Legal action against Dis-Chem’s “no whites” policy looming

Solidarity has sent legal documents to Dis-Chem regarding its moratorium on the appointment and promotion of white people, and legal action will follow should the ban remain in place.

On Monday, 17 October, Solidarity CEO Dirk Hermann sent a legal letter to Dis-Chem CEO Ivan Saltzman regarding the moratorium.

Solidarity argues that Dis-Chem cannot stand by the memorandum whilst at the same time act in compliance with the requirements of the Employment Equity Act (EEA).

Solidarity asked Dis-Chem to either:

  • Indicate the manner in which it contends the moratorium on the appointment or promotion of white employees is consistent with the requirements of the EEA, or
  • If it has decided to withdraw the moratorium, issue a public statement and a public apology.

Unless Dis-Chem provides an adequate response by the close of business on Friday 21 October, Solidarity will take legal action to challenge Dis-Chem’s moratorium on white appointments.

Dis-Chem told Daily Investor it will respond to Solidarity should the legal matter progress.

The run-up to the dispute started on 19 September when the Dis-Chem CEO released a letter which placed a moratorium on the appointment of white people.

The moratorium included all external appointments and internal promotions of white individuals.

Solidarity engaged with Dis-Chem following the letter, and the company responded that it had withdrawn the letter.

Hermann posted the letter on Twitter on 13 October, questioning why such a letter was written in the first place.

A backlash and threats of a boycott against the pharmacy chain followed, with numerous high-profile business leaders and politicians slating the policy.

Dis-Chem responded to the backlash by saying it withdrew “the wording of the memorandum”.

However, the company said its intention remained and stood by the unequivocal imperative to continue its transformation journey.

Dis-Chem highlighted that a News24 report claiming it had withdrawn its moratorium on hiring whites was inaccurate.

It means that Dis-Chem’s moratorium on the appointment of white people – including external appointments and internal promotions – remains.

Solidarity welcomed the withdrawal of the memorandum but said it is not the end of the road regarding this issue.

“We will ensure that it is not only the memorandum that is retracted, but the policy as a whole,” Solidarity said.

Connie Mulder, head of the Solidarity research institute

Connie Mulder, head of the Solidarity research institute, said Dis-Chem’s ban on the appointment and promotion of white people contravenes the Employment Equity Act.

“Dis-Chem’s action is not in the spirit of employment equity and is in contravention of article 15 of the Employment Equity Act,” Mulder said.

The act states that an “absolute barrier to the prospective or continued employment or advancement of people who are not from designated groups” is not required.

He said there is a big difference between looking at transformation targets and excluding a race group from appointments and promotions.

“It is not noble intent. It is malicious compliance. Dis-Chem is doing it because they are concerned about financial issues,” Mulder said.

Mulder said they have successfully fought this issue legally in the past and will do so again with Dis-Chem.

“We have gone to court several times in the past on this specific principle, and there is legal precedent that says you cannot exclude people based on their race,” he said.

“You can have preferred candidates, but you cannot have a hard quota system which Dis-Chem is implementing.”

It is a high-risk strategy from Dis-Chem because its discrimination against white employees has resulted in anger from its customers, which may lead to consumer action against the company.

Civil rights organisation Afriforum has already encouraged its members to support their local community pharmacy instead of Dis-Chem.

Expert opinion

Miranda Hosking, GIBS Business School’s managing executive

Miranda Hosking, GIBS Business School’s managing executive of social education, said Dis-Chem seems focused on compliance rather than transformation.

Another problem is that employment equity legislation requires wide consultation, including employees.

“In this instance, consultation was limited to senior management, which excluded the rest of the staff,” she said.

“This is contrary to the intention of employment equity legislation that requires diverse views and inputs.”

Hoskins added that the letter makes black employees look like tokens rather than deserving candidates.

“It diminishes the role black people play in the economy, organisations, and leading companies in South Africa,” she said.

Michael Bagraim – labour lawyer at Bagraim Attorneys

Michael Bagraim, a labour lawyer at Bagraim Attorneys, said Saltzman’s letter looks like a knee-jerk reaction to threats about a 10% fine for not meeting employment equity targets.

“The letter was an overreaction, and you can see the panic in the wording,” said Bagraim.

He added that a letter like that should have never been allowed from a JSE-listed company like Dis-Chem.

Commenting on transformation, Bagraim said big businesses are not expanding their workforce because of poor economic growth.

It raises the question of how you change the demographics of your workforce when you are not growing the number of employees.

As you cannot retrench staff to reflect the demographics of the country, executives like Saltzman start to panic in fear of big fines.