Huawei Technologies Co Ltd and South Africa’s labour department reached a settlement out of court regarding local hiring rules, the companies announced Tuesday in a joint statement.
Huawei Technologies South Africa was charged to court by authorities in February, alleging it did not meet a requirement to have 60% South African workers and seeking a penalty of 1.5 million rand ($99,300), or 2% of the business’s annual 2020 revenue.
After discovering that almost 90% of Huawei Technologies South Africa’s workforce are foreign nationals, the department asked the court to compel Huawei to draft and implement an employment equity plan to hire more local workers.
Eventually, the two parties agreed to negotiate an out-of-court settlement.
According to the joint statement, the department has accepted Huawei Technologies South Africa’s plan to increase South African participation to above 50% within three years, especially from designated groups as defined in the country’s Employment Equity Act.
According to the two parties, to address South Africa’s digital skills gap, they will collaborate on offering training courses in information and communications technology (ICT) to the unemployed.
The development program, which includes internships, will run over the three years of the employment equity plan and include candidates from particular groups, including women and rural workers.
This “fosters a public and private partnership that facilitates the transfer of skills, while also addressing the issue of unemployment by creating jobs in the ICT sector,” said Advocate Fikiswa Bede, chief director of statutory and advocacy services at the Department of Employment and Labour.
This is the first time a South African government has taken legal action against the Chinese tech giant, which is under U.S. sanctions over allegations that its equipment could be used for espionage by the Chinese government.
Huawei and Beijing have repeatedly denied the allegations.
A smaller Chinese firm, however, has been shut down by the labour department after allegations of poor working conditions and human trafficking at its factory in Johannesburg. Court proceedings are ongoing.
Huawei is one of South Africa’s major players in information and communications technology, selling everything from smartphones, to television sets and telecom equipment, to cloud computing and data storage solutions.
The number of employees it employs in South Africa has not been publicly disclosed.