South Africa's New Employment Law Indicates Increasingly Complex DEI Landscape for Global Employers

A new law in South Africa establishes racial targets for large employers, sparking a lawsuit within the country and igniting international debates. This development highlights the complexity of navigating DEI compliance across different nations and underscores the significant reputational risks global employers face due to this controversial issue. 

HR Policy Global’s Take: The Employment Equity Amendment Act, effective earlier this year, recently set sector quota requirements for 18 industries. Trump's administration criticized this move, along with other initiatives in South Africa aimed at boosting racial equity, for alleged discrimination and threatened to cut funding to the country. Global employers must prioritize local compliance and simultaneously provide a narrative that aligns with their global total value proposition on equity and inclusion.  

The Employment Equity Amendment Act, effective from January 1, 2025, introduces significant changes to South African employment laws. The law requires companies with more than 50 employees must meet sectoral targets for the number of non-white people, women and disabled people in skilled and senior roles under the act or justify their failure to do so.  Key components include:  

The lawsuit within the country 

South Africa's Democratic Alliance (DA), the second-largest party in government, challenged the law in court last week, arguing that it is unconstitutional and will deter business investments while stifling economic growth. However, supporters view it as a crucial step toward rectifying historical racial imbalances as racial inequity persist, with white individuals predominantly occupying top management positions.  

The Minister of Labour and Parliament defended the law, confidently assuring the court that it will not damage jobs or the economy, dismissed the DA's allegation that it prioritizes race over merit.  

The Pretoria High Court has yet to deliver its ruling on the DA's challenge to the Act, having reserved judgment after hearing the case. 

A Very Complex Global Environment on DEI 

Last month, U.S. President Donald Trump criticized South Africa's racial employment targets, offering asylum to white South Africans. Trump's stance reflects a broader debate on race-based laws and suggests DEI measures and requirements in one country might be perceived as discriminatory by others. Therefore, global companies find it very challenging to maintain consistent practice guidelines in this field and implement DEI strategies across diverse political climates. 

The bottom line: Employers in South America must still comply with the law until a different ruling is made. In the meantime, ensure that you adopt a local approach by adhering to local DEI policies, while using a generic global guide to align with your company's overall values.