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  • B-BBEE changes in the pipeline

B-BBEE changes in the pipeline

21 October 2019

The only constant in life is change, and this most certainly applies to the B-BBEE Codes of Good Practice.

Amendments to the general codes were gazetted earlier this year and will be effective for all companies measuring themselves on the generic scorecard, with effect from 1 December 2019. It is important to understand that this is effective on that date, regardless of the financial period being verified. If your B-BBEE planning did not take these changes into account, it is likely to have an effect on your scorecard.

The biggest changes are seen under the skills development scorecard, where the target for skills spend (equivalent to 6% of salaries bill) is now split into 2 sub categories – 3.5% to be spent on learning programmes for African, Coloured and Indian people and 2.5% to be spent on Bursaries for students at Higher Education Institutions.  This is in response to the Fees Must Call movement. The government is essentially aiming at filling this need by shifting the responsibility onto corporate South Africa.  It’s not going to cost business more than before, but it might come at the cost of spend on internal staff in some cases.

The other change under the skills element is to the much abused definition of “absorbed”. Previously, 5 bonus points could be earned “where assisting a learner to proceed with further education or training”.  Skills academies and the like quickly jumped onto this requirement and ensured a steady stream of learners were enrolled onto learnership after learnership, often without regard for the long term employability of thousands of desperate people earning stipends of R2500 a month, by completing the like of Hygiene and Cleaning NQF level 2 and 3 learnerships.  Points could also be earned for securing these learners on “long-term contract employment”. The absence of a definition of “long-term” saw 3 month temporary contracts being passed as absorption, definitely not in the spirit of the Act. The amended definitions now prevent this type of abuse, by removing the mechanism which allowed companies to simply roll learners over onto a new learnership and by clarifying long-term contract of employment as “a legal agreement between an individual and an entity that this individual would work for until his or her mandatory date of retirement;”

Changes under Enterprise and Supplier Development are also in the pipeline, with the target for procuring from 51% black owned entities increasing from 40% to 50%.

A much applauded change is the ability to continue recognising enterprise and supplier development beneficiaries as such, after their turnover has exceeded their threshold of R50million, for a period of 5 years after they exceed this category.  This ensured that growing Black businesses are not dropped from supplier development initiatives as they cross this threshold, and continue to benefit from a development relationship for a further period, allowing more time for them to develop and stabilise.

Although these and other changes are currently only in place for companies measured on the general scorecard, the various sectors are in the process of aligning their scorecards to these changes, which will follow the process of being published for comment before being gazetted. For more information, contact BDO Verification Services.

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