Johannesburg - The Department of Labour was
intensifying its efforts to root out JSE listed companies that contravene the
Employment Equity Act, and recent amendments would see businesses facing even
harsher consequences for non-compliance, said Justine Combrink, Partner, and
head of Financial Reporting at Mazars.
Entities were required to
submit a report to the department of labour on their progress in implementing
affirmative action and eliminating unfair discrimination by 15 January
2011.
Entities employing over 150
employees were also required to issue their Employment Equity Plan to the
department on the 1st working day in October annually, biennially for
those with less than 150 employees.
In addition, public entities
were required to include a summary of their plan in their annual financial
reports. And it was recommended that they highlighted their progress in this
summary. The department of labour supplied a table that was required to be
included in this report, summarising the occupational levels of the employees
together with the breakdown of their nationalities and gender.
Also read: 72 JSE firms get scrutinised over equity compliance
At the time that the
requirement to report was issued, SARS had stated its intention to look at all
employment equity reports; where these were not correct or not in compliance
with the rating percentages required by the Act they would impose fines.
Clearly this has not been
correctly applied over the years, with the Department of Labour singling out
the JSE Limited as one of the offenders warned to get their house in
order.
The department included a
statement that they would be reviewing another 72 JSE-listed companies by the
end of December 2017. This review would not only involve a test as to whether
the plans were submitted and reported, but also an interrogation of the plans.
Any companies found not to have reported correctly would be hit with fines amounting
to R1.5m.
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According to the EE Act, if
a company was found guilty of contravening the Employment Equity Act (No. 55 Of
1998), maximum fines imposed would be from R500 000 for a first offender and
up to R900 000 for a multiple offender. This limitation of fines has now been
expanded.
The latest decision taken by
the Department of Labour and announced by their Chief Director for Statutory
and Advocacy Services, Fikiswa Mncanca, was that if a company does not have a
plan it would be subjected to a fine of R1.5m.
Mncanca added that those failing
to report on EE plans would also be subjected to a penalty of R1.5m.
Companies that did report an EE plan, but doesn’t actually have or apply it
would possibly even be taken to criminal courts. Labour Minister, Mildred
Olifant, also warned that the department would proclaim section 53 of the EE
Act to block non-compliant companies from doing business with the state.