The National Employers’ Association of South Africa (NEASA) and Sakeliga NPC have launched a legal challenge against the Minister of Employment and Labour on the contentious “2025 Targets” for employment equity. These targets are a result of adding section 15A to the Employment Equity Act 55 of 1998 (EEA), allowing the Minister to set sectoral numerical targets. Section 15A came into effect on 1 January 2025, with targets due to be implemented from 1 September 2025.

How does this work?

According to section 15A, the Minister must identify national economic sectors in which these targets will be set. This is a legal injunction to the Minister (non-negotiable). But, the Minister may, after consulting the relevant sectors and with the advice of the Commission, set numerical targets for any national economic sector as identified (not compulsory). The purpose of these powers is to ensure the equitable representation of suitably qualified people from designated groups at all occupational levels.

To make all of this happen, the Minister must publish a  draft of any proposed sectors and targets in the government gazette, allowing interested parties at least 30 days to comment on them.

What is the crux of the challenge?

The plaintiffs argue that the process used to arrive at these equity targets is procedurally flawed and thus procedurally unfair. They argue that section 15A(4) of the Employment Equity Act requires that if the Minister wants to set numerical targets, she needs to publish a draft version in the Government Gazette and give interested parties at least 30 days to comment. According to NEASA and Sakeliga, they were given about eight days to comment on the 2025 targets. They point out that in previous years (2023 and 2024), draft targets were published for comment. But this did not occur with the 2025 targets. It does not end there on the procedural missteps.

As stated earlier, they argue that the Act also requires that the Minister needs to consult with “the relevant sectors” before setting these targets under section 15A(2), which also never happened. The sectors in question had not yet been identified and thus, the consultations could not be done properly.

They allege the Minister did not consult with employees from the relevant sectors, but even when she consulted with employers, such “consultation” was not meaningful. These “consultations” were mostly short, hour-long virtual meetings on platforms like Microsoft Teams, with a limit of 1000 attendees, which meant some people could not even get in or speak. To make matters worse, the proposed targets were often only provided a day or two before, or even during, the meetings.

But wait, there is more. The 2025 targets were alleged to be arbitrary.  The Minister used a fixed, pre-determined percentage increase across the board for different occupational levels (6% for top management, 7% for senior employees, 8% for professionally qualified and middle management, and 9% for skilled technical). This “one size fits all” approach is problematic because it does not consider the unique circumstances of each sector, such as its nature and economic status, growth rate, or even how many suitably qualified people from designated groups are actually available for those roles. They show that simply adjusting these percentages based on the national Economically Active Population (EAP) is not enough, as the EAP does not differentiate between sectors or skill levels. This raises serious questions about whether these targets are actually achievable.

It is also the case that these 2025 targets could have the unintended consequence of disadvantaging women, who are considered a designated group themselves. This could be regarded as unjustifiable discrimination and may be in conflict with the very purpose of the Act.

They argue that these targets should have been preceded by a socio-economic impact assessment.  Without it, the policy is irrational. Ultimately, the applicants argued that the 2025 targets constitute unlawful quotas in violation of  our equality clause in section 9 of the Constitution.

What are the plaintiffs asking for?

NEASA and Sakeliga asked the court to  grant them an urgent interim interdict to stop the implementation of these targets and regulations while the High Court fully reviews their lawfulness and constitutionality.  Apart from the obvious constitutional and social implications of these decisions, what are the implications for your businesses?

Failure to comply with the 2025 Targets could lead to fines of up to R1.5 million or 2% of an employer’s turnover for a first contravention. This means that capital that should be efficiently injected into the economy will end up in state coffers.

Worse yet, under the yet to enter into force, section 53 of the EEA, a failure to comply could lead to the state refusing to contract with that employer and to cancel any existing contract it has with the employer. Since the government is the largest procurer of goods and services in the market, being blocked from trading with it could be fatal to a business. Since procurement is seen as a lever for industrialisation in South Africa, these employment equity targets could lead to an industrial policy that allocates resources only to firms not in violation of the 2025 equity targets. This unnecessarily pits efficiency and equity in procurement. Our Constitution demands that procurement policy must balance the goals of fairness, equity, competitiveness.

These employment equity targets may also impact the use of trade instruments used to protect or grow the domestic industry. For instance, duty increase, reduction and rebate applications require compliance with the labour laws. On the face of it, this could preclude non-compliant applicants from accessing these instruments.

These numerical sectoral targets could also be in violation of our international trade obligations under the WTO, SADC, and  AfCFTA on trade in services. These agreements prohibit limitations on the total number of natural persons that may be employed in a particular service sector.

The ball is now in the court of the Minister.

Want to know more about the legality and economics of employment equity? Say hello at info@xagta.com