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THE IMPORTANCE OF SKILLS DEVELOPMENT AND THE NEW BBBEE CODES

In Article Archive, Members by Neil Raymer1 Comment

How will an organisation’s upcoming skills development submission impact on its future BBBEE ratings and what steps can be taken to maximise their scores in this element?

The amended BBBEE codes, which come into effect on 1 May 2015, introduce the concept of priority elements namely, ownership, skills development and supplier and enterprise development. In simple terms, if an organisation fails to obtain 40% of the points allocated in any of these elements, its rating will be discounted by one level.

Companies with less than 10% black ownership will automatically have their ratings discounted by 1 level, which means that those wishing to obtain a rating (albeit a Level 7 or 8) will need to concentrate on all the other elements and in particular skills development. Even if an organisation has good BBBEE ownership credentials (51%+ black ownership) they will be required to score 40% in this element if they don’t want to be discounted a level. Remember that references to black people in respect of the BBBEE Act also include people of coloured and Indian descent.

The amended codes are already in play as an organisation’s 2016 (or sooner) rating will be based on the current financial year it is in; i.e. if an organisation has a financial year from 1 March to 28 February, the codes would already have been in effect for the month of March 2015.
The amended codes place a great deal of emphasis on organisations assisting and transferring hard skills (qualifications and accredited courses) to black employees and black unemployed persons. The result of this is that little weight (maximum of 15%) is given to soft skills; i.e. customer service, firefighting etc. The target for skills development spending on black people has also increased from 3% of the leviable payroll to 6%. The above stresses the need for organisations to take their skills submissions (due on 30 April 2015) very seriously, as refunds and grants offered by the SETAs can go some way to negating the additional costs associated with the increased targets.

The amended generic scorecard (for organisations whose turnover exceeds R 50 million per annum), allocates 25 points to the skills development element and it is thus vital to score well in this element.

Taking into account the above, we wish to offer the following advice:

• Submit your Annual Training Report (ATR) and Workplace Skills Plan (WSP), as failure to do so will disqualify you from scoring in this element.
• Give serious consideration to the scarce and critical skills facing your organisation and report them to your SETA as part of the WSP.
• Make provision for learnerships, apprenticeships and internships in your PIVOTAL plans. The codes set a target of 2.5% participation in such programmes in respect of an organisation’s total number of employees.
• Make provision for the utilisation of unemployed black people in the programmes referred to above, as the same target of 2.5% applies.
• Remember that the salaries or stipends paid to employees in the above programmes can be included in determining your training costs (this can have a massive impact in reaching the 6% target).
• Set out a timetable for training and measure progress on a monthly basis.
• Utilise the services of black people with disabilities and provide them with training (too many organisations neglect this aspect). There are 4 points on offer in this regard.
• Ensure new black employees, who were unemployed prior to taking up employment, sign a declaration to this effect before commencing employment.
• Ensure that every employee provides a certified identity document prior to commencing employment.
• Keep proper and up to date records. This has become vital, as the black people trained may not be in employment at the time of the verification.
• Wherever possible, retain the people that were in learnership, apprenticeship and internship programmes, as this can count for an additional 5 bonus points in this element.
• If the person cannot be retained, ensure that you obtain his/her contact details, as points can be accumulated if he/she finds alternative employment. The exit interview can be used for this purpose.
• Try and marry internal training programmes, where organisation-specific skills are taught, to an existing accredited training programme (piggybacking). This is not a quick process and it may take some time before the benefits are fully appreciated.
• Incorporate skills development as part of wider BBBEE plan and monitor progress on a monthly basis.
• Although the Qualifying Small Enterprise (QSE) scorecard will contain less stringent requirements we suggest that organisations follow the same approach.

Neil Raymer for Labourwise

Comments

  1. Thank you Neil for such an insightful article. It is the best article I have ever read on the new codes and provides practical ways to maximize the points.

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