FRANS RAUTENBACH: Employment Equity Amendment Act, merit still matters

If you have always believed that everyone should play by the same rules and be judged by the same standards, that would have got you labelled a radical 60 years ago, a liberal 30 years ago, and a racist today. — Thomas Sowell.

The Employment Equity Amendment Act (EEA) was finally published this week. And predictably it caused pandemonium. The common perception is that it enables the labour minister to prescribe race quotas for employers. That impression is wrong (“Solidarity to challenge minister’s power to set racial quotas,” April 13).

In my latest book, Help Yourself SA: How ordinary citizens can reform our broken economy, I wrote a chapter on the EEA, based on the proposed legislation as it was. I took the view in the book that we can escape the worst ravages of the EEA by pursuing merit as guideline, without breaking the law. I still believe that is possible.

It is clear that the overall aim and object of the EEA, both old and new, is to provide equitable opportunities to black employees, and to ensure demographic representativeness. As long as an employer demonstrably and in good faith pursues those objects by implementing “affirmative action measures”, and follows the prescribed procedure, it will comply with the Act.

Let’s investigate the idea that the minister can impose quotas. The primary transformation obligation is that set out in section 13, providing that designated employers must implement “affirmative action measures”. Section 15 then describes those measures: “(1) Affirmative action measures are measures designed to ensure that suitably qualified people from designated groups have equal employment opportunities and are equitably represented in all occupational levels in the workforce of a designated employer.”

Affirmative action measures implemented by a designated employer must include measures to eliminate barriers preventing the advancement of black employees, promote diversity, provide reasonable accommodation for blacks, ensure equitable representation and train black employees. Those measures “include preferential treatment and numerical goals, but exclude quotas”. So, quotas are not required. That provision remains the law. This means the employer does not have to create binding rules that certain numbers or percentages of specified categories of employment must be black.

Quotas differ from numerical goals, which are just that: goals for which the parties aim, but are not compulsory. While a quota is an obligation, a goal is an ideal. In ordinary parlance, quotas are binding numbers that impose legal obligations. A fishing quota or a mining quota, for example, is a maximum permissible quantity that may be mined or caught. Also note that in the original act, “quotas” stand in contradistinction to “numerical goals”, suggesting that the two have different meanings — one is an ideal and the other an obligation.

The new section 15A now empowers the minister to prescribe “targets” for industrial sectors. At the outset, the point must be made that the new section does not envisage quotas. The section does not mention “quotas”, only “targets”. Second, the provision is nowhere qualified to the effect that the targets are binding on employers in the sense that the demographics in the workplace must comply with them.

The reason the legislature uses the word “targets” and not “goals” or “numerical goals” in the new section is obvious: “numerical goals” are set by the employer itself, while “targets” are set by the minister. Later on, section 20 (2A) then provides that the numerical goals set out by a designated employer in its employment equity plan “must comply with any sectoral target in terms of section 15A that applies to that employer”. That confirms that targets set limits to the goals employers must set in their plans. There is still no provision that an employer is legally obliged to meet either goals or targets.

So it is clear that the targets set by the minister are primarily procedural in nature, and not substantive. They primarily qualify the duty of the employer to include certain numerical goals in its plan, but not that it is obliged to meet those goals. Of course the enquiry goes further. Section 43 authorises the director-general to “conduct a review to determine whether an employer is complying with this Act” .

What has caused unnecessary alarm in the media is the new provision in section 42(1)a that the director-general, in assessing compliance with the Act, may take into account “whether the employer has complied with a sectoral target as set out in terms of section 15A applicable to that employer”. Self-evidently the director-general may only assess obligations with which employers must comply under the Act.

And as we have already seen, the obligation imposed by section 15A and 20 (2A) is not a substantive one to fill any level or category of employment with employees that meet any target, but only to insert numerical goals in its plan that comply with applicable targets set by the minister. It is a procedural obligation.

There are some provisions that may ostensibly detract from the view that merit may be retained as the guideline to appointment of employees. The director-general in making the authorised assessment may “take into account” the extent to which designated groups are represented at all levels. But also this section must be construed conservatively. It cannot be read as imposing a duty on employers to populate employment levels with representative numbers of black people, for example.

Considering the actual numbers of employees by level is not the same as imposing an obligation to meet any degree of representation. The duties on an employer are set out above. Those necessarily imply a duty to design a plan that is bona fide and rational. But it does not include a duty of equitable representation, meeting targets or anything that has the same effect.

If the legislature had in mind an obligation on employers to populate levels of employment in a way that met either the employer’s goals or the minister’s targets, it would have said so. It did not. But the question remains: what then is the purpose of the provision that the director-general may take into account the degree of representativeness in the workforce?

Although that there is no substantive obligation of demographic representative appointment or promotion, existing levels of representation remain relevant to determining whether the employer’s plan, and the affirmative action measures it contains, are bona fide and rational. In other words, it helps tell us whether they are seriously “designed to” achieve employment equity.

A real-world numerical base is relevant to determining whether a transformation plan is rational. A rational plan has to start somewhere. At the same time, the existing level of representativeness may also demonstrate the degree of progress towards that the goal of employment equity, which may show if it is being implemented in good faith or not.

The notion of “suitable qualifications” may further create the false impression that merit may not be considered in appointments. Section 20 prescribes certain factors that must be considered when deciding whether an employee is “suitably qualified” — for example, the employee’s ability to learn to do the job in question, and that lack of experience may not eliminate them. But the relevance of suitable qualifications is not to impose a duty to appoint. It is relevant to whether an employee should be considered for a job, and numerical goals may only include suitably qualified employees.

Declaring that an employee is suitably qualified is not the same as deciding to appoint or promote them. It may determine whether the employee must be considered for a job (make the shortlist), but there may be more than one suitably qualified employee who applies for a job and makes the shortlist as being suitably qualified, and the employer can appoint only one. Nothing in the act prohibits it doing so on merit.

Finally, detractors of the merit-based interpretation may point out that the act prescribes “reasonable accommodation” of black employees to ensure “equitable representation”. But that argument overlooks that the act does not prescribe what form such accommodation must take. It could be preferential training and representativeness targets, for example.

So, meeting numerical targets is not obligatory. It is in order for an employer to have a plan that contains a numerical goal of, say, 80% black people in all management levels (assuming that meets the minister’s target), and pursue that goal by enrolling black employees in management training courses on a preferential basis. At the same time, it is to say that when decisions are to be taken about appointing or promoting employees that would be done purely on merit.

That said, the most urgent need is basic education. The main reason management levels are first not representative of black employees, and why they often populate only so-called “soft” positions such as human resource management, and why many employment equity appointments fail, is that our education system has let us down. There is simply not enough intellectual capital among the black population to come close to achieving the ideals of the Employment Equity Act. For that reason, basic education should be the first and foremost priority of any employment equity plan.

Employers may, for example, provide scholarships or bursaries to potential employees, or even contribute to the funding of affordable private schools situated in historically black residential areas. In addition, an employer may, in conjunction with others in the industry or alone, set up training programmes targeting black employees or aspirant employees.

One can envisage the possibility of companies attaching their names (and funding) to private schools based on merit, together with Stem, IT and management training colleges run broadly along the same lines. A particularly acute need is for schools that offer streaming of pupils in apprenticeship courses from grade 10, along the lines of similar schools in Europe, in particular Switzerland. These schools may offer classes in the disciplines required by sponsors, such as electrical engineering, IT, banking, hospitality, the automotive industry or retail, combined with say two days of practical apprenticeship work. To this end, a group of employers may perhaps pool their resources.

An example from sports may illustrate the potential success of such a system. In rugby and cricket, the majority of successful black players who end up in, or seriously contend for, the national teams are past pupils from private or former model-C schools who received scholarships enabling their attendance. By being drawn into an environment that respects merit, these talented players flourish. Nothing else has come close to the contribution of schools in empowering black sportspeople. They do the same for professional development.

The benefit of the suggested approach is that it will introduce what is the only sensible form of affirmative action, namely one that addresses the problem of black poverty and inequality at its root, which is a lack of education and employment. Unless we can address those two problems, employment equity remains a pipe dream.

• Rautenbach, an advocate specialising in labour law, is author of “Help Yourself SA: How ordinary citizens can reform our broken economy”.  This is an edited extract from the book, updated to deal with the new Employment Equity Act.