For most of the life of the Employment Equity Act, the annual report asked designated employers a fairly forgiving question: did you file, and did you set yourself a plan. An employer could file diligently for a decade, set modest targets, miss them, and remain in good standing throughout. The paperwork was the compliance.
That arrangement has ended. In a media statement issued on 4 August 2026, the Department of Employment and Labour described the current cycle as the first year of assessment for all designated employers, and tied achievement of sector specific numerical targets to access to state contracts. The reporting season opened on 1 September.
Who is now in scope, and who quietly left it
The definition of a designated employer changed at the start of 2025, and the change cut in both directions. Turnover no longer forms part of the test. Headcount is the whole of it: an employer with 50 or more employees is designated, and one below that line is not, regardless of what it turns over.
A number of smaller businesses with high revenue and few staff therefore fell out of Chapter III reporting altogether. A number of labour intensive businesses with thin margins and a lot of people found themselves squarely inside it. The department’s own statement phrases the threshold as employers with more than fifty employees, while the widely applied reading of the amended Act is 50 or more. For a business sitting at exactly 50 the distinction matters, and it is worth confirming rather than assuming.
The practical trigger for many owners is growth they have not thought of as a compliance event. A business that crossed 50 people during the past year is now obliged to have an employment equity plan, to report on it, and to be measured against a target it may not know exists.
The targets are no longer yours to set
This is the substantive change and it is easy to miss inside the procedural detail. Under the previous regime an employer analysed its own workforce, set its own numerical goals and reported progress against them. Under the 2025 regulations the Minister of Employment and Labour determined numerical targets across 18 national economic sectors, published in April 2025, and employers align their plans to the target set for their sector rather than to one of their own construction.
The targets run over a five year horizon, from 1 September 2025 to 31 August 2030. That is the timeframe against which progress is assessed, which means the current report is a baseline year in substance even though it is the first year in which the question is asked. Nobody is expected to have arrived. Employers are expected to be able to show the trajectory.
The enforcement that actually bites
There are two consequences of non-compliance and they are not equally weighted.
The first is the fine. Schedule 1 of the Act provides for a first contravention attracting the greater of R1.5 million or 2% of annual turnover, escalating for repeat contraventions to the greater of R2.7 million or 10% of turnover. Those are ceilings rather than tariffs and they are imposed through a process, not automatically, but the percentage of turnover formulation is the part worth reading twice. It scales with the business.
The second is the one that changes behaviour faster. Since 1 September 2025, an employer seeking a state contract needs an Employment Equity Compliance Certificate, valid for twelve months. No certificate, no tender. For a business whose order book depends on government or state owned entity work, that is not a penalty in the ordinary sense. It is the removal of the customer.
It also reaches further than the businesses directly affected. A designated employer that loses its certificate stops being able to bid, and its subcontractors, many of them well under 50 employees and outside the reporting obligation entirely, lose the work that sat underneath the bid.
What is still unsettled
Worth stating plainly: the reporting dates in wide circulation, 1 October 2026 for manual submissions and 15 January 2027 for the online system, come from compliance advisers and payroll providers rather than from the department’s own August statement, which does not carry them. They are consistent across several independent sources and they match the pattern of previous years. They are still worth confirming on the department’s reporting portal before planning around them, particularly if you intend to file on paper, since that deadline is the earlier one by more than three months.
The reporting itself runs through the EEA2 annual report, covering workforce composition and progress, and the EEA4 income differential statement, which goes to the National Minimum Wage Commission.
The work that is worth doing this month
Establish which of the 18 sectors your business falls into, because the target follows from that and nothing else. Pull your current workforce profile by occupational level, since the assessment is not about headline percentages but about where people sit in the structure. Check that your employment equity plan has been aligned to the sector target rather than to whatever numbers were carried forward from the previous plan, which is the single most common gap in a first year of the new regime.
And if you tender for state work, put the compliance certificate on the same calendar as your tax clearance. It expires annually, it is now a precondition rather than a differentiator, and the moment to discover it has lapsed is not the week a tender closes.
