Employment equity overhaul: Key steps to meeting January 2026 targets
The clock is ticking towards January 2026, when designated employers will be assessed against sectoral targets applicable to their industry. Employers without robust barrier analyses and well-substantiated justifications for variances may draw early attention as the Department begins its initial compliance reviews.
Dhevarsha Ramjettan, Partner at Webber Wentzel
With the sectoral numerical targets in force since 15 April 2025, designated employers will soon arrive at a critical juncture on 15 January 2026, when the online reporting portal will close. Thereafter, the Department of Employment and Labour (DoEL) will assess Employment Equity (EE) targets against sectoral targets.
For a comprehensive background on the 2025 Regulations and their implications, our earlier article, Heightened responsibilities for employers amidst employment equity amendments: The introduction of Economic Sectors targets, provides context on the broader legislative framework and the introduction of sectoral targets.
Understanding baseline reporting
There is a fundamental shift in how compliance will be measured. When designated employers submit their baseline reports during the online reporting period, 1 September 2025 to 15 January 2026, and select their relevant economic sector, the portal will automatically populate the sectoral targets for that sector for the year 2030.
In practice, this means that employers will no longer define their own endpoint targets. Instead, they will be expected to align their Employment Equity Plans (EEPs) to the sector’s pre-determined transformation trajectory, setting annual goals that show credible progress towards the 2030 benchmark.
Employers should therefore use the 2025 baseline cycle to test their current position against sector targets, identify structural and operational barriers, and prepare defensible documentation for any areas where full alignment may not be possible within the five-year horizon.
Designated employers will not be measured against their achievement of EE targets for the first year of reporting. Rather, the focus will be on the current status of the workforce. However, this does not diminish the importance of this reporting cycle's submission.
Once a designated employer has captured its annual target for the following year, that target will be automatically populated in subsequent reports and will be used as a benchmark for measuring progress.
The online reporting system establishes a clearer and more consistent compliance framework. With sectoral targets now embedded in the reporting process, the Department will be able to evaluate employers against a common measurable standard.
Designated employers must therefore consider:
- Are our targets based on accurate and comprehensive data?
- Will our organisation realistically be able to meet these targets?
- Where alignment with the sectoral targets is not possible, do we have the necessary justification and evidence ready?
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What does "align to targets" really mean?
Alignment does not necessarily mean achieving 100% compliance with numerical targets across every occupational level. Rather, it means demonstrating a credible and evidence-based trajectory towards meeting sectoral targets, supported by concrete affirmative action measures and, where targets cannot be met, providing well-substantiated justifications for non-compliance.
Some designated employers have adopted a passive “wait and see” approach, pending further clarity on implementation. This strategy carries substantial risks. The DoEL has demonstrated its commitment to rigorous enforcement, and employers who have failed to prepare adequately may find themselves scrambling to justify non-compliance without the necessary supporting evidence.
Designated employers are encouraged to undertake an honest, data-driven analysis of current workforce composition, recruitment pipelines, promotion opportunities, and labour market realities to assess the extent to which their EEPs align with sector targets.
Third-party sense-checking can be vital for designated employers seeking to avoid the consequences of a DoEL finding of non-compliance. Engaging external advisers to review EEPs and barrier analyses can help identify weaknesses in reasoning, gaps in evidence, or assumptions that may not withstand regulatory scrutiny.
The financial consequences of non-compliance
The financial penalties for non-compliance with sectoral numerical targets, in the absence of reasonable grounds, are substantial and escalate with repeated contraventions. Under Schedule 1 of the Employment Equity Act, a first contravention may attract a fine of the greater of R1.5m or 2% of annual turnover, escalating for repeat offences to the greater of R2.7m or 10% of turnover.
In addition, employers who cannot demonstrate compliance or provide a credible justification for non-alignment risk disqualification from state contracts, as an EE Compliance Certificate is required to tender for such work.
What to expect: a new era of enforcement
The employment equity landscape is entering a new era characterised by stronger enforcement, greater regulatory scrutiny, and heightened public attention. While some stakeholders continue to raise concerns about the feasibility or fairness of sectoral targets, the legislative direction is clear, and the DoEL's commitment to implementation has been reiterated on various occasions.
Designated employers should take a proactive approach to compliance. The DoEL is expected to prioritise enforcement to encourage compliance across sectors. Employers who have not prepared adequately may face unnecessary risks, including compliance findings, penalties, and reputational damage.
Designated employers should look to conduct rigorous workforce analyses, develop credible EEPs, and gather supporting evidence for any anticipated non-compliance well before the January 2026 reporting deadline.
About the author
Dhevarsha Ramjettan is a Partner at Webber Wentzel