The Amended B-BBEE Codes of Good Practice were Gazetted on 31 May 2019 and they will materially impact organisations’ BBBEE strategic and planning processes. This becomes more pressing in that from 1 December 2019 latest, the amended provisions will be used by verification agencies. These changes were unpacked last week in my B-BBEE Newsflash, Amendments to the B-BBEE Codes of Good Practice.
I have compiled a list of 3 things to take into consideration when preparing your BBBEE strategy for the skills development and preferential procurement elements.
Definitions have changed and now have new meanings
The most important changes to definitions are both related to the absorption of learners.
When it comes to absorption, you can no longer place a learner in a new learnership and claim that you’ve absorbed him/her into the workforce. Entities must now offer permanent employment (a long-term contract of employment) to learners to qualify for the absorption bonus points.
This means organisations will have to take a more considered approach in profiling the positions that are being targeted for learnerships as well as the caliber of learners recruited in order to ensure they are the right caliber for absorption as permanent employees post the learnership.
1. The general framework of B-BBEE has changed, and with it the generic scorecard
The definitions of Qualifying Small Enterprises and Exempted Micro Enterprises both now require that Black Ownership be measured on the Flow Through Basis when deciding whether to use affidavits.
2. Skills Development scorecard
Changes made to the Skills Development scorecard include:
- A revised allocation of spend by virtue of a target of 3.5% of leviable amount (and 6 points) for Skills Development Expenditure on Learning Programmes specified in the Learning Programmes Matrix.
- Skills Development Expenditure on Bursaries for Black Students at higher education institutions will now earn you 4 points if you reach the targeted spend of 2.5% of leviable amount. It’s important to note that there is some confusion regarding the definition of Bursaries as in one place reference is made to bursaries paid for black people for Higher Education purposes and in another to attend Basic and Higher Education institutions.
3. Enterprise and Supplier Development scorecard
Under preferential procurement sub-element, organisations can now earn 2 more points (11 instead of 9) if they reach a 50% target spend on 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. The 50% target is a 10% increase on the previous target.
There are also improved recognition for 51% black owned large companies as:
- They can be recognised for Enterprise and Supplier development if their turnover now exceeds R50 million if they were first recognised as beneficiaries when their turnover was less than R50 million. Such recognition is limited to 5 years after the first recognition.
- Procurement from a 51% black owned generic company can be recognised as procurement from EME or QSE for a period of 5 years after first recognition as procurement from an EME or QSE.
Upcoming B-BBEE workshops
Next month I will be hosting 1-day workshops on the Amended Codes of Good Practice across the country. Please join me on:
- 4 July 2019: Durban
- 5 July 2019: Cape Town
- 9 July 2019: Johannesburg
- 31 July 2019: Port Elizabeth
You can download the brochure and register here.
I will also be facilitating our popular B-BBEE Boot Camp workshop in East London on 16-17 July. During the workshop, I will also discuss the Amended Codes of Good Practice and how to prepare for their implementation. For more information on the workshop, or to register, click here.
The amendments to the B-BBEE Codes of Good Practice will impact planning for forthcoming verifications and target spend. Please feel free to contact me to determine their impact on targets.