WHAT TO DO WHEN . . . . You're Not Sure of EEA Legislation

ARTICLE 43

WHAT TO DO WHEN . . . . You’re Not Sure Of EEA Legislation

By Nikki Viljoen of Viljoen Consulting CC October 2009

First of all. Let’s get ourselves clear on what EEA is – it stands for Employment Equity Act. The EEA is a law that was passed by the ANC government after they scrapped all the old laws. The law makes it compulsory for specific employers (who meet the minimum requirements) to implement AA (affirmative action).

When this law was originally promulgated into law, several things happened, the most profound being the ‘knee jerk’ type of reaction that most people had. You see most people, without actually understanding what the law meant decided that it meant that everyone had to comply and small businesses would have the same rules and regulations governing them as the large corporations had governing them. Quite honestly, if you think about it logically that would just be crazy – it would never work.

Here’s the deal:

There are certain requirements that a company has to meet before they are even eligible to find themselves in a position where they are compelled to implement AA. For example turnover of less than R5 000 000 gives one set of rules and regulations, R5 000 001 to R35 000 000 another and anything upwards from R35 000 001 an entirely different set. There are also different ways of becoming compliant. It works on a number of points that you earn for doing various things.

The companies that meet the various requirements are required by law to employ and train people who belonged to, what is now knowen as the “previously disadvantaged groups” during the apartheid years. These groups are (but may not be limited to) black, female and the disabled. The ‘black’ people are considered to include Africans, Coloured, Indians and Chinese.

So for example, if you have a company that meets the R35 000 000 turnover requirements you would be required if you traded out of Johannesburg where the population is say 75% black, to employ 75 black people out of every 100 that you employ. This would include every level within your organisation as well. So if you have 10 directors, at least 8 of them should be black, if you have 200 senior managers at least 150 of them should be black and so on.

This is where the logic comes in – if you are an SMME, with your turnover at less than R5 000 000 per annum, it is highly unlikely that you would have more than say a few members of staff. In all probability you would (as in my case) be the only employee in your company and outsource the rest of your requirements. Since I don’t employ anyone else, it stands to reason that I cannot be ¾ black and the rest white. Therefore SMME’s that trade below the R5 000 000 are exempt. It is still a good idea however, just to get yourself into the habit, to uses suppliers, where possible, who are BEE compliant as this will give you points that will go to your score on the next level. Large corporations, who use SMME’s as their suppliers also score points for this. This is yet another way that Government has committed to supporting and encouraging the SMME and entrepreneurs to start up their own enterprises. Another good thing to do is to get yourself a BEE certificate, even though you are automatically exempt.

This of course does not mean that all the white males have to now be dismissed from their positions in order for the company to replace them with the required number of blacks, women and disabled people. What it does mean though is that as employees resign, as in the natural order of things, blacks, women and disabled people should be considered first when replacing a person for that position. It also does not mean that you have to employ someone who is clearly not capable of doing the job and/or who do not have the necessary skills to do the job – that too would not be a good thing as it would clearly have a negative effect on the company and in the long run the government would also suffer as turnover would drop, SARS collections would drop and the economy of the country would also drop.

Unfortunately whenever a law is introduced that has the potential to have a big impact on what is currently seen as the norm, people react without finding out all the facts and/or even really understanding what the law is all about and the result is usually one that ends up in ‘short cuts’ being taken or even in some cases a flagrant disregard of the law. This could very well end up costing you in fines and/or in a situation where your company loses credibility or worse, where your company loses contracts because you have failed to uphold the law.

Like it or not, the law is here and from what I understand it is here to stay, so instead of enticing all manner of negative aspects into your space, if you are not sure of the requirements of the law or what you have to do, find yourself an registered, accredited BEE consultant and let them guide you in the right direction – you’ll find that the road you travel down will not be nearly as full of rocks and potholes that you thought it would be.

Being responsible and proactive in the running of your business and in the meeting of all the compliance issues is always cheaper in the long run.

Nikki is an Internal Auditor and Business Administration Specialist who can be contacted on 083 702 8849 or nikki@viljoenconsulting.co.za or http://www.viljoenconsulting.co.za