Establishing a presence in South Africa

Labour and related issues

Edward Dreyer Edward Dreyer

Broad-Based Black Economic Empowerment
All South African companies are affected by the country’s Broad-Based Black Economic Empowerment (B-BBEE) regulations. These regulations are aimed at promoting economic participation by South African citizens who are African, Coloured or Indian persons; who were prejudiced by historical policies.

B-BBEE is governed by the Broad-Based Black Economic Empowerment Act 53 of 2003, which promotes codes of good practice that result in black economic empowerment when implemented by South African companies. Implementation of the codes of good practice is not compulsory, but companies that choose not to implement the codes face several economic challenges for non-compliance.

Government is obliged to consider a company’s B-BBEE status when transacting with the private sector; a poor B-BBEE status may result in withholding of a tender, a license or a concession. In the private sector, because the B-BBEE status of a company is partly dependant on the status of its suppliers, purchasing decisions are often linked to B-BBEE status.

Compliance with the codes requires that the company meets minimum targets for participation of black people in the company’s ownership, employees, training spend and purchases from B-BBEE compliant suppliers. In addition, contributions can be made for the development of black enterprises and socio-economic development.

A company’s B-BBEE status is certified annually by accredited B-BBEE Verification professionals, and demonstrated by a B-BBEE certificate. B-BBEE certificates are based on contributions made in a financial year, and the employee and ownership status as at the date of measurement. A B-BBEE certificate is valid for 12 months from date of issue.


The lack of available skills is a constraint to business growth globally according to research from the Grant Thornton International Business Report (IBR). Three in every ten (30%) businesses around the world are struggling to recruit the right people but in South Africa, the lack of availability of a skilled workforce is affecting 36% of businesses. In a country with 25% unemployment, on balance, 22% of businesses report that they expect to increase employment over the next 12 months.

The South African government has committed itself to taking concrete steps to raise the skills profile of the labour market in such strategies as New Growth Path, National Skills Accord, Basic Education Accord and the Youth Employment Accord.

Labour relations
South Africa’s labour legislation, following the 1994 elections, is among the most progressive in the world, promoting economic development, social justice, labour peace and democracy in the workplace. It sets out to achieve this by providing a framework for regulating the relationship between employees and their unions on the one hand and employers and their organisations on the other hand.

The Labour Relations Act (LRA), Act 66 of 1995 with the subsequent amendments sets out the rights of employers and employees and their organisations more clearly than before. This provides parties with more certainty with regard to the exercise of these rights. The Act also favours conciliation and negotiation as a way of settling labour disputes.

For more information on labour legislation and a selection of basic guides to labour relations in South Africa visit the Department of Labour at