The DTI recently published a number of proposed amendments to the Broad Based Black Economic Empowerment Act for comment, which if implemented will have a significant impact on organisations, making it more onerous to retain or improve their ratings. Labourwise Human Resources intends to make written submissions on behalf of our clients and we welcome your comments in this regard.
According to Rob Davies the Trade and Industry Minister quoted in Business Day 29 October 2012, “The amendments are needed to B-BBEE legislation to ensure South Africa’s economy is more inclusive”. This sentiment has also been expressed by numerous commentators that it has only benefited a few select individuals whilst ignoring the masses.
The proposed amendments have a number of serious implications which could adversely affect the ratings of a number of organisations. The salient points include:
• Reducing the Elements;
• Amending the Rating Levels;
• Introducing Priority Elements;
• Amending the Income thresholds for Exempt Micro Enterprises (EME’s),Qualifying Small Enterprises(QSE’s) and Generics
• Ensuring that QSE’s are rated in all 5 elements.
REDUCING THE ELEMENTS
The elements will be reduced from 7 to 5 with Management Control and Employment Equity being merged and will be worth 25 points. TPreferential Procurement and Enterprise Development will also be merged and referred to as “Enterprise and Supplier Development” and which will be worth 40 points. The other elements remain the same with changes in points allocated.
• Ownership - 25 points;
• Skills Development - 20 points;
• Socio Economic Development - 5 points.
AMENDING THE RECOGNITION LEVELS
The potential points on offer increases from 100 to 105 (excluding bonus points), however the new recognition levels have been raised as follows:
INTRODUCING PRIORITY ELEMENTS
The amendments have emphasised 3 priority elements, namely Ownership, Skills Development and Enterprise and Supplier Development. The proposal is that if a generic organisation does not meet the minimum targets in all of the categories its calculated rating will be decreased by 2 levels.
QSE’s will be required to comply with the minimum requirements of ownership and one of the other priority elements, failing which its calculated rating will be decreased by 1 level.
AMENDING THE INCOME THRESHOLDS FOR EME’S, QSE’S AND GENERICS
The good news is that the income thresholds will be increased as follows:
ENSURING THAT QSE’S ARE RATED IN ALL 5 ELEMENTS.
An important proposal is that instead of being rated in 4 of the 7 elements, QSE’s will be rated in all 5 of the elements. This will have a significant impact on a number of organisations we consult to as they are owner-managed and it will force them to consider their ownership of the business or to lose a rating level if they retain their present structure.
OTHER SIGNFICANT AMENDMENTS
There are a number of other proposed amendments which could have a significant adverse affect on organisations these include:
• Only recognising Value Added Suppliers procurement spend. This is exceptionally problematic as it does not take into account organisations that have a high turnover with a relatively small staff complement.
• In terms of Socio Economic Development, if a contribution is to be recognised the beneficiaries must all be black.
COMMENTS ON THE PROPOSED AMENDMENTS
Whilst this article has only dealt with the most salient proposed amendments, there are numerous proposals which are highly problematic and impractical and which in their current form will have an adverse affect on organisations doing business in South Africa. Should you wish to add your comments or obtain advice please contact us at firstname.lastname@example.org. Submissions must be made before 4 December 2012.
IMPLEMENTATION OF AMENDMENTS
Once all the submissions have been taken into account, it is envisaged that organisations will be given a year to adapt to the new legislation.
Neil Raymer of Labourwise Human Resources for www.labourwise.co.za
Labourwise is an on-line labour relations service aimed at assisting employers with the implementation of effective labour relations. They can be contacted via www.labourwise.co.za or email@example.com