Small and medium companies (SMEs) play an essential role in bringing sustainable economic development and remains a pipedream to various countries. However, the rapid closure and decline of SMEs take a centre stage amongst the contributors to the shrinkage of South African economy. As such, the quest for economic growth has prompted the need for closely look at impact of labour regulations on operational performance of SMEs. The key purpose of the paper is to examine the impact of labour

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... ions on operational performance of SMEs with specific attention given to employment equity amendments in South Africa. While labour policies are promulgated to attain predetermined goals, the quest to accomplish those goals should not be an impediment to operational performance of SMEs. In this paper, the quantitative research approach and descriptive research design were utilised. The sample for this study was 226 SMEs in South Africa. It was evident from the results of this paper that the amendments to employment equity legislation were not emancipating SMEs, but rather impeding their operational performance. The employment equity amendments caused a reshuffling of the current workforce instead of creating jobs. This study served as a guide in decision-making and provide advice related to the impact employment equity amendments on operational performance of SMEs in South Africa. The management of SMEs ought to constructively engage with the government and labour to reveal the trade-offs that are inclusive and sustainable for all parties. A demarcation line needs to be drawn between the economic interests and political interests, and reform these amendments for the sake of reviving the whole economy.