Employment Equity and Small Businesses: What You Need to Know

You don’t have to be a big business to understand your responsibilities.

The words “Employment Equity” often trigger a mix of panic, confusion, or a sigh of “that’s for corporates.”

But here’s the truth:

Employment Equity (EE) affects more businesses than most people think. And even if your company is still small, there’s value — and strategy — in understanding how it works.

This post breaks down:

• Who needs to comply (and when)

• What “designated employer” actually means

• Why EE matters (beyond just paperwork)

• And how to engage without getting lost in compliance fog

Let’s make it simple.

Section 1: What is Employment Equity (EE)?

EE is a South African legal framework aimed at:

• Promoting fair representation of designated groups

• Creating equitable access to employment and growth opportunities

• Removing unfair discrimination from policies, practices, and workplace systems

In short: It’s about building workplaces where diversity isn’t accidental — it’s intentional.

The governing legislation is the Employment Equity Act (EEA), and compliance is monitored by the Department of Employment and Labour.

Section 2: Who Needs to Comply?

You’re only legally required to comply if you meet the definition of a Designated Employer.

Here’s how that breaks down:

🟠 Sector thresholds matter.
Even if you have only 15 or 30 staff — you might still count if your turnover exceeds the limit for your sector.

📌 For example:
In the Wholesale and Retail sector, the threshold is R30 million.
In Manufacturing, it’s R50 million.
(Thresholds vary — check your industry.)

Section 3: What If You’re Not a Designated Employer?

Then you don’t have to submit EE reports.

BUT — there are still good reasons to engage with equity voluntarily:

• If you’re planning to grow and want to be future-compliant

• If you want to tender or contract with government or corporates

• If you want to align with BBBEE scorecard requirements

• If you care about building a fair, future-ready business

EE shouldn’t be about fear of penalty.
It should be about building systems that reflect the country you operate in.

Section 4: What Does EE Actually Require You To Do?

If you are a designated employer, the process is more structured:

1. Assign an EE Manager / Responsible Person
   Doesn’t have to be full-time. Can be the HR lead, owner, or designated staff.

2. Conduct a Workforce Analysis
   Assess race, gender, disability representation by occupational level.

3. Consult with Your Team
   Especially with underrepresented groups — create a consultative forum or representative committee.

4. Draft and Submit Your EE Plan
   1–5 year plan showing how you’ll improve equity across job levels.

5. Submit EE Reports Annually
   Forms: EEA2 (progress report) and EEA4 (income differentials)

💡 Due date is usually 15 January of the following year.

Section 5: What Small Businesses Get Wrong

• ❌ Assuming EE only matters once you’re “big”

• ❌ Copy-pasting EE plans from online templates with no consultation

• ❌ Ignoring income gap analysis (EEA4)

• ❌ Forgetting that turnover not staff count can trigger compliance

• ❌ Failing to see the strategy behind equity — it’s not just compliance

Section 6: The Bigger Picture

EE isn’t about ticking boxes.

It’s about:

• Creating meaningful access to employment

• Addressing legacy barriers in South Africa

• Designing growth that includes more people — fairly

And when done right, it becomes a powerful part of your transformation story — not just a document submission.

Final Thoughts: It’s Better to Prepare Early

Whether you’re submitting reports this year or planning ahead for the future:

Get familiar. Ask questions. Start the conversations.

EE doesn’t have to be complicated — especially with the right support.
And building a fairer workplace? That’s always worth the effort.