In the wake of the recent Department of Labour’s Roadshow on Employment Equity, it is imperative that employers properly comply with the requirements of employment equity and not use a tick box approach to compliance. The Department of Labour has realised that employers have been superficial in their approach and the intensifying Director-General Reviews is aimed at ensuring employers do what they are supposed to and not the bear minimum. Most businesses fear the thought of incurring a turnover-based penalty, guaranteed to be no less than R 1,5 million.
According to the 19th CEE report, much of the drag on employment equity transformation is in the private sector. And that’s where Labour and Employment Minister Thulas Nxesi now wants harsher action to get everyone in line and on board. “There’s been little transformation in the workplace since the passing of the employment equity legislation 20 years ago. This means our country is not moving on transformation,” said the minister. Minister Nxesi further promised that Government will now be forced to resort to harsh measures to ensure transformation in the workplaces.
Despite your best intentions and EE actions, and if you still feel uncomfortable about the EE audit itself, unknown factors and the ultimate outcome of whether you are deemed compliant or not. This article will assist and will explain what will be unfolding throughout the audit, and how you should prepare for an EE audit.
There are three main types of EE-related audits:
1. Procedural Inspection
This entails a summary overview of the employers’ current state of Employment Equity Compliance by examining whether the main aspects of compliance have been adhered to, specifically measuring whether a senior manager has been assigned to drive EE Compliance, whether consultations with staff about the correct contents are being had, whether your EE Plan and strategies are documented, and whether you’ve successfully submitted your EE Reports for the previous period. The intention is to gain a broad overview of whether the employer is complying with the legislation to a satisfactory level, by perusing the presence and quality of EE-documentation required and supplied.
2. Substantive Inspection
This occurs when an aggrieved party approaches or contacts the Department of Labour with a grievance that relates to, could be, or could be construed as, a contravention of the EE Act, unfair discrimination or a lack of transformation in the business. This is treated as an anonymous tip-off, and includes all the trimmings of a Procedural Inspection, along with interviews of your EE Committee and Senior Management, with the intention of identifying whether the allegations are true or false. While addressing the allegations, a procedural audit occurs, with an additional focus on substantive compliance (whether the employer is legitimately implementing EE, and how said implementation could have resolved this grievance without it being escalated to the Department of Labour.
3. Review by the Director General
In terms of section 43 of the Employment Equity Act of 1998 as amended, the Director-General may conduct a review to determine whether an employer is complying with this Act and make recommendations.
This Review determines whether you are applying the EE Act correctly, whether you are compliant, the extent of your compliance, and monitors your implementation of the EE Act. All your EE Documentation, inclusive of reports, minutes of meetings, plans, training sessions and other relevant documents (going as far back as 3 years) are assessed in detail, and the inspector (on behalf of the Director General) indicates whether your organisation is transforming, is not transforming, or will not achieve transformation.
Regardless of which of the above-mentioned audits you find yourself in, and the intention of said audit, employers are requested to provide a list of documents to the relevant inspector, prior to a deadline, in order for the documents to be analysed. After the analysis, findings are discussed with the CEO and senior managers assigned to drive EE within the business, and formal correspondence is issued to the employer.
Documentary requirements are requested formally and requires the EE manager or CEO to complete a checklist in addition to supplying said documentation, called the EEA7 Regulation.
In preparation for said audit, let’s define the documents and their corresponding requirement.
• Proof of assigning an EE Manager- This requests that the employer being audited indicates whether they have assigned any senior managers whom are hold accountable for the implementation of EE at their workplace, and to supply measurable proof of same, such as a detailed assignment letter directing a senior manager to ensure compliance with the EE Act.
• Proof of consultation with a representative forum for consultation on EE, and the corresponding proof thereof. By indicating that the employer has consulted with representatives of all kinds of staff members in its employ, with specific focus on ensuring that all ethnic persuasions and gender-profiles have been given a voice to raise queries and concerns pertaining to diversity and discrimination.
• Proof of conducting an analyses of the employer’s workforce, work-environment, the policies in place, processes, practices and procedures that apply to the business, and whether these have been vetted and updated to ensure that no unfairly discriminatory behaviour could take place in the organisation’s core and support functions.
• Proof of a formal, detailed EE Plan being present and implemented within the workplace, and whether it includes the correct content, strategies to address a lack of diversity and whether the strategies and numerical targets will achieve transformation in the business.
• Proof of an income differential statement being conducted- a breakdown of staff’s annualised salary figures and the discrepancies between people who perform the same, or similar, functions, with justifiable reasons for said differences.
• Proof of EE Annual reports being submitted for the period being audited- the inspector will request information from as far back as three years.
All the above-mentioned information should be prepared in hard and soft copy for the inspector in order to accurately assess the information. Failure to submit this is seen as an affront to the Director General and leads to punitive action being taken.
Any sensible employer would be well advised to prepare for the audit by ensuring that the core compliance items have been implemented, in order to prevent the inspector from applying for a fine. The recommended course of action is thus as follows;
1.Communicate the audit date to relevant stakeholders.
Such as Top Management, HR, EE Committee. Ensure that they are made aware of the requirements, consequences of noncompliance, and timelines linked to the audit.
2. Generate formal assignment/appointment letters.
If you do not have a formally assigned EE Manager and/ or appointed EE Committee members and have these co-signed by the CEO or Accounting Officer (in case of a public company).
EE Nominations and Acceptance: Please ensure all documentation related to the nomination and election of the members of the EE committee is in writing as well as signed EE member acceptance forms.
The EE Manager Assignment letter must indicate the following:
• That he/she is a permanent employee of the company & report directly to the CEO.
• That he/she has executive authority and means to perform their function.
• That he/she has an appropriate budget and access to other resources.
• That key employment equity outcomes have been incorporated into his/her performance contract.
3. Obtain and duplicate all records of consultation with staff pertaining to employment equity consultations as far back as three years.
One aspect that the Department of Labour will scrutinise is the consultations with employees. In order to “pass the test” in this regard it is imperative that the consultations are genuine. The best way to illustrate this to the Department is to ensure the following are in order:
• The Agendas are to set out fully the topics that will be discussed and debated;
• Attendance registers are to set out the constituencies represented;
• Detailed minutes, including resolutions taken and action items must be drafted. The minutes are to reflect the discussions held especially in respect of the analysis the workforce profile and the procedures, practices, policies and work environment;
• Proof of regular meetings – 4 per year is deemed regular.
The more information you’re able to present, the more transparent and accommodating you appear to the Department of Labour. Pay special attention to the signed attendance registers, agendas of EE meetings and minutes thereof that are required. Should you not have agendas, it is recommended that you prepare these after the fact to reflect what was discussed. Although this is not best practice, it does entrench the fact that you covered the discussion points that were supposed to.
Furthermore, training should also be provided to the committee in order for them to execute their responsibilities effectively.
4. Ensure that your EE Analyses are on the corresponding template documentation.
Conducting of an analysis must be done in accordance with the EEA12 form of the Employment Equity Regulations of 2014, as amended. All areas of the EEA12 form template must remain, but the employer may add other areas, including columns and rows, in order to meet the objectives of the Act. Please note that you should delete the department of labour’s logos on the template.
The outcome of an Analysis must be used to inform the content of the Plan. Therefore, the Analysis must be conducted prior to the development of an EE Plan.
The purpose of the analysis is –
a) To determine the extent of under-representation of employees, i.e. both permanent and temporary workers, from the designated groups in the different occupational levels of the employer’s workforce in terms of race, gender and disability.
b) b) To assess all employment policies, procedures and practices, and the working environment in order to:
i. (Identify any barriers that may contribute to the under-representation or under-utilization of employees from the designated groups;
ii. Identify any barriers or factors that may contribute to the lack of Affirmation of diversity in the workplace;
iii. Identify other employment conditions that may adversely affect designated groups; and
iv. Identify practices or factors that positively promote employment equity and diversity in the workplace, including reasonable accommodation.
5. Ensure that your EE Plan are on the corresponding template documentation.
The EE Plan should be generated on the EEA13 Regulation document. Regardless of how diverse, transformative or transparent your organisation is, should the documentation required not be in line with the Department of Labour’s specifications, they will be rejected. It is advised that all documents be quality-checked and updated on the most current template documents on a frequent basis. Please note that you should delete the department of labour’s logos. Regardless of when the documents are updated, do ensure that the dates indicated on the original document match the dates on the updated version exactly, and that all signatures and signatories designated are current (it is also a good idea to keep copies of previous plans in the file).
In developing numerical goals and annual targets, both the national and regional demographics of the economically active population must be taken into account (Section 42 (a)(i).
6. Records:
Show how your EE plan has been communicated to all staff and where employees can freely view or copy your plan.
7. Obtain and present your most recent EE reports.
This specifically refers to three documents- the EEA2 Regulation Document, the EEA4 Regulation Document and the corresponding Letter of Acknowledgement.
The EE Report must be used as a monitoring and evaluation tool to inform future
implementation strategies and the preparation of successive plans. EE Reports must reflect the progress made against the employer’s current EE Plan.
8. Ensure that a copy of your EE Plan is made available to staff.
It is recommended that a copy be placed at reception/notice board and a memo is circulated to all staff.
9. Ensure that a copy of the EE Act is visibly displayed at each of your workplaces.
It is recommended that you place this on notice boards as well as in the kitchen/ cafeteria/ designated lunch area demarcated for staff, which all employers should have.
In line with best practices, corporate governance standards and common sense, consider the following after the above has been actioned;
10. Call an urgent meeting with your EE Consultative Committee.
Informing them of the audit requirements, deadlines, dates and consequences of noncompliance. Ensure that as many of the EE Committee members, as reasonably possible, can attend the onsite audit and follow-up visits as determined by the Department of Labour. This has an enabling effect of reaffirming the purpose, involvement and validity of the EE Committee and indicates transparency. This is also a useful opportunity to ensure that you meet with your EE Committee and have the corresponding paper trail should you not have met with the EE Committee in a while.
11. Create a duplicate file of documentation for the inspector’s perusal and use.
This eliminates back-and-forth activities when comparing documents and reduces requests for further information during the audit process. Please note that you will likely not receive this file back, so ensure to not supply the inspector with your original documents
12. Expect the Department of Labour to issue you with some form of request or recommendation in line with the intentions of transformation,
Regardless of your current state of compliance and/or transformation. An auditor that finds no recommendations to make during an audit yields no value, and it reflects poorly on the Labour Inspector should they find no way of redirecting, reprimanding or re-aligning your company towards accelerated transformation.

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