Nicola Mauson | July 22, 2025
The employment equity targets for South Africa's new gazette sector could violate several international trade agreements, such as the World Trade Organization's General Agreement on Services (GATS) and regional protocols under the African Continental Free Trade Area (AFCFTA).
This, according to Clivevinti, the research director at XA Global Trade Advisor, said the expected entry into force from September 1 appears to impose discriminatory restrictions on those who can be hired in certain sectors without taking into account the sectors signed by South Africa or international obligations.
Potential trade impacts formed part of the legal challenges launched by the National Association of Employers (NEASA) and the Sakeriga NPC for the Minister of Employment and Labor. The issues announced on July 9th were aimed at halting the implementation of the 2025 goals and the underlying regulations.
Vinti argued that a numerical quota based on national race and gender demographics would violate a risk violation of international agreements that explicitly prohibit employment caps for the service sector when implemented without sector-specific competency considerations. For example, under GATS, Member States are prohibited from setting quantitative restrictions on the number of people they can employ in certain service sectors. The same provisions are reflected in the protocols of the AFCFTA and the Southern African Development Community, which focuses on the promotion of access and non-discrimination in the trade of services.
In South Africa, these stock targets apply to both local and foreign-owned companies operating in the domestic economy. When implemented without taking into account the availability of appropriately qualified individuals within designated groups, it can act as a barrier to market access, especially for foreign service providers and investors who may cause trade disputes and retaliatory measures.
At the heart of the court's applications filed by NEASA and Sakeliga is the argument that the 2025 target flowing from the insertion into the Employment Equity Act (EEA) of Section 15A was adopted in violation of procedural and constitutional requirements.
The amendment, effective January 1, 2025, grants the Minister of Employment and Labor Nomahosazanames, the authority to set sector-specific numeric employment targets to ensure fair expression at all occupational levels. However, the law also requires that such goals be preceded by a public consultation process, and that affected sectors should be properly identified and involved.
According to the applicant, this did not occur.
They claim they were given more than a week to respond in place of the minimum 30-day comment period as stipulated in the law. Additionally, draft targets were published in 2023 and 2024 for release, but this step was skipped entirely for the 2025 goal.
Neasa and Sakeliga also argued that the consultation process was neither meaningful nor comprehensive. Some sessions were limited to 1,000 virtual participants, with little or no prior notice being held. Employers are said to have been given only access to goals proposed during or shortly before these meetings.
To exacerbate the procedural issues, the applicant says the Minister used a “all of one size” approach when determining the goal. Apply a blanket increase of 6% to 9% across occupational levels, regardless of the structure of each sector, skill availability, growth trajectory, or economic context. This makes them arbitrarily, irrational and potentially unattainable.
The challenge also raised concerns about the impact on women. Although women themselves are designated groups under the EEA, the target structure can paradoxically be disadvantaged by their inability to explain intragroup disparities.
Importantly, the plaintiff said no socioeconomic impact assessments were conducted prior to viewing the target. In their view, this omission made regulations irrational and placed policies that were opposed to Section 9 of the Constitution. This deals with equality and non-discrimination rights.
Beyond constitutional and procedural issues, the applicant highlighted the direct risks to the corporation. Companies that do not meet new stock targets face penalties of up to R1.5 million or 2% of annual revenue for the first violation. Section 53 of the EEA, which has not yet been enforced, could ultimately see non-compliant companies that have not been completely excluded from the government's procurement process, and existing state contracts have been cancelled.
“Since the government is the largest source of goods and services in the market, it could be fatal for businesses to be blocked from dealing with it,” Vinti said.
Equity goals can also affect access to key trading equipment. Rebates, increases and reduction applications of obligations often used to support or protect domestic industries require compliance with labor laws. Non-compliance can disqualify businesses from benefiting from these equipment and undermining local competitiveness.
According to Vinti, these developments could increase the reliability of South Africa's trade.
The issue is now in front of the courts, with NEASA and Sakeliga calling for an urgent interim stoppage of the target while the High Court considers the legality and constitutionality of the regulations. “The ball is currently in the Minister's court,” Vinti said.
“Disclaimer – the views and opinions expressed in this article are the views of the author and are not necessarily those of the Bee Room.”
