Take Note: Important Changes to the B-BBEE Charter
The changes to the B-BBEE will affect many businesses around SA and will be effective from October/ November 2019. Here's what you need to know.
As of 31 May 2019, various new Amendments to the B-BBEE Charter will affect businesses around the country. While these changes will only officially be implemented later this year, it is strongly advised to realign your compliance strategies from the early out-set.
With our new Government officially coming into play, these legislative changes look to address outstanding issues and reduce Gazetting costs.
According to Shawn Swiegers, Company Secretary and Compliance Manager for LFP Group, the Amendments are being made under Revised Code 000 General Principles, Interpretation and Definitions Revised Schedule 1, Skills Development Revised Code 300 and Enterprise & Supplier Development Revised Code 400.
What to expect: Changes to the Skills Development Code:
Shawn believes that the changes help to clarify the confusion that has long plagued corporate SA. “Like with everything, further precautionary measures and clarifications around the B-BBEE Charter need to be put in place – regardless of some of the controversy that surrounds them,” says Shawn Swiegers.
“President Cyril Ramaphosa continues to rally behind BEE and businesses are playing close attention,” he continues.
“Some of the Amendments to note is that of absorption, for instance, which no longer includes further education and training and affects the 5 Skills Development bonus points. The points available under Skills Development and bursary expenditure now sits at 10 (up from 8) while the combined target remains at 6%”.
Swiegers further notes that ‘double counting’ of initiatives under Skills Development expenditure and bursaries is not permitted and that the 40% sub-minimum for Priority Element compliance is clarified as 8 points.
“Formal Skills Development expenditure is extended to include Category A bursary students so companies can now claim stipend expenditures for Categories A, B, C and D learners which will prove beneficial”.
In addition, indicators for Employed & Unemployed learnerships are now combined and spend on bursaries for black students attending higher Education Institutions has been introduced (target of 2.5% leviable amount and 4 weighting point).
“Training Manager’s salary cannot exceed 15% of your Skills Development Expenditure” he explains.
Concise overview of changes:
Skills Development Expenditure on Black People
Points and target reduced.
Expenditure on Bursaries for Black Students at Higher Education Institutions
New indicator relating to bursaries for tertiary education.
Skills Development Expenditure on Black People Participating in Learnerships, Apprenticeships and Internships
Points reduced and a clear restriction to Cat B, C & D with no distinction between employed and unemployed black people.
Bonus: Number of Black People Absorbed
Clearly limited to Cat B, C and D learners only.
What to expect: Changes to the Enterprise Supplier Development (ESD) Code:
Swiegers notes that various changes have been implemented to further promote the support of black-owned enterprises in South Africa.
“One of the biggest changes to note is Procurement Spend with 51% Black Owned Businesses,” he says.
“Here, points have increased from 9 to 11 and the target from 40 – 50%. Amongst other notable changes, is that the multiplier of 1.2 (for first time suppliers) is removed and replaced by a 1.2 recognition boost for purchasing from 51% Black Owned or Black Woman Owned suppliers. These qualifications are achieved using the flow-through principle”.
Finally, Swiegers says that various other Amendments will be pertinent to businesses around South Africa. “Contact your trusted B-BBEE service provider to guide you on this journey. These amendments are critical and cannot be ignored”.
Related: To B-BBEE Or Not To B-BBEE