So this is how the new B-BBEE code amendments affect you, in case you didn’t know

Jun 10, 2019

With all of the changes that came along with the month of May 2019, the outgoing minister of Trade and Industry decided to end it off on a big note with a B-BBEE filled surprise. Before the effects of the new democratically elected government were implemented, the South African DTI signed Gazette 42496 on the 9th April 2019 which was then gazetted on the 31st March 2019. This included an amendment of 3 B-BBEE Codes of good practice as well as the as amendments to Schedule 1 within which several integral definitions have been modified. These changes are to be implemented within any time between the 1st June 2019 and the 30th November 2019.

Amendments to Schedule 1

One of the first changes in Notice 303 of 2019 is the revised Schedule 1 of the Amended Codes of Good Practice which outlines definitions of elements within the Codes as well as its interpretations. Among the most significant changes are the revised definitions of “Absorption” and “Long-term contract of employment”

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.”

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”

This means that learners that have been placed within learnership programmes can no longer be rolled over into newer programmes and still be qualified as an “absorbed” learner. This also means that companies must now offer permanent long term employment contracts to qualifying candidates of learnership programmes in order to qualify for the absorption bonus.

“30% Black Women Owned means an Entity in which: (a) Black women hold at least 30% of the exercisable voting rights as determined under Code series 100; (b) Black women hold at least 30% of the economic interest as determined under Code series 100; and (c) has earned all the points for Net Value under statement 100″

Quaifying ESD contributions have also been amended to no longer include 30% Black Women Owned entities and are now limited to 51% Black Owned or Black Women-Owned QSE’s or EME’s.

Revised Code 000, Statement 000 : General Principles

Enhanced B-BBEE Recognition for an EME/QSE that is 51%/100% Back Owned leading to a Level 2/1 compliance status must be measured using the flow-through principle and not modified flow-through.

A new section headed Eligibility of Joint Ventures has been included, it gives guidance as to how to calculate a consolidated BEE Certificate for an unincorporated Joint Venture.

Revised Code 300 : General Principles for Measuring Skills Development

There has been a few changes to the skills development scorecard as listed in Notice 305 which is outlined below:

Criteria Current Status Amended Status
Targets Points Targets Points
Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for black people as a % of Leviable Amount. 6% 8 3.5% 6
Skills Development Expenditure on Bursaries for Black Students at Higher Education Institutions. 2.5% 4
Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for black employees with disabilities as a % of Leviable Amount. 0.3% 4 0.3% 4
Number of black people participating in Learnerships, Apprenticeships or internships as a % of total employees. 2.5% 4 5% 6
Number of black unemployed people participating in Learnerships, Apprenticeships and internships as a % of total employees. 2.5% 4
Total Points 20 20
(Bonus Points) Number of black people absorbed by the Measured and Industry Entity at the end of the Internship/Learnership/Apprenticeship programme 100% 5 100% 5

There is now a distinct split of the 6% leviable amount target for overall skills development expenditure and bursaries and double counting on spend initiatives is expressly not permitted. While the 6% target remains unchanged, there is now a 2 point increase in the permitted points as listed in 2.1.1.1 and 2.1.1.2. The cap on informal and workplace skills development expenditure for category F/G learning programmes has been raised from 15% to 25%. The narrative description of Category A in the Learning Programme Matrix has been revised:

“Institution based theoretical instruction alone – formally assessed by educational institutions established by or registered with the Department of Basic Education or the Department of Higher Education & Training.”

Revised Code 400 : General Principles for Measuring Enterprise & Supplier Development

There has also been a number of changes to the preferential procurement sub-element of the enterprise and supplier development scorecard as per Notice 304 as follows:

Criteria Current Status Amended Status
Targets Points Targets Points
B-BBEE Procurement Spend from all Empowering Suppliers 80% 5 80 5
B-BBEE Procurement Spend from all Empowering Suppliers that are Qualifying Small Enterprises 15% 3 15% 3
B-BBEE Procurement Spend from all Empowering Exempted Micro-Enterprises 15% 4 15% 4
B-BBEE Procurement Spend from Empowering Suppliers that are at least 51% Black Owned 40% 9 50% 11
B-BBEE Procurement Spend from Empowering Suppliers that are at least 30% Black Women Owned 12% 4 12% 4
Total Points 25 27
(Bonus Points) B-BBEE Procurement Spend from Empowering Designated Group Suppliers that are at least 51% Black Owned. 2% 2 2% 2

The biggest change lies within the target for preferential procurement from 51% black owned entities of which the target is now 50% with 11 available points. This has increased by an additional 2 points with an accompanying increase in 10% as a target. Beneficiaries of supplier development and enterprise development must be at least 51% black owned or black-women owned as qualified using the flow through method. Generic entities that are 51% black owned can still be recognised as Exempt Micro Enterprises (EME’s) or Qualifying Small Enterprises (QSE’s) provided that it is within 5 years from when they were first listed as 51% black owned beneficiaries of suppler development or enterprise development programmes. The same principle applies to procurement from these entities. The multiplier of 1.2 for first time suppliers has been removed and replaced by a 1.2 recognition boost for purchasing from 51% black owned or black women owned suppliers whose qualification is achieved using the flow-through principle and not the modified flow-through principle.

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