There will be serious implications for companies who would like to do business with government due to the new amendment to the Employment Equity Act.
The Amended Act provides that companies now need to apply for a compliance certificate under the Employment Equity legislation, which, like a BEE certificate, is valid for a one year period. Without this certificate, companies will not be able to do business with the government and organs of state, much like a tax compliance certificate.
So what does this mean? Essentially, it means that companies that don’t comply with the national minimum wage,that have any findings against them by the CCMA or who have not complied with their own annual Employment Equity targets will not be able to carry out any work with government.
Employment Equity legislation has been in play for several decades and while some companies have made considerable inroads on targets, others have set arbitrary targets which they have possibly never had any real intention of reaching. In the absence of penalties for not achieving targets, or quotas – suggestions for which have been met with strong opposition – it seems the government is taking a different approach for a change. The signal they are sending is that they will no longer continue to do business with companies that mistreat employees and that are not committed to actually achieving transformation targets.