as an example. Each hospital must report separately. This is so because the overall representivity of hospitals in the health department might be acceptable but one particular hospital might have an all white staff. For this reason each hospital must report separately.

Black Business Council (BBC) submission
Mr Loyiso Mbabane highlighted a few of the Council’s concerns and made specific recommendations in this regard. It was suggested that:
- Highly trained inspectors be assigned to deal with Employment Equity compliance, monitoring and enforcement. Their competencies should include a sound knowledge of affirmative action organisational development and an above average competence in the human resources field.
- That a partnership be created with organisations like the BMF (Black Management Forum) and IPM (Institute for People Management) to enforce and monitor compliance with the Act.

Concern was also expressed that the Commission for Employment Equity is a very small commission and it has no independence and no clout.
They recommended that the commission be elevated to the status of an independent national commission such as the Human Rights Commission.

They also believed the Act to be insensitive in that members of ‘’designated groups’’ were equated when they do not have the same history of disadvantage.
For example, black disabled people have suffered more discrimination than white disabled people. They said that the formulation of targets to redress imbalances should have regard to the subcategories which exist within ‘’designated groups’’ and that there should be an order of priority in terms of women of different races and disabled people. They also made specific reference to the uneven discrimination experienced amongst blacks such as between Indians and other blacks and between Coloureds and other blacks. They noted that the Act should not treat these subgroups as if they were all the same.

National African Chamber of Commerce (NAFCOC) presentation
Mr Aubrey Tshalata, NAFCOC’s Director, said that many black businesses were not serious roleplayers in the South African economy. Black entrepreneurs still look toward government for implementation of laws for the advancement of their groups. It is important for them that the state continues its duty to deal with the social imbalances in South Africa.

Economic imperatives must drive affirmative action. To boost the economy, you have to empower the masses economically. He emphasised that the protection of designated groups lies with the state and not with the judiciary. The judiciary must realise that the Constitution is supreme and previously disadvantaged groups must be protected by the government. The intent of the law is to bring about social justice.

Regarding AIDS the question to be asked is who benefits from HIV testing. If the employees do not benefit then there should be no testing for the purposes of the Act. ‘’Discrimination is the enemy that we are dealing with’’ and the intent of the Act is that the employee must be protected. He concluded by saying that the government must steer in the direction of non-racism, non-sexism and employment equity. This responsibility lay with the government not the judiciary and not management.

Business South Africa (BSA) presentation
Dr Frans Barker, Industrial Relations Advisor, said that there have been presentations on the Act to employers in the major centres. Generally little resistance has been experienced as employers accepted the importance of employment equity.

While BSA supported the Act generally there were reservations in respect of S27 (in terms of which the Act requires the employer to reduce disproportionate income differentials by means of collective bargaining, sectoral determinations, applying norma and benchmarks and skills development). They said that discrimination in wages must be addressed but that S6 [Prohibition of unfair discrimination] would enable this. S27 however had certain unintended consequences. These included increased job insecurity (because employers would outsource and subcontract) and South Africa would lose its job creators to foreign competitors.

Regarding small business he said that the definition of small business should be changed so that no regard be had to the turnover of a business with less than 50 employees.

Ms Lettie La Grange, health advisor to BSA, spoke on the issue of HIV/AIDS. She said that the BSA fully endorse the intent of the Act to disallow discrimination on the grounds of HIV. They feel however that section 6(1) provides enough protection. It reads: ‘’No person may unfairly discriminate directly or indirectly against an employee in any employment policy or practice on one or more grounds including race, gender, sex, pregnancy, marital status, family responsibility, ethnic or social origin, colour, sexual orientation, age, disability religion, HIV status ,conscience, belief, political opinion, culture, language and birth.

Section 7(2) creates unintended consequences. It reads: ‘’Testing of an employee to determine that employee’s HIV status is prohibited unless such testing is determined to be justifiable by the Labour Court in terms of section 50(4) of this Act.’’

The problem that arises is that because of s7(2) the employer can never test the employee even if it is for the employee’s benefit. Thus even ‘’beneficent testing’’ is disallowed. This could have various unintended consequences (for example if health workers in the workplace cannot test you then you cannot get treatment which may have been provided free of charge. Also some employees may want voluntary testing so that they can protect their families in the event that they are in fact HIV positive. Because of s7(2) this cannot be done. The BSA believes that these negative consequences of the Act are unintended.

Discussion
Committee members responded with the following questions and comments:
- A member of the DP asked NAFCOC if they were suggesting that government should override the CCMA and other courts. He then commented to the BBC that there would be a cost which came with appointing inspectors and said that he did not think that the emphasis should be on policing. He also commented that small businesses should be defined as those with more than 100 employees and not those with more than 50 employees.

- Mr Rasmeni (ANC) referred to the unintended consequences of Section 27 and 7(2) by the BSA and asked them if they were not simply ‘’putting up stumbling blocks to transformation’’ in the workplace. He continued, "Was it not simply a way of hiding behind another theme to prevent transformation’’.

- Another member asked what could be done to continue to bring about transformation yet avoid the unintended consequences outlined by BSA. He asked the BSA if they were proposing that transformation simply be left and asked them what they thought the consequences of that would be.

- The Department of Labour was congratulated on the Act by a committee member. She then asked the BSA if they were trying to ‘’threaten’’ (scare) the government by saying that the transformation would cause a loss of experience and skills. She asked how they thought the issue of transformation should be addressed.

- Ms Abrahams (ANC) asked what was being done to assist the disabled in the workplace.

Each organisation was given two minutes to respond to these questions:
Black Business Council – In the past employers promoted very few blacks. This was the reality of the situation. The Act now provides employers with certain guidelines. A problem which still exists is that different groups with different histories of discrimination are lumped together. An example is that women are a ‘’designated group’’. The problem is that white women are promoted over black women and black women are more disadvantaged. The Act does not address this problem specifically and it is in the interests of real equity to do so.

There should also be guidelines on HIV. This has not been issued yet.

NAFCOC – On their reference to the role of the state versus the courts, they answered that there are two levels upon which to steer social behaviour. The one is the state which gets its directive from the Constitution and then drafts legislation in accordance with this mandate. The second is the judiciary (including the CCMA and the courts) who have to interpret this legislation. The outcome of court cases suggests that the courts are hesitant to interfere with management. This means that there is a danger that the courts are not as sensitised as they ought to be.

The State has the primary responsibility to drive transformation. ‘’This government must be as active in anti-discrimination as the previous government was with advocating discrimination’’. People look to government to protect them. Apartheid placed many constraints on Black people including the inability to climb the corporate ladder. These inequalities need to be addressed with the same passion that the old government perpetuated inequality. The State has a responsibility to transform the CCMA and the Labour Court.

Business South Africa – They support the notion of employment equity. However they have reservations with regard to certain aspects. These include the total prohibition on HIV/AIDS testing and the wage gap issue.

Regarding the reservations against them such as ‘’protectionism’’ and hiding behind reasons not to transform, they responded that they were not threatening government (by saying that business would be lost). Employers are buying into employment equity; their reservation is only about the wage gap.

Small businesses that are non-exempt are those with less than fifty employees but with a turnover between R2M –R25M. They prefer that the cut-off point remain fifty employees but that the turnover be left out (for the first couple of years). Simply because a business has a high turnover does not necessarily mean that they are making big profits.

The transformation process is implemented far easier in workplaces where there is a history of transformation. An example of this is the mining industry where they have been involved in forums agreements and affirmative action for a long time. Because there has been a long history transformation has been easier. Where there has not been such a long history there have been some problems with transformation.

People in the business sector are becoming more aware of the skills which disabled people have. There is a cost which comes with employing these people (for example making their environment physically accessible) but this is balanced out by the skills which they contribute.

On the issue of HIV – BSA fully endorses the intent of the Act to disallow discrimination on the grounds of HIV. Section 6(1) provides enough protection and it is section 7(2) that creates unintended consequences. Some employees may want voluntary testing for various reasons. Section 7(2) prevents this. This they think is an unintended consequence of the Act.

The Department – In the event of an occupational hazard taking place and there is a risk of HIV then the employer can simply take the employee to the local clinic. This would then happen outside the employment environment and there would be no infringement of the Act. The primary point is that there is a culture of discrimination against people with HIV and AIDS. This was the ‘’key evil’’ which had to be addressed. Regarding COIDA no-one would lose eligibility to COIDA if the disputed provision (s7(2)) continues to stand.

TEA BREAK

COSATU
Neil Coleman of COSATU briefed the committee on their submission. COSATU stated the need for the Department to increase capacity building within the unions, particularly at the "shop-floor level". It was thought imperative to build the capacity of the shop stewards so that they could better understand the Act, and to empower them to negotiate from a position of strength. In addition, it was proposed that assistance should be provided to help employers develop plans on how to implement the Act.

It was learned, as a result of a "snap survey" of five of COSATU’s affiliates, that there was entrenched hostility towards employment equity by some employers and conservative trade unions. Mr Coleman urged the Department of Labour to place more focus on enforcement mechanisms to deal with recalcitrant employers.

COSATU stated that the adequacy of the provisions to deal with the closure of the apartheid wage gap remain to be tested. They argued that the substantive issues of Ministerial regulations in 27(2); sectoral determinations in 27(3)(b) and the norms and benchmarks envisaged in 27(3)(c) had not been adequately clarified. They called for clarity on when the Employment Conditions Commission (ECC) would commence and conclude these matters, since the implementation of the wage equity clause hinges on these norms and benchmarks, and sectoral determinations.

Finally, they proposed that the ECC issue a Code of Good Practice for HIV/AIDS testing, instead of amending the Act. COSATU stated the provision to prohibit HIV/AIDS testing was included in the recommendations of the South African Law Commission (SALC). The purpose of the prohibition was to stop HIV testing conducted at the request of the employer with the purpose of denying employment or employee benefits to a person with HIV. COSATU argued that since section 7(2) of the Act does not prohibit testing on the basis of public health interest or for the worker’s sake, there was no need to amend the Act.

FEDUSA
Ms Gretchen Humphries, FEDUSA Parliamentary Officer, stated that the Act did not go far enough in ensuring equality in employment opportunities for those who had been denied jobs in the past. She argued the Act must place an obligation on employers to introduce affirmative action steps to redress these imbalances.

FEDUSA raised concerns over how the Act would be implemented. It was their position that both employers and employees must be informed about the provisions of the law, and how to apply it. They also called for the Act to be implemented without undue cost to the employer, and in ways that enhance productivity, efficiency, and good employment practices.

With respect to inherent requirements, FEDUSA proposed that a list of types of jobs where gender would be an inherent requirement be made available. They further proposed that each position within a workplace have a work profile which includes key outputs and competencies believed to be inherent requirements of the job. It was put forth that employment equity, if it was core competency based, would ensure improved standards based on best practices in the workplace.

While FEDUSA supported reducing income differentials, they felt that it was "not sound" to address this issue within the context of the Act. They submitted that the employment equity process was not adequate enough to deal with the elimination of the apartheid wage gap, stating that the wage gap went beyond the parameters of the Act. They argued that these aspects should be addressed through collective bargaining and not through legislation.

Community Constituency
Mr Godfrey Jack, Managing Director of Msizi Financial Services and reperesentative of Community Constituency, briefed the committee. Mr Jack called for the Act to make it obligatory that employers establish consultative forums as outlined in the Code of Good Practice. Currently, the Code of Good Practice only suggests that co-planning, co-analysis, and co-monitoring occurs between the employer and the employee at the work-level take place. Mr Jack argued that in light of the Department of Labour’s lack of capacity to unearth any undermining of the Act, the onus must rest on the employer.

Mr Jack dismissed HIV/AIDS testing in the workplace . Rather, the Community Constituency held the opinion that any type of testing for HIV/AIDS would be manipulated to ensure that persons who had contracted the virus were not employed. It was believed, however, that persons working in "dangerous occupations" in terms of HIV/AIDS, should be tested.

Finally, it was put forth that the Employment Equity Act and the Code of Good Practice had to be tightened in terms of eradicating discrimination from the workplace. This was in light of the recent ruling by a legal judge on hiring pregnant women for senior positions who are imminently due to go on maternity leave.

Discussion
The following questions were posed by the committee:
Mr Moonsamy (ANC) asked in regard to FEDUSA’s submission, why they felt a disclosure of salaries would negatively impact on a person’s right to privacy?

He also asked for clarity on COSATU’S claim that the Department lacked the capacity to implement the Act, and what solutions would they propose?

Ms Thabethe (ANC) asked whether the Community Constituency saw this Act as a stumbling block for consultative forums?

The Chair asked what was being done at the federal level of COSATU to assist capacity building, and how was that translated to the provincial levels?

A member asked for COSATU’s view of how best to address the issue of the wage gap, and income differentials?

The Chair asked that each organisation comment on the questions posed, as well as include their closing remarks. The following comments were given:

FEDUSA - Ms Humphries stated that the salary agreement between an employee and an employer was a confidential matter between those two parties, and that it was important that an individual’s right to privacy be protected. No closing comments were given.

Community Constituency - Mr Jack stated that the current perception is that businesses will see the Employment Equity Act as a measure that will not assist them in the creation and maximization of profits. As a result of this view, there would be reluctance on the part of businesses to help implement the Act.

Mr Jack criticised the Department of Labour stating that no attempt had been made to educate members of the business community on how to implement the Act properly. He felt that it was crucial that both employers and employees understand the "spirit and message" of the Act, and that without guidance from the Department, businesses would lack the capacity to implement it.

COSATU – On the issue of the wage gap, Mr Coleman stated he was surprised that more South African businesses were not aware of the problem of income differentials. He believed the Employment Equity Act was the cornerstone by which these inequalities would be addressed, stating that it would force society to see income differentials as the result of decades of discrimination.

He proposed two methods of addressing income differentials. First, to identify what differentials exist. This was already covered by the Employment Equity Act. Secondly, to either freeze or reduce salaries at the top, or establish a performance-based pay structure. He strongly urged the committee to consider both these options.

On the issue of capacity-building, Mr Coleman felt that the inspectorate capacity and monitoring services within the Department needed to be increased if they were to be at all effective, as well as the civil society’s monitoring services. He also called for an investigation into how the process of implementing this Act was progressing, especially with regard to Chapter 3, which deals with affirmative action.

Department of Labour - Ms Seftel dismissed the claims that workshops were required for employers, arguing that both employees and employers had a good understanding of how the Act transformed the workplace.

She agreed with COSATU that the best method of enforcing the Act was not through inspectorates, but felt strongly that there was a role for inspectorates. People had been trained in each of the provinces to fulfil this role, and the Department was currently addressing the issue of having specialised inspectorates to deal with certain areas of employment.

Ms Seftel also said a more conscious effort was needed by the "role players" in both business and industry in implementing this Act. Reference was made to NEDLAC that had stated that the enforcement of the Act was the responsibility of CEOs. She supported the suggestion of the Community Constituency that the community also acts as a monitor.

Finally, Ms Seftel called for trade unions to start taking a more active role in ensuring the process moves forward.

The meeting was adjourned.