A number of JSE-listed companies could face punitive measures if found not to be complying with the EE Act. Photo: Timothy Bernard

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.

Read also: JSE-listed companies facing EE crackdown

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.