The outgoing Minister of the Department of Trade and Industry has snuck in a farewell gift to business. He signed Gazette 42496 on 9 April 2019 and they were gazetted on 31 May 2019. This gazette deals with:
- Amendments to Schedule 1 to the B-BBEE codes which make several changes to definitions used
- Replacement of Codes Series 000 statement 000 which is the general framework to measure B-BBEE compliance
- Replacement of Codes Series 300 statement 300 which is the Skills Development Statement
- Replacement of Codes Series 400 statement 000 covering Enterprise and Supplier Development
The implementation date for all these changes is “within 6 Months from date of Gazette”. This implementation is unclear, as the implementation date could be any time between now and 31 November 2019, or it could be 30 November 2019. This impacts our planning.
Amendments to Schedule 1
The most significant change is the following change made to absorption of learners.
|“Absorption” means a measure of the Measured Entity’s ability to successfully secure a long-term contract of employment for the Employee, Learner, Intern or Apprentice.||Rolling a learner over onto a new learnership can no longer be treated as Absorption.
Companies must now offer permanent Employment to learners to qualify for the absorption bonus points.
|“Long-term contract of employment means a legal agreement between an individual and an entity that this individual would work for until his or her mandatory date of retirement;”|
Code Series 000 Statement 000 – General Framework
The following are significant changes to Statement 000, the general framework for B-BBEE:
- The definition of Exempted Micro Enterprises (EME) now requires that Black Ownership be measured on the Flow Through Basis (paragraph 4)
- The definition of Qualifying Small Enterprises or QSE, also requires that Black Ownership be measured on the Flow Through Basis (paragraph 5)
- The scoring of unincorporated Joint Ventures is now included in the Generic codes and not taken out of the Construction Sector codes (paragraph 7)
- The table in paragraph 9 summarises the Generic Scorecard
|Element||As Amended (per Statement 000)||Per actual Scorecard||Original amended codes|
|Skills Development||20.00 + 5 Bonus||20.00 + 5 Bonus||20.00 + 5 Bonus|
|Enterprise and Supplier Development||40.00 + 4 Bonus||42.00 + 4 Bonus||40.00 + 4 Bonus|
|Total||109.00 + 9 bonus||111.00 + 9 Bonus||109.00 + 9 Bonus|
Code Series 300 Statement 300 – Skills Development
The Skills development Scorecard has been changed as follows:
|Category||Skills Development||Points||Target||Original Points||Original Target|
|Skills Development Expenditure on any programme specified in the Learning Programme Matrix for black people as a percentage of the Leviable Amount|
|Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for black people as a percentage of Leviable Amount.||6.00||3.5 %||8.00||6%|
|Skills Development Expenditure on Bursaries for Black Students at Higher Education Institutions||4.00||2.5%|
|Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for black employees with disabilities as a percentage of Leviable Amount.||4.00||0.3%||4.00||0.3%|
|Learnerships, Apprenticeships, and Internships|
|Number of black people participating in Learnerships, Apprenticeships and internships as a percentage of total employees.||6.00||5%||4.00||2.5%|
|Number of unemployed Black People participating in training programmes per the Skills Development Matrix.||4.00||2.5%|
|Number of black people absorbed by the Measured and Industry Entity at the end of the Internship, Learnership and Apprenticeship programme||5.00||100%||5.00||100%|
|Total||20.00 + 5 Bonus||20.00 + 5 Bonus|
Changes are shown in bold italics.
Other important changes are:
- The same spend cannot be claimed for Skills Development and Bursaries.
- The limitation of 15% of total skills development spend on categories F and G training has been increased to 25%.
- The limitation of 15% of total skills development spend on non-core training does not apply to bursaries spend.
- You can claim salaries and wages, or stipends paid to staff on Category B, C and D training and stipends paid under a bursary scheme.
- There is a definition issue regarding Bursaries. In the table above it states, “Skills Development Expenditure on Bursaries for Black Students at Higher Education Institutions”, this covers University fees. However paragraph 5.6 states “A bursary or scholarship scheme is a grant made to or for students who are registered at educational institutions established by or registered with the Department of Basic Education or the Department of Higher Education & Training. Examples of legitimate training costs for a bursary or scholarship includes payment of school, college or university fees, or a portion thereof; funding for textbooks or other learning materials; funding for subsistence or accommodation during the period of study.”. This clearly covers both Basic (school) and Higher (Tertiary) bursaries. Until we receive clarity, I suggest we claim both School and University bursaries as Skills Development.
Code Series 400 Statement 400 – Enterprise & Supplier Development
The Enterprise & Supplier Development Scorecard has been changed as follows:
|Criteria||Points||Target||Original Points||Original Target|
|B-BBEE Procurement Spend from all Empowering Suppliers based on the B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend||5.00||80%||5.00||80%|
|B-BBEE Procurement Spend from all Empowering Suppliers that are Qualifying Small Enterprises based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend||3.00||15%||3.00||15%|
|B-BBEE Procurement Spend from all Empowering Exempted Micro-Enterprises based on the applicable BBBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend.||4.00||15%||4.00||15%|
|B-BBEE Procurement Spend from Empowering Suppliers that are at least 51% Black Owned based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend||11.00||50%||9.00||40%|
|B-BBEE Procurement Spend from Empowering Suppliers that are at least 30% Black Women Owned based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend||4.00||12%||4.00||12%|
|B-BBEE Procurement Spend from Empowering Designated Group Suppliers that are at least 51% Black Owned.||2.00||2%||2.00||2%|
|Annual value of all Supplier Development Contributions made by the Measured Entity as a percentage of the target.||10.00||2% of NPAT||10.00||2% of NPAT|
|Annual value of Enterprise Development Contributions and Sector Specific Programmes made by the Measured Entity as a percentage of the target.||5.00||1% of NPAT||5.00||1% of NPAT|
|Bonus point for graduation of one or more Enterprise Development beneficiaries to the Supplier Development level.||1.00||1.00|
|Bonus point for creating one or more jobs directly as a result of Supplier Development and Enterprise Development initiatives by the Measured Entity.||1.00||1.00|
|Total||42.00 + 4 bonus||40.00 + 4 bonus|
Changes are shown in bold italics.
Other important changes are:
- The requirement to calculate an industry norm Net Profit after Tax has been included in the codes. In the past it was inferred.
- There was a multiplier of 1.2 times for procurement from First Time Suppliers. This has been changed to a multiplier of 1.2 times on Procurement from companies which are at least 51% Black Owned or Black Women Owned using the Flow Through principle.
- Supplier and Development beneficiaries must be at least 51% Black Owned or 51% Black Women owned EME, QSE or Generic companies using the Flow Through principle. For Generics to be recognised, they must have been recognised as an EME or a QSE first, and such recognition is limited to 5 years from first recognition.
- A Supplier Development beneficiary must form part of the company’s supply chain.
- Companies can recognise procurement from at least 51% Black Owned or 51% Black Women owned Generic companies using the Flow Through principle as EME or QSE. In order to be recognised, the Generics must have been recognised as an EME or a QSE first, and such recognition is limited to 5 years from first recognition.
- The recognition percentage for Guarantees provided on behalf of a beneficiary has been increased from 3% to 50%.
These changes are significant and will impact planning for forthcoming verifications and target spend. Please feel free to contact me to determine their impact on targets. If you need other B-BEE consulting, please do not hesitate to contact me on 083 440 2130 or [email protected].