The Chinese ICT superpower, Huawei has found itself in quite the predicament with the Department of Employment and Labour (the Department) for not employing enough South African employees at their South African division.
In a statement issued by the Department on 11 February 2022, the Department confirmed that court action had been taken against Huawei Technologies South Africa (Pty) Ltd due to their non-compliance with employment equity regulations.
This comes after an investigation was conducted by the Department in 2020 which revealed that the number of foreign nationals employed by the company is approximately 90% – which is well in excess of the 40% as permitted in terms of the Immigration Regulations. As per the Regulations, the company is required to employ at minimum 60% South African citizens and permanent residents and a maximum of 40% foreign nationals. When asked by the Department about their extensive foreign workforce, the company erroneously stated that the Department of Home Affairs approved this, which was found by the Department to be untrue.
What the law says
In accordance with Section 21 (2) of the Immigration Act of 2002, as amended, a corporate visa may be issued by the Director-General of Home Affairs to a corporate applicant (juristic entity) to employ foreigners in the Republic and in consultation with the Departments of Labour and Department of Trade and Industry, the Director General shall determine the maximum number of foreigners to be employed. Section 20 (2) of the Immigration Regulations of 2014 provides that, an applicant for a corporate visa is required to “provide proof that at least 60% of the total staff complement that are employed in the operations of the business are citizens or permanent residents employed permanently in various positions”. Section 20 (3) of the Regulations explicitly states that this must be the case throughout the duration of the visa.
Furthermore, an assessment report concluded by the Department’s Inspection and Enforcement Service projected that the company’s majority foreign workforce is estimated to increase in the next two years, without the prospect of employing any designated group as identified in the Employment Equity Act 55 of 1998 (“EEA”). The purpose of the EEA is to promote equity in the workplace and ensure that previously disadvantaged South Africans are empowered and protected in the workplace. Designated groups are defined in section 1 of the EEA to be black people, women, and people with disabilities. The section goes a step further and identifies companies who are deemed to be designated employers in terms of the EEA. Designated employers are employers who employ 50 or more employees; or employers who have an annual turnover equal to or above R30 million as it currently stands for the communications sector. It is also required in section 20 of the EEA that designated employers prepare and implement an employment equity plan to achieve reasonable progress towards employment equity in the employer’s workforce.
The Department seeks to obtain a court order instructing Huawei to comply with the employment equity regulations and pay a fine of R1.5 million or alternatively, 2% of the company’s local revenue, whichever is greater.
The decision by the Department to take legal action against Huawei and other companies who are not compliant with employment equity regulations, is part of a bigger operation to combat the lack of representation of local citizens in the South African workforce. Mandating employment quotas for foreign nationals, is one such way of doing so. Non-compliance with employment equity regulations further perpetuates the perception that foreign nationals have more job opportunities in South Africa than South African citizens. This strict approach is also in line with the proposed Employment Services Amendment Bill which seeks to limit the hiring of foreign nationals in certain sectors and promote the employment of South African citizens, as well as the Employment Equity Amendment Bill currently before the National Council of Provinces which is heavily centred around setting numerical targets to include more designated groups in all occupational levels in the workforce.
The action taken against Huawei serves as a warning to both local and international companies to adhere to employment equity regulations or pay the price.
Andrea Miguel – Candidate Attorney
JUSTINE DEL MONTE & ASSOCIATES INC.