EMPLOYMENT EQUITY ACT SECTOR CLASSIFICATION & REPORTING OBLIGATIONS

This FAQ article provides clarity on how the Employment Equity Act (EEA) applies to businesses operating across multiple establishments or under franchise models. It provides clarification on the completion of the EEA13 (Employment Equity Plan Template: Standard format for developing a compliant EE Plan. Includes goals, targets, timeframes, and monitoring mechanisms.) form. It also outlines the correct sector classification for businesses in the Hairdressing, Cosmetology, and Beauty Industry, especially those with retail components.

Franchise-Based Structures and EEA Reporting

Q: If a single employer owns multiple franchises or establishments across different regions, and the total number of employees is 50 or more, how should EEA reporting be handled?

A: If all franchises operate under one legal entity, the employer is considered a designated employer under the EEA. The employer should:

• Submit one consolidated EEA report covering all employees.

• Establish a central Employment Equity Committee representing all locations.

• Ensure each franchise contributes via sub-plans and committee to reflect site-specific realities.

This approach promotes both compliance and meaningful employee participation.

Q: What if each franchise is registered as a separate legal entity, but the combined employee count across all entities is 50 or more?

A: Each legal entity is treated as a separate employer under the EEA. Therefore:

• Only entities that individually employ 50 or more employees are required to comply with Chapter 3.

• Entities with fewer than 50 employees are not obligated to submit EEA reports or establish Employment Equity Committees.

This interpretation aligns with the EEA’s definition of a designated employer and ensures obligations are applied appropriately.

EEA13 Form Completion – Clarification from the Department of Employment and Labour (DEL)

Purpose of This Guidance

Q: Why is this clarification being issued?

A: The DEL has provided updated guidance to assist designated employers in correctly completing Tables 4 and 5.2 of the EEA13 form. This follows queries regarding the interpretation of sector targets and goal-setting obligations under the Employment Equity Act.

Table 4 – Sector Targets Requirements for Management Levels

Q: What targets must be used for the top four occupational levels?

A: Employers are required to use the regulated 5-year sector targets published in the Government Gazette on 15 April 2025. These targets apply to the following occupational categories:

• Senior Management

• Professionally Qualified

• Skilled Technical

• Semi-Professional

These targets are mandatory and may not be altered.

Q: What is expected for Semi-Skilled and Unskilled levels?

A: Employers must set their own numerical goals for these levels. These goals should:

• Be realistic and achievable within the 5-year EE Plan period

• Be informed by a thorough workforce profile analysis and the 5 year employment equity plan

• Achievable targets that reflect the company’s operational context and demographic composition

Table 5.2 – Numerical Goals Based on Current Representation

Q: What if our current representation is below the regulated sector targets?

A: You must reflect the full regulated 5-year sector targets for each of the top four occupational levels. These represent the minimum goals to be achieved by 31 August 2030. Targets may not be reduced, even if internal analysis suggests they are unlikely to be met.

Q: What if our current representation exceeds the sector targets?

A: You must still set goals that demonstrate progress toward the Economic Active Population (EAP). While full EAP alignment is not required by 2030, your goals must show measurable movement toward greater representivity.

Compliance Requirements and Implementation Notes

Q: What compliance principles must be followed when setting targets?

A:

1. Workforce Analysis: All targets must be based on a current and comprehensive workforce profile.

2. No Reverse Engineering: Employers may not dismiss, retrench, or reduce representation to meet sector targets.

3. Interim Flexibility: Targets for Years 1–4 may be adjusted if shortfalls are justifiable and documented.

4. Documentation: All goals must be supported by evidence from your workforce analysis and 5-year EE Plan.

Q: What practical steps should we follow when completing the EEA13 form?

A:

• Begin with a full workforce profile analysis

• Compare current representation against sector targets

• Populate Table 4 using the regulated targets for management levels and realistic goals for lower levels

• Populate Table 5.2 with either the full sector targets or goals showing progression toward EAP

• Record and justify any anticipated shortfalls in interim years.

Sector Classification: Hairdressing, Cosmetology, and Beauty Industry

Q: What is the correct EEA sector classification for establishments offering beauty services and selling beauty products?

A: Establishments in the Hairdressing, Cosmetology, and Beauty Industry, especially those with a retail component, should be classified under:

Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles

This sector includes:

• Specialised retail stores (cosmetics, toiletries, accessories)

• Beauty service providers with significant retail activity

Summary Table: EEA Sector Classification

Industry Activity	EEA Reporting Sector
Hairdressing, Cosmetology, Beauty Services	Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles
Retail of Beauty Products/Accessories	Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles

We encourage all members to:

• Review franchise structures and legal registrations

• Assess employee headcounts per entity

• Align Employment Equity planning with the correct sector classification

This will ensure accurate reporting, legal compliance, and readiness for Department of Employment and Labour audits.