Huge fines for firms flouting transformation

2012-07-15 18:00

Johannesburg – Business people could pay an enormous price if they do not strictly observe provisions regarding affirmative action.

Businesses could be fined up to 10% of their turnover, which in the case of major companies could run into millions.

Attempts at Nedlac to reach a compromise about proposed radical amendments to the Employment Equity Act came to naught and the next step is to take them through the parliamentary process.

The proposed amendments appear to be so radical that the business sector will have them tested in court if they remain unchanged by the parliamentary process.

Should the proposals be accepted, not only could considerably larger fines be levied but they would also make it much easier for government to impose them.

The 1998 Employment Equity Act prescribes relatively small fines of between R500 000 and a maximum of R900 000.

The new fines being proposed follow the model of competition legislation and are linked to companies' turnover.

They range from 2% of a company's annual turnover to 10% for repeated violations and could cost a large employer millions.

Current penalty provisions, which have been in place for 14 years, have in practice almost never been imposed on transgressors. Since 1998 at most “five or six” fines have been levied, said a person close to the Nedlac negotiations.

With the new proposed changes the department of labour is trying to remove obstacles that have made it difficult to fine transgressors.

It is proposed that the system of review and appeals be dispensed with and that the director general of labour be able to drag offenders straight to the labour court.

This will prevent review mechanisms being employed to hold up the fine-paying process, the department said in a memorandum.

The proposed fines are largely in line with those outlined at the end of 2011 in the black empowerment bill for companies using fronts to claim that they are empowered.

Not only are fines of up to 10% envisioned, but also imprisonment of up to 10 years for people who lie about their company’s empowerment status.

Fines are not the only worrisome proposed amendments.

Sake24 understands the suggestion that demographic representation (and thus affirmative targets) should no longer reflect the profile of the region’s economically active population but that of the country as a whole has also survived the Nedlac process.

This provision harks back to government spokesperson Jimmy Manyi’s infamous remark that the Western Cape has an over-concentration of coloured people, and the implication that people should migrate so that every region in the country should reflect its overall racial divisions.

A provision such as this could have serious consequences, especially for the Western Cape, the province most at out of step with the national demographic pattern.

The Employment Equity Act covers only “designated employers” - those employing more than 50 people.

Fines can be levied firstly if such companies neglect to draw up the required affirmative action plans. A labour inspector could request a copy of this plan at any time.

Employers could also be fined if they fail to submit the required annual report on their progress in terms of affirmative action. Currently businesses with fewer than 150 workers need to submit this report only every two years.

It is proposed that this provision should be scrapped because the department’s online system facilitates the process.

The department’s director general can also review employers’ compliance with the act.

The employer must cooperate and provide any document requested. Should he fail to do so, or disregard the director general’s recommendations after the review, he could also be fined.

 - Sake24

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  • Dawn Campbell Gibson - 2012-07-15 18:37

    Businesses cant win can they? Go with AA and loose business due to bad staff. Dont go with AA and get fined!

      wesley.bischoff - 2012-07-16 08:45

      One day that will happen and someone won't accept it. Hopefully they will then take the government to the Constitutional Court, as AA and BEE is against basic human rights. Getting a job, or being accepted to university (i wasn't accepted because i am white, i was told so) is not about your skin colour, it is about your abilities, knowledge and dedication.

  • PaulGBoyd1 - 2012-07-15 18:47

    Another message from the ruling party, "There is no future for you in SA Mr and Mrs Whitey"! Africa is for Africans unfortunately not the white ones!

      David Rogers - 2012-07-15 19:31

      One is inclined to say; so let them(ANC) carry on stuffing it up as they have done so well for the last 18 years(what say you Madiba?). My other sense says, lets work together and rid us of these ANC cockroaches so we can get this country moving forward. Sadly that will not happen because it is far too expedient to blame a whitey for your ineptitude than admit you dont have a clue!

  • aaron.radebe.1 - 2012-07-15 19:10

    Yes, this will do wonders for government's job creation drive.. not! Why is it that the more they talk about job creation, the harder they make it for companies to grow???

  • ben.spreeth - 2012-07-15 19:23

    That's right A.N.C. Keep on feeding the dragon. Eventually it will turn around and devour you.

      wesley.bischoff - 2012-07-16 08:48

      Let's hope so...

  • andre.vandeventer.16 - 2012-07-15 19:31

    Institutionalized stealing again! How on earth can the government decide who my partner(s)in my business should be?

      David Rogers - 2012-07-15 20:03

      Just imagine how much money THEY will steal from the proceeds of these immoral fines they wish to impose upon businesses? What a a crock of sh*t!

  • Erna - 2012-07-15 19:41

    This government is very good at making rules for other people but NOT good at all in following rules themselves. They are making it more and more difficult for people to run successful businesses, and who will lose in the end - the people!

  • - 2012-07-15 19:50

    Big business will disappear...and alot of small businesses will replace them with less than 50 employees per company. This will also stop growth. And large companies will scale down and divide into smaller companies. For the goverment...its going to become an admin nightmare with more companies to keep track of. I don't think they have thought this through.

      Klaus - 2012-07-15 20:09

      exactly my sentiments, divide and down size to below 50 employees, also easier to manage

      lacrimose.wolf - 2012-07-15 20:38

      Which is prezactly what our co has done. We're a multi-national, registered as a Ltd in ZA but with the paucity of candidates and these AA rules, we've decided to keep the operation under 50. It's a HUGE loss to ZA and the rest of Africa for we have much employment to offer. Meanwhile our other emerging market operations (Brazil, India, China) grow and grow.

      amanda.victor.92 - 2012-07-16 05:08

      Then the clever ones in the ANC will drop the number down again. Eish, you can't outsmart the clever ones!

  • colin.ashby.35 - 2012-07-15 20:48

    the morally bankrupt govt is now financially bankrupting the nation

  • david.goliath.355 - 2012-07-15 20:55

    This country's economy is being driven into the ground by the ANC. I see thousands of Business owners closing down their firms and leaving. I have already shut my Steel works down and let 300 workers go and all due to BEE. I told the workers that the ANC was responsible for their job losses and that they must go and ask Zuma for food for their families.

  • fedix.makwala - 2012-07-15 21:15

    The government must not only talk this time but should also act. The selfishness has been going on for long now. If this is not done it will take a millennium for them to transform this country.

      david.goliath.355 - 2012-07-15 21:42

      Fedix, who will feed the starving millions when the firms close down, I know of many firms that were closed down and the owners have left the country l;eaving thousands of workers without work !!!!!!!!!! Will you feed them !!!!

      david.goliath.355 - 2012-07-15 21:44

      The same thing happened in Zim and now thousands if not millions are starving, Fedix, you must get the rasist chip off your shoulder and put your dumb head down and work to save this ailing country or there will be nothing left soon.

      lacrimose.wolf - 2012-07-15 21:56

      What's selfish about people who have jobs showing up for work and doing the work they're hired to do?

      boltonbarry - 2012-07-16 00:03

      The only way the ANC is transforming this country is in the same way food tranformes in my digestive track

      stephanie.sutherland41 - 2012-07-16 06:13

      I have a solution for smaller companies. Break your company into smaller bussiness according to Departments and keep employment under 50 in respective companies and give a few shares of the company to your family memeber and keep the majority shares. Thus you keep your company/companies, but avoid the goverment issue of forced labour practices and employ the best person for the job, no matter their race. Sounds like a bit of paperwork, but can save you a lot of hassle in the long run. If you expand, create another small company and build it up.... Who knows it might

  • carl.essafrau - 2012-07-15 21:24

    These changes reflect the failure of the A.N.C. led government! Some 18 years after the ANC came into power, instead of being able to do away with discriminatory economic practices which favour one race over another, the ANC needs to make it more unequal. An 18 year old white male, born into a democratic South Africa, will experience discrimination in university, in the work place and one day if he decides to put his capital and effort at risk, in his business. Racism is the result of one race viewing another as being different and less capable – so why is the ANC institutionalising this practice? I hope I am wrong, if we continue along this path, when that 18 year old retires one day and has paid off his house and saved for his retirement, he will be told that he needs to give up that house and his pension to an 18 year old “previously disadvantaged” person. I will never end as it serves the majority to not have it end!

      wesley.bischoff - 2012-07-16 09:03

      Isn't it an insult to black people when the government say, "Hey, here's a job just because you are black, not because you have the qualifications/experience. There is a white/Indian/coloured person more qualified than you, but you get the job 'coz of your colour."??? I had a black girl with me in college, who is from Namibia, and she said that it is very insulting to give someone a job based just on their skin colour. She said it is an insult to their intelligence and integrity. She would want the job because she proved herself and worked hard. She is right, and this is from the perspective of one of our neighbours...

      Penny - 2012-07-16 11:34

      Only place in the world where the Government protects the majority against the minority...

  • john.morreira.9 - 2012-07-15 21:29

    Animal farm !!

  • carl.essafrau - 2012-07-15 21:44

    Business owners (employers)are already forced to overpay for unproductive labour (SACP, unions in bed with government), are overtaxed relative to what they receive in return (nothing), have had to give away shares in their company to people who add little to no value, employ or overpay less qualified staff and put up with state institutions that don't function (CIPRO, Eskom, Transnet, SAPS, Water, Mineral Affairs etc etc.). In 30 years time, after business has been forced to give away 51% shareholding to the state, employ 80% of its staff from one race group and had its land redistributed (mainly to politicians and their families), this country will finally have transformed... into Zimbabwe! This government currently wastes and steals 30% (according to Treasury)of the taxes that it receives - this is what needs to be sorted out! It is not the answer to force business to follow economic pratices that make it less competitive, which force it to close down or downsize! Capital flows to where it is rewarded at the best possible rate at the lowest possible risk - there is already very little new investment in this country as a result of the ANC governments lack of policy clarity and integrity!Would you put your money and effort at risk if you know it may be taken away tomorrow simply because it is popular to do so and may win a corrupt politician an election.

      lacrimose.wolf - 2012-07-15 22:03

      There's no long-term view. A company such as ours which has been in business for 40 years and has a proven model, comes to govt with a plan and it's shot down in flames then when there are embers come back and say "OK but please put on these wonderful red bracelets". Then they turn to the other side of the podium and tell those same unemployed people how they have been saved/abandoned depending on the outcome. For politricksters, it's a win-win situation. For people, especially graduates out of work, it's insanity. But they will never know...

  • Philip Mostert - 2012-07-15 21:55

    Affirmative action = apartheid. it is racist to have to employ somebody based on skin color

  • deabreu - 2012-07-15 22:29

    The anc are turning out to be worse than nazis. Racist organisation from the depts of hell.

      balan.morgen - 2012-07-16 14:24

      Yeah apartheid is still practised, but this time by the anc.

  • SaTyRLoliCoN - 2012-07-16 00:31

    Prepare for war.

  • davin.hansen007 - 2012-07-16 01:03

    How is this not Racism? Should employement not be on merit?

  • jacques.vandermerwe.140 - 2012-07-16 02:52

    South Africa will be a nation of wimps and losers tied into a culture of mediocrity until this race-uber-alles things comes to an end. Personally, I think we are in for a tough couple of centuries.......

  • fedix.makwala - 2012-07-16 06:11

    The biggest problem here is resistance to comply with the laws of the country, despite benefiting from the environment. Apartheid has made some of the people to think that it is perfect to rich at the expense of the other race. Over 300 years black south africans were slaving for the white minority. As much as the ANC government is seen as corrupt, there is so much unethical behavior in these firms. Unfair labour practices including inequality in the workplace. Stop complaining about everything.

      wesley.bischoff - 2012-07-16 09:15

      When the government, down to the municipality level, starts to work properly, and taxpayers money is not stolen, then the complaining will stop.

      john.rattey - 2012-07-16 10:03

      Oh dear, there are many people who hid behind and benefitted from the "laws of the country" during that stupid apartheid regime, with as much conviction that you, felix, seem to have for much the same type of laws in place today. We accept that those "laws" were injust and inhumane. Any "Law" that discriminates between the different cultures, religions, races, etc of the citizens it is meant to serve is wrong - no matter what spin you put on it. The bottom line is, just because it is law, does not mean it is just.

      Marshall Ross - 2012-07-16 13:40

      So it's ok for you all to complain but not for us?

      david.goliath.355 - 2012-07-16 13:41

      The same thing happened in Zim and now thousands if not millions are starving, Fedix, you must get the rasist chip off your shoulder and put your dumb head down and work to save this ailing country or there will be nothing left soon.

      timothy.tanzer.5 - 2012-07-17 09:42

      Read your history books before quoting.

  • Wayne - 2012-07-16 07:06

    Amazing! The majority trying to legislate the minority to provide more jobs for the majority. Where is the real job creation strategy? Why not create jobs through your own industry and endeavour, instead of putting up ever increasing barriers to free market endeavour? Its akin to taking a winning racehorse/jockey pairing and insisting that another jockey must ride it, in the interests of "representivity", even if it means that the horse might lose its winning edge. Ridiculous! When are we going to put merit as the defining criteria and not race?

      wesley.bischoff - 2012-07-16 09:16

      Legalise cannabis and the manufacturing of products from hemp... that industry would create MANY jobs, as well as income from VAT.

  • hugh.robinson.56 - 2012-07-16 07:58

    It is businsesses fault to begin with. They all clamboured to start BEE and EE from about 94, licked the boots of the ANC without consideration to what they were dealing with. This time round as with etolling business has to dig its heels to prevent being intimidated into how they run their businesses.

  • pohunter1 - 2012-07-16 08:12

    Take this issue on in the constitutional court, and save this country's economical powerhouse (business) from the ANC's policy of "ideology" before "practicality". I am, as are others, not so sure that BEEE may be unconstitutional.

  • Michael - 2012-07-16 08:19

    The most threatened living being in SA right now - The Golden Egg Laying Goose- population 1 and nervous as hell...

  • lina.lizzi - 2012-07-16 09:00

    Imagine how many investments we are going to attract now!!

  • ian.d.samson - 2012-07-16 10:22

    Zimbabwe here we come!

  • DrGonzoSA - 2012-07-16 10:23

    Just have a look at how the muncipalities have done by employing people based on colour rather than technical ability. Why do they think this would be any different for business? Forcing successful companies to employ unqualified staff is ridiculous. Big businesses will simply move to countries were they are made to feel welcome. And unemplyment will go up and up and up and up....

  • johnnie.vercuil - 2012-07-16 11:38

    Every time they make a law, a lot of people lose their jobs.

  • wade.balsdon - 2012-09-06 16:40

    Smaller business owners should become independent distributors,take selected staff along with them and then shut their businesses down. This should escalate to larger firms until govt. wake up!!

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