The transformation imperative in South Africa's financial services sector has reached a critical juncture with the recent amendments to the Employment Equity Act 55 of 1998 (EEA), which came into effect on 15 April 2025. These legislative changes signal a transition from a discretionary compliance model to a more prescriptive and measurable approach. Employers in the financial services sector are now required to actively drive change through clearly defined numerical targets and strategic employment equity planning.
This is particularly important given the slow pace of transformation across all sectors, including the financial services sector. The sector faces challenges such as the underrepresentation of historically disadvantaged individuals in executive roles, skill shortages, and complex corporate structures. As a result, the financial services sector is under increased pressure to demonstrate concrete transformation outcomes.
Sector-specific targets: What employers in the financial services sector must achieve
The key driver behind these heightened obligations is the introduction of section 15A into the EEA. This provision grants the Minister of Employment and Labour the authority to determine sector-specific numerical targets applicable to designated employers.
The amendments introduce five-year sectoral targets tailored to, amongst other sectors, the financial and insurance sector. Designated employers operating within this sector are required to incorporate these into their Employment Equity Plans (EEPs).
For the financial and insurance sector specifically, the sectoral targets require that 63.1% of top management positions be held by members of designated groups. Of these, 27.8% should be occupied by males from designated groups, and 35.3% by females from those groups. At senior management level, the target increases to 77.0%, with 31.7% allocated to males and 45.3% to females within designated groups. For the professionally qualified and middle management category, the target is set at 86.8%, broken down into 40.7% male and 46.1% female representation among designated groups.
For skilled technical positions, 95.6% of these are expected to be held by designated groups, comprising 49.5% male and 46.1% female representation. In addition to these occupational level targets, there is a universal requirement across all levels that at least 3% of positions be filled by persons with disabilities.
These targets are not merely aspirational, they are enforceable. Employers are expected to report progress annually, and a failure to meet these thresholds may result in scrutiny, penalties, or loss of access to state contracts.
While the legislation allows employers to justify non-compliance with sectoral targets, these justifications will be rigorously assessed. Acceptable grounds may include a lack of suitably qualified candidates from designated groups, limited promotion or recruitment opportunities, the impact of business transfers, mergers, CCMA awards, court orders, or adverse economic conditions.
Importantly, these reasons must be thoroughly documented. The onus is on the employer to prove their validity, and unsupported or vague justifications are unlikely to be accepted. Therefore, employers must maintain detailed records and internal analyses to substantiate any departure from their EEP commitments.
For effective implementation, organisations must strengthen their internal employment equity structures. This includes training line managers and employment equity forum representatives, particularly those involved in recruitment and promotion decisions. These forums must be empowered to act as transformation champions within the business.
Additionally, employers should upgrade administrative processes to support accurate data collection, timely reporting, and robust monitoring. Record-keeping is particularly critical where employers rely on justifications for not meeting targets.
A strategic imperative for financial services employers
The EEA amendments mark a clear departure from soft compliance. For the financial services sector, alongside all other affected sectors, transformation is no longer a peripheral human resources function but a core strategic priority. The legislative changes call for intentional, well-resourced, and evidence-based planning that integrates employment equity into every level of workforce decision-making.
Financial sector employers must act decisively. Reviewing and updating EEPs, setting defensible numerical goals, building internal capacity, and aligning organisational culture with transformation goals are no longer optional; they are essential for legal compliance, commercial competitiveness, and meaningful social impact.
For support in updating your Employment Equity Plan or navigating compliance requirements, please contact us.
