The Employment Equity Act and employer inspections

The 2023 amendments to the Employment Equity Act 55 of 1998 (EEA) aside, the Department of Employment and Labour (DEL) has in the recent past been active in the inspection of designated employers to monitor both general compliance with the EEA and to ensure that designated employers have prepared and implemented their employment equity plans (EEP).

24 Apr 2023 3 min read Employment Law Alert Article

At a glance

  • The Department of Employment and Labour (DEL) conducts inspections to monitor compliance with the Employment Equity Act (EEA) and the implementation of employment equity plans (EEP) by designated employers. Non-compliance with the EEA can result in fines up to R2.7 million or 10% of annual turnover.
  • Inspections can be general, focusing on overall compliance and documentation, or initiated by complaints of non-compliance. Inspections by the Director-General involve a thorough review of employment equity documentation.
  • Employers should prepare for inspections by ensuring their EEP and reports are up to date and cooperating with labour inspectors. Litigation can be avoided through proper preparation and cooperation, as non-compliance risks are costly.

The purpose of an EEP is for an employer to map how to it intends to make reasonable progress towards achieving employment equity in the workplace. Under the EEA a defaulting employer may face a fine up to R2,7 million or 10% of its annual turnover for non-compliance with the EEA.

The DEL, through its labour inspectors, conducts the compliance inspections. Sometimes it does so without warning. These inspections ordinarily arise as a result of inadequate affirmative action measures or a lack of accurate reporting in respect of adherence to employment equity requirements. It is therefore important to understand the various types of inspections that designated employers can be subjected to, as well as the best ways to prepare for, and respond to them, when faced by a labour inspector.

Types of employment equity inspections

General inspections

These involve a general overview of whether the employer has implemented an EEP and ensuring that all reports relating to employment equity procedures are up to date. These inspections aim to look at whether the main aspects of EE compliance have been adhered to, by looking specifically at the documentation that is required.

Allegation of non-compliance

This occurs as a result of a complaint made to the DEL that an employer is alleged to not have complied with the EEA. This contravention could fall under any of the grounds of unfair discrimination or transformation in adherence with the EEA. These inspections will include the procedure followed in a general inspection as well as interviews with various individuals in order to determine if the allegations are true and whether better compliance with the EEA would have resolved the issues alleged by employees.

Inspections by the Director-General

This involves a full review of all employment equity documentation including, amongst other things, the minutes of meetings by a designated employment equity committee and employment equity policies going back as far as three years in order for the Director-General to make a determination as to whether or not the employer has complied.

General tips to prepare for a compliant employment equity inspection

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Best practice in responding to an employment equity inspection

Employers must respond to any employment equity investigations in a manner that aims to promote the objects of the EEA by co-operating with labour inspectors during their inspections. This requires employer preparation.

A labour inspector has extensive power under the EEA, including the authority to issue a compliance order against a defaulting employer which, if not complied with, will end up in the Labour Court.

In our experience, litigation is avoidable. When confronted with an inspection, an employer must be prepared and co-operative towards the labour inspector. Where litigation is unavoidable because the process has run past the employer, it is sensible to put in place a proper strategy to deal with the litigation as the risks with an adverse order for non-compliance are not cheap.

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