HomeFeatures & AnalysisMining Charter: It's unconstitutional to use rigid quotas for transformation

Mining Charter: It’s unconstitutional to use rigid quotas for transformation

The decision has wide implications, says Peter Leon, Partner and Co-Chair of Herbert Smith Freehills’ Africa Practice, including for South Africa’s beleaguered mining industry and the draft Mining Charter.

Striking down an employment equity plan which imposed national demographics on regional departments, and thus excluded “over-represented” coloured correctional officers in the Western Cape from the prospect of promotion, the court effectively reaffirmed its finding from 2014 (in an unsuccessful case brought by Solidarity against the Department of Police) that it is unconstitutional to use rigid quotas, as opposed to flexible targets, to achieve transformation.

On the day of the judgment, a majority of the court found that the plan in question was not inflexible, and thus not a quota, but set it aside in any event on separate grounds.

The court’s reasoning has significant implications for the “draft reviewed Mining Charter”, which the Mineral Resources Minister, Mosebenzi Zwane, published for comment in April.

According to Leon, this draft Mining Charter unambiguously requires mining companies to apply rigid racial quotas in their employment and promotion practices, and would thus fall foul of the Constitutional Court’s interpretation of legitimate affirmative action.

Among other changes, the draft charter drastically increases the employment equity thresholds expected of mining companies.

While the existing 2010 charter requires at least 40% of management (across all levels) to be historically disadvantaged South Africans, the new draft charter not only increases the thresholds to 50% at board level and 88% at junior management level but it also reduces the pool of eligible empowerment candidates, by disqualifying all women and disabled people who are white.

These reforms not only create immense practical difficulties, but are also inconsistent with the Employment Equity Act and the Mineral and Petroleum Resources Development Act, both of which recognise white women and disabled people as qualifying for employment equity.

Being concerned exclusively with employment, the recent Constitutional Court judgment does not have any clear implications for the charter’s other requirements, such as perpetual 26% black ownership and increased procurement from black owned enterprises.

Although it does demonstrate that the use of blunt arithmetical quotas will not easily be endorsed by the courts as legitimate measures to promote transformation.

As Minister Zwane and his department mull over the public’s comments on the draft charter, they would be well advised to consider this judgment carefully and be guided by its reasoning.