Employment Equity: What Changed for Designated Employers in 2025

For years, whether a business counted as a "designated employer" under the Employment Equity Act depended on two separate tests — headcount, or an annual turnover threshold that varied by sector and was, in practice, easy to get wrong. As of 1 January 2025, that's no longer the case.

The turnover test is gone

The Employment Equity Amendment Act, signed into law in 2023, came into effect on 1 January 2025 and removed the turnover-based test entirely. A designated employer is now defined by one measure only: an employer with more than 50 employees. Businesses that previously fell into scope purely because of a high turnover — regardless of how few people they employed — no longer do.

Fewer businesses are in scope, not more

The practical effect is a narrower net. Employers with fewer than 50 employees are no longer required to prepare an Employment Equity plan or submit annual EE reports, even if their turnover would previously have pulled them in. This was framed explicitly as a reduction in regulatory burden on smaller businesses, and for most small and mid-sized employers, it removes an obligation rather than adding one.

What designated status still requires

For employers that remain in scope — anything over 50 employees — the obligations haven't softened. A designated employer needs an Employment Equity plan in place, numerical targets set against the sectoral targets published by the Department of Employment and Labour for its specific industry, and annual reporting on progress. The 2025 regulations also introduced sector-specific numerical targets, which designated employers now need to measure their own workforce profile against directly.

Getting the classification wrong carries real risk

Because the test changed, a business that correctly assessed itself as non-designated under the old rules needs to re-check that status under the new one — and vice versa, if headcount has grown past 50 since the last review. Misclassifying employer status, in either direction, either creates unnecessary compliance work or leaves a genuine obligation unmet.

If your business has grown, restructured, or simply hasn't reviewed its Employment Equity status since the amendment took effect, it's worth confirming where you now stand. Our HR & Labour Law service handles that assessment and the ongoing compliance that follows it.