The Heating, Ventilation, Air Conditioning, and Refrigeration (HVAC&R) sector, along with other key industries in South Africa, is now under the shadow of potential legal upheaval.
The EEAA, which came into effect in January 2025, mandates specific hiring quotas across 18 economic sectors. Image by Senivpetro/Freepik.com
Employer associations, including the National Employers Association of SA (Neasa) and Afrikaans business organisation Sakeliga, have announced their intention to immediately challenge the new employment equity targets mandated by the recently enacted Employment Equity Amendment Act (EEAA). These organisations argue that the Act’s stipulations, based on race, gender, and disability, are unconstitutional, unlawful, and detrimental to the economy.
The EEAA, which came into effect in January 2025, mandates specific hiring quotas across 18 economic sectors, including agriculture, mining transport, and construction – several of which have significant intersections with the HVAC&R industry in terms of manufacturing, installation and maintenance. The government’s objective is to increase the representation of ‘designated groups’, namely black people, women and individuals with disabilities, within these sectors.
Under the new legislation, businesses with 50 or more employees are required to align their employment equity plans with these sector-specific targets between September 1, 2025, and August 31, 2030. Neasa and Sakeliga contend that these sectoral targets essentially function as ‘strict hiring quotas’ tied to racial and other demographic ratios, with the threat of penalties reaching up to 10% of a company’s turnover for non-compliance.
In a joint statement, the two organisations declared their belief that the EEAA and its regulations are “unconstitutional, impossible, and harmful”. They announced an immediate joint legal challenge to seek an interdict against the implementation of these regulations and the Act itself.
Neasa and Sakeliga further argue that the state is acting unconstitutionally by imposing “totalitarian infringements” on the freedom of businesses, owners, and employees to associate and trade freely. They assert that under the guise of “transformation”, the EEAA promotes a “stifling stagnation” by insisting that commercial and, by implication, social activities should adhere strictly to specified racial and other demographic ratios. The organisations also warn that this legislation will damage the economy’s productive capacity, create division within society, and unduly empower the state.
While regulations gazetted under the Act do provide certain justifiable grounds for non-compliance, such as a lack of necessary skills within designated groups or the impact of mergers or business transfers, critics like the Democratic Alliance (DA) and trade union Solidarity maintain that the Act is unconstitutional and echoes apartheid-era race-based limitations on job opportunities. The DA estimates that the implementation of these targets could lead to approximately 600 000 job losses.
The Department of Employment and Labour will reportedly require 10,000 labour inspectors to police the Act and its regulations. In contrast, Minister of Employment and Labour Nomakhosazana Meth has lauded the EEAA for reducing the regulatory burden on smaller businesses, allowing them to prioritise growth.
The government highlights that the aim of the Act is to address persistent inequalities in the labour market. For instance, despite black people constituting roughly 80% of the population, they hold approximately 17% of top management positions. Businesses with over 50 employees will need to obtain compliance certificates demonstrating their progress in meeting the numerical targets.
Sakeliga and Neasa are advising businesses to seek individualised legal counsel regarding the Act to minimise legal risks and protect their operations, employees and clients in the face of what they consider unconstitutional, unimplementable and harmful legislation.
This legal challenge signifies a growing opposition to the government’s race-based transformation efforts in the workplace, suggesting a potentially significant shift in the landscape of employment regulations in South Africa, with direct implications for sectors like HVAC&R.
