Amendments to the B-bbee Codes of good practiced

B-BBEE Training: Amended Construction Sector Charter Codes

On Friday 31st May 2019, the Department of Trade and Industry (the dti) published Gazette #42496, an amendment to Gazette #36928.

The amendments were published in terms of Section 9 (1) of the Broad-Based Black Economic Empowerment Amendment Act 2003, (Act No. 53 of 2003) as amended by Act 46 of 2013.

This Gazette, which issued amendments to Code Series 000 (General), 300 (Skills Development), 400 (Enterprise & Supplier Development), and Schedule 1 (Definitions), came into effect upon the date of publication. A six-month transition period is allowed for implementation. Hence, until and including 30th November 2019, an organisation measured against the Generic Codes can elect to be measured against the 2013 provisions held in Gazette #36928. Notwithstanding, an organisation may elect to be measured against the amended provisions immediately, but only before 1st December 2019. Should an organisation elect to be measured on the amendments of this Gazette, all the amendments in the Gazette are applicable.

Either on or following 1st December 2019, evidence of an organisation’s Status Level, whether in the form of a SANAS accredited B-BBEE Certificate, an Affidavit, or a CIPC Certificate, must be measured against the 2019 amended provisions of Gazette #42496. This deadline is non-negotiable. Gazette #36928 will be repealed on 1st December 2019. Consequently, following the repeal, all relevant amendments apply to the Amended Generic Codes; therefore all organisations, irrespective of their threshold, are bound by it.

However, organisations measured on a Sector Code issued in terms of Section 9(1) of the B-BBEE Act as amended, are measured according to the requirements of that particular Sector Code. Therefore, organisations measured on a Sector Code will not be affected by these amendments.

Nevertheless, where matters are silent in the Sector Codes, the amended provisions of Gazette #42496 are applicable.

The Sector Councils are, however, are now required to align their sector-specific Codes to the dti’s Amended Codes of Good Practice, and a transitional period of twelve points from 1 June 2019 to 30 May 2020 has been allocated for this process, encouraged to initiate an alignment process to integrate these amendments into their specific Sector Code. On the 18th of September 2019, the Tourism B-BBEE Charter Council published their draft amendments in Gazette 42725 and invited all interested and affected persons and organisations to participate in the alignment by submitting comments and inputs in writing by no later than 30 November 2019 to the Tourism B-BBEE Charter Council.

Statement 000: General Principles – The Generic Scorecard Notice 306 of 2019

Compliance with Priority Element clearly states that Sub-minimum Requirements are only applicable when Bonus Points are excluded as outlined below:
- Skills Development – 40% of the 20 points available
- Preferential Procurement – 40% of the 25 points available
- Supplier Development – 40% of the 10 points available
- Enterprise Development – 40% of the 5 points available
Organisations that are 51% or 100% ‘Black’-owned QSEs that benefit from Enhanced Recognition only need to comply with Ownership as a Priority Element (paragraph 3.3.2.2).
The Discounting Principle applies to QSEs that do not comply with the Sub-minimum Requirements. Organisations that are 51% or 100% ‘Black’-owned EMEs or QSEs can achieve Enhanced Recognition using the Flow-Through Principle. This indicates that the Modified Flow-Through Principle does not apply in this instance.
The Joint Venture calculation applies to organisations with a Status Level 1, 2 or 4. Points are outlined as follows:
- Level 1-100% ‘Black’-owned = 100 points;
- Level 2-51% ‘Black’-owned = 95 points; and
- Level 4 = 85 points.

This calculation is applicable across all Sector Codes except the Construction Sector Code, which has its own Joint Venture calculation.

Statement 300: The General Principles for Measuring Skills Development – Notice 305 of 2019

The Skills Development Generic Scorecard has been amended as follows:

Indicator	Weighting points	Compliance Target	Amendments
2.1.1.1. Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for black people as a percentage of Leviable Amount	6	3.5%	Weighting Points and Compliance Target was reduced to make provision for bursaries.
2.1.1.2. Skills Development Expenditure on Bursaries for Black Students at Higher Education Institutions	4	2.5%	New indicator relating to bursaries for tertiary education.
2.1.1.3. Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for black employees with disabilities as a percentage of Leviable Amount	4	0.3%	No change to Weighting Points
2.1.2.1. Number of black people participating in Learnerships, Apprenticeships and internships as a percentage of total employees	6	5%	Combining the old employed and unemployed Learnerships, Apprenticeships and Internships into one category with the same target but fewer points. This is to ensure that double counting does not occur.
BONUS POINTS 2.1.3. Number of black people absorbed by the Measured and Industry Entity at the end of the Learnership, Apprenticeship or Internship	5	100%	Limited to Learnerships, Apprenticeships and Internships
Total	25		Unchanged

The total points, excluding Bonus Points, remain unchanged. The only adjustments were for the provision of bursaries, as well as the combination of Employed and Unemployed Learnerships, Apprenticeships and Internships.
The EAP calculation remains unchanged and applies to bursaries.
Skills Development expenditure on bursaries under 2.1.1.2 must not be counted under the Skills Development Indicator 2.1.1.1 and vice versa.
The Category F&G Learning programs’ cap increased from 15% to 25%; however, training costs such as travel, accommodation and catering remain at 15%.
In terms of bursaries, there is no cap on training costs such as travel, accommodation or catering.
Salaries and wages for Learnerships, Apprenticeships and Internships claimed under Skills Development Expenditure includes stipends paid to ‘Black’ Bursary Students. However, it is vital to note that there can be a stipend for employees, but wages or salaries are excluded.
The category A Bursaries are defined as ‘Black’ Students registered at educational institutions established by, or registered with, the Department of Basic Education or the Department of Higher Education and Training.

One could assume that adding Bursaries to the Skills Development Element is a way to address ‘fees must fall’ through the private sector to alleviate the potential financial burden on the economy.

Statement 400: The General Principles for Measuring Enterprise and Supplier Development – Notice 304 of 2019

The Enterprise and Supplier Development Scorecard has been amended as follows:

Indicator	Weighting points	Compliance Target	Amendments
2.1.1. 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	80%	Unchanged
2.1.2. 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. Refer to Paragraph 3.9 in Statement 400 – The General Principles for Measuring Enterprise and Supplier Development, Notice 304 of 2019	3	15%	If a Generic Enterprise was previously recognized as a QSE, the recognition remains for a maximum of five years, using only Flow-Through, providing evidence that supports this.
2.1.3. 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. Refer to Paragraph 3.9 in Statement 400 – The General Principles for Measuring Enterprise and Supplier Development, Notice 304 of 2019	4	15%	If a Generic Enterprise was previously recognized as an EME, the recognition remains for a maximum of five years, using only Flow-Through, providing evidence that supports this.
2.1.4. 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	50%	Increased from 9 points to 11 with weighting increased from 40% to 50%
2.1.5. 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	12%	Unchanged
Bonus points 2.1.6. B-BBEE Procurement Spend from Empowering Designated Group Suppliers that are at least 51% Black Owned.	2	2%	No change except for clarification requirement of 51% ‘Black’ Ownership
2.2.1. The annual value of all Supplier Development Contributions made by the Measured Entity as a percentage of the target.	5	1% of NPAT	If a QSE Supplier Development Beneficiary evolves to become a Generic Enterprise the recognition remains for a maximum of five years, using only Flow-Through, providing evidence supports this.
Bonus Points 2.4.1. Bonus point for graduation of one or more Enterprise Development beneficiaries to the Supplier Development level.	1		Unchanged
2.4.2. Bonus point for creating one or more jobs directly as a result of Supplier Development and Enterprise Development initiatives by the Measured Entity.	1		Unchanged
Total	44	46	Total weighting points changed

The Net Profit After Tax (NPAT) calculation is provided for under this element.
First-time supplier recognition applies to organisations that are 51% ‘Black’-owned or 51% ‘Black’ Women-owned using the
Flow-Through Principle only, the calculation of which spend is multiplied by 1.2.
Guarantees under the Benefit Factor Matrix increased from 3% to 50% recognition.
The increased spending with ‘Black’-owned entities could tip the scale in favor of increasing ‘Black’ Ownership within the measured entity to compensate for the loss in points.
The insertion of paragraph 3.8: “A Supplier Development Beneficiary is deemed as being part of an organisation’s supply chain, whereas an Enterprise Development Beneficiary is not.” This addition clearly distinguishes the role of the Beneficiaries in an organisation’s supply chain, in that a Beneficiary can only be an Enterprise Development Beneficiary or a Supplier Development Beneficiary, not both.
The points for 51% ‘Black-owned organisations has increased to 11

Schedule 1: Interpretation & Definitions – Notice 303 of 2019

The expectations of the Codes of Good Practice must be interpreted according to the provisions in the Codes. Any reasonable interpretation consistent with the objectives of the Act and the Regulations thereof must take precedence. The words importing persons shall mean, where the context so requires or admits, individuals, firms, partnerships, trusts, corporations, government bodies, authorities, agencies, unincorporated bodies of persons or associations, and any organisation having legal capacity.

Definition amendments in Schedule 1 are outlined hereunder:

Term	Old Definition	New Definition
Absorption	Means a measure of the measured entity’s ability to successfully secure formal, permanent or long-term contract of employment for the learner, ~~or to assist the Learner’s proceed with further education and training.~~	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	Not previously addressed	Means a legal agreement between an individual and an entity that this individual would work until his or her mandatory date of retirement.
30% Black Woman Owned	Means an entity in which:(a) Black Woman hold ~~more than~~ 30% of the exercisable voting rights(b) Black Woman hold ~~more than~~ 30% of the economic interest(c) has earned all the points for Net Value under statement 100	Means an entity in which:(a) Black woman hold at least 30% of the voting rights.(b) Black woman hold at least 30% of the economic interest(c) has earned all the points for Net Value under statement 100
Current Equity Interest Date (Previously Net-Value Date)	Means the latter occurring of the date of commencement of statement 100 and the date ~~upon which the earliest of all still operative transactions undertaken~~ by the measured entity in order to achieve black rights of ownership, became effective and unconditional	Means the later occurring of the date of commencement of statement 100 and the date upon which the transaction undertaken by the measured entity in order to achieve black rights of ownership, became effective and unconditional.

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