NEASA has rejected the Department of Employment and Labour’s Draft Reviewed Code of Good Practice on the Preparation, Implementation and Monitoring of the Employment Equity Plan and its reinforcement of a racial employment quota regime in South Africa.

Read NEASA’s full comments on the Draft Code here.

Published on 24 July 2026 for public comment, the Draft Code aims to replace the existing Code to align it with the current statutory regulatory framework, which introduced sector-numerical employment equity quotas that designated employers have to meet.

Among others, the most significant changes in the Draft Code are:

• The incorporation of the sectoral numerical targets for employers when developing their Employment Equity (EE) Plans. The Draft Code will now require employers to review their current employment equity compliance practices in an attempt to meet these targets.
• Employers will also now have to ensure that formal agreements are in place that regulate how their EE Committees operate and that committee members receive appropriate training on their roles and responsibilities.
• The employer’s workforce analysis and numerical goals must now also address both under-representation and over-representation of people from designated groups at each occupational level. The current code only refers to under-representation in the analysis of an employer’s workforce.
• The Draft Code further concretises the requirement that a compliance certificate will only be issued if an employer complies with the EE targets In its submission, NEASA argues that the Draft Code is legally impermissible as it perpetuates the enforcement of a rigid hiring employment quota regime - where employment equity targets for employers rigidly determine whom they must hire, thereby effectively operating as de facto quotas.

NEASA submits that, contrary to what the Department has argued, the targets incorporated into this Draft Code are not targets that designated employers must aim at, but in reality, are particular demographic quotas and compositions that designated employers must achieve or suffer the risk of severe penalties for non-compliance – including the inability to do business with the State, the cancellation of existing state contracts, enforcement orders, and fines.

It is noted in the submission that similar rigid and blunt affirmative action measures that operate as quotas have been declared unconstitutional by the South African Courts in the past. NEASA submits that the provisions in the regulatory framework that permit employers to raise a reasonable ground to justify a failure to comply do not cause the targets to cease being unlawful and unconstitutional quotas. The targets remain unlawful and unconstitutional quotas as employers remain obliged to comply with such quotas notwithstanding.

NEASA submits that should the Draft Code be adopted in its current form, it will cause more legal uncertainty, especially as there remains scant guidance on how employers can possibly achieve compliance. There is no actual explanation of what compliance means or how an employer will be measured, nor how inspectors will assess compliance.

The requirement that employers prioritise strategies to address under-representation will compel employers to avoid appointing or promoting individuals from an over-represented demographic group. NEASA has submitted that no strategy based on a racial/gender spreadsheet should inform or determine whether a person is appointed, promoted, retained, trained, or dismissed. This in itself could actually create an absolute barrier. This requirement ignores labour market realities and the availability of suitably qualified persons.

NEASA demonstrates in its submission that the Draft Code also aims to give effect to an employment equity regulatory framework that demands compliance with employment equity targets which are impractical, disproportionate, legally uncertain, and objectively immeasurable.

The provisions that a compliance certificate may be withheld or withdrawn for non-compliance mean many employers may lose major contracts and face being disqualified from contracting with the state altogether, even where an employer has provided grounds to justify non-compliance. This will place many employers in an unfair and economically untenable situation.

The legal challenge that NEASA and Sakeliga initiated at the High Court to review and set aside the 2025 employment equity amendments and the accompanying regulations (which are strikingly mirrored in this Draft Code), is still pending.

NEASA has therefore rejected the Draft Code as it reinforces a prescriptive employment equity scheme that imposes unconstitutional race-and gender-based employment quotas on employers that are arbitrary, inflexible, blunt and rigid.

NEASA remains, in principle, steadfastly opposed to the concept of hiring persons based on racial metrics and requisites. Merit-based appointments and sound business principles should remain the apex priority of every business. The Draft Code does not align with this principle. NEASA therefore recommended its immediate withdrawal.