An increasingly acrimonious stand-off between government and business seems likely after Labour Minister Membathisi Mdladlana’s ”name and shame” blunder this week. At least 10 JSE-listed companies, criticised by the minister for failing to adhere to employment equity legislation, have lodged sharp denials.
The government’s response has been to issue a warning that submitting incomplete reports could be seen as fraudulent. This is despite originally criticising companies for not submitting reports at all, rather than submitting unsatisfactory ones.
African Bank, Ceramic Industries, Netcare, Tongaat-Hulett, Ellerine Holdings, Gold Fields, ERP.com and Crooks Brothers were on a list — e-mailed to journalists this week — of 1 000 companies that allegedly failed to submit employment equity reports. However, the companies say they have receipts to prove their reports were received by the department, and some even produced letters from senior labour officials praising their employment equity progress.
Kumba and Comair were singled out by the minister at a press conference on Monday, where he said they had not met employment equity targets. Mdladlana said companies ”should desist from using the old and tired excuse of lack of skills among blacks as a barrier and instead use their own resources to develop skills”.
Comair joint chief executive Erik Venter said Comair had invested R4-million in training black pilots, of which there was an industry-wide shortage, and that 87% of its recruits in the past year had been from designated groups.
Meanwhile, the South African Chamber of Business said it regretted the department’s use of ”name and shame” tactics, which could lead to defamation claims, and has called for public apologies to be issued where errors were made.
But Jimmy Manyi, head of the Employment Equity Commission, was unrepentant. ”As the committee that advises the minister on employment equity matters, we do not apologise for the advice we gave him and we stand by it. In fact, there are tougher measures to come. We have discovered that many companies were flouting the law by reporting in a manner that tries to circumvent the law,” he said in a statement on Wednesday.
He told the Mail & Guardian that companies tried to circumvent employment equity requirements by submitting incomplete reports and hiding the number of employees they had. He said it was difficult to differentiate between companies making honest mistakes and those deliberately trying to get around the law.
He added that companies have been required to submit reports since 2000 and that they should be aware of the procedure by now. In addition, said Manyi, the department had sent letters to companies informing them if their reports had not been received and asking them to rectify the situation. At least one company has told the M&G that it has not received such letters, but Manyi says he has proof that these letters were sent.
But it seems the department’s own filing systems could have contributed to the problem. Reports are filed according to company name, rather than tax code, and if a company has different names or subsidiaries, this could result in incomplete or inaccurate records.
The Tongaat-Hulett Group had reported under the name Tongaat-Hulett Sugar, explained Manyi. Ironically, Tongaat-Hulett is ranked sixth overall for employment equity in the Financial Mail Top Empowerment Companies Survey.
African Bank submitted its report under the name African Bank Investments Limited (its holding company) one year, and African Bank Limited another. But African Bank spokesperson Dawn Marole challenged this, saying the company had reported as African Bank Investments Limited (Abil) for the past three years, with reports on all of the subsidiaries included and submitted timeously, and she was able to prove it. She said the company had never received any letter notifying it of a problem with the reports.
At least one large company, Ceramic Industries, had filed a report under its previous name, National Ceramic Industries, and had neglected to inform government of its name change so that the employment equity register could be updated, says Manyi.
The fiasco has raised concerns in business circles about the department’s record keeping and ability to effectively monitor employment equity progress.