• Aligning Employment Equity Goals with the New BBBEE Targets
  • June 21, 2012
  • Law Firm: Norton Rose Canada LLP - Montreal Office
  • All designated employers will be required by the Employment Equity Act (EEA) to submit employment equity reports this year, by no later than 1 October 2012.

    A designated employer is:

    • An employer who employs 50 or more employees; or
    • An employer who employs fewer than 50 employees, but has a total annual turnover above the annual turnover thresholds prescribed in terms of the EEA. The prescribed annual turnover thresholds vary depending on sector or standard industrial classifications, ranging from R2million to R5million.

    The EEA requires all designated employers to prepare and implement employment equity plans. One of the key prescribed components of an employment equity plan is numerical goals. A designated employer must establish and consult about numerical goals that are to apply for the period of its plan. Numerical goals must strive to achieve an equitable representation of suitably qualified people from designated groups within each occupational category and level in the workforce.

    Under the EEA, the benchmark to establish numerical goals is the demographics of the economically active population. Other factors such as the attrition percentages of the workforce and projections of growth or rationalisation of the workforce may be applied to establish realistic and achievable goals. In other words, the demographics benchmark is not cast in stone as the “target” that must be achieved under the provisions of the EEA.

    The measurement criteria of the employment equity element (“the code”) under Broad Based Economic Empowerment (BBBEE) is different. The targets applicable under the code are specified. A minimum percentage applies to qualify for scoring under this component.

    Employment equity numerical goals may be aligned with BBBEE target goals to strategically manage the achievement of BBBEE. This strategy does not affect the employer’s statutory compliance under the provisions of the EEA, if relevant and justifiable factors are applied in establishing employment equity numerical goals. Compliance can be achieved by establishing employment equity numerical goals based on at least the minimum qualifying targets under the code.

    The employment equity element of the generic BBBEE scorecard accounts for 15 points, whilst for qualifying small enterprises, 25 points. Approximately 15% of a company’s score may be achieved by meeting the targets established under the code.

    On 7 February 2012 the Minister of Trade and Industry published notice of the new BBBEE targets effective from 9 February 2012. These were the six to ten year compliance targets established on 9 February 2007. The new compliance targets for black employee representation in the workforce are as follows:

    • Black disabled employees: 3%
    • Black employees in senior management: 60%
    • Black employees in middle management: 75%
    • Black employees in junior management: 80%

    The formula utilised to calculate a qualifying company’s score is applied based on a 50% recognition for black female appointments.

    A minimum of 40% of each of the targets set out above must be achieved for a measured equity to qualify for any points under this element of the scorecard. The minimum targets are:

    • Black disabled employees: 1.2%
    • Black employees in senior management: 24%
    • Black employees in middle management: 30%
    • Black employees in junior management: 32%

    Numerical goals established for the purpose of meeting the objectives of the EEA should be greater than the minimum qualifying targets for each of the criteria to be measured, with 50% of goals established for black females. In this way it is possible to achieve statutory compliance under the provisions of EEA and at the same time, using the same vehicle to achieve the strategic BBBEE objectives of the business.