Broad-Based Black Economic Empowerment (B-BBEE) is a form of economic empowerment initiated by the South African government with the goal to distribute wealth across as broad a spectrum of previously disadvantaged South African society as possible. B-BBEE compliance will enable a business to obtain better contracts, in addition, it provides credibility for the company. The implementation and compliance with B-BBEE in a company is accompanied by several benefits, but firstly points must be earned on the B-BBEE scorecard. Ever wondered how the sales in your company could be affected if you dropped two to four B-BBEE scorecard levels? The answer to this is that your competitors will immediately start sticking their claws into your market. The new B-BBEE scorecard makes it a bit difficult for companies to get business especially if they have not yet adapted to these new codes. Companies who have not carefully planned are therefore at a greater risk. Skills development is one of the most expensive and costly priority elements on the scorecard but has great benefits when implemented correctly. This element measures the investment that businesses make to the training and development of its black workforce in order to improve their skills and competencies. Training staff members is beneficial for the company and its employees. The importance of skills development is therefore no longer an add-on to business strategies or a “nice to have” but an imperative factor. Skills development as one of the elements of the B-BBEE scorecard carries a weighting of 20 points. In addition to the 20 points, companies are entitled to claim up to 40% on any costs incurred for stuff training.
Maximising points on your B-BBEE scorecard for skills development
Ultimately, skills development is about leveraged training and building a scorecard. As mentioned earlier, skills development and training is one of the priority B-BBEE scorecard elements and is important to gain points on. Getting this right not only assists with overall B-BBEE score rating but it also helps improve the skills of a company’s workforce as well as reducing unemployment in the broader community in which the company exists. A proper skills development and training strategy includes focusing on people with disabilities, and programmes that allow for salary inclusion as well as maximise tax breaks, subsidies and SETA funding. The following ways include how companies can gain points and benefit all at the same time:
- Generic companies can earn 8-points if 6% of payroll is invested in the training of black people whilst QSE’s only needs to spend 3% of their payroll.
- Additionally, 4-points can be earned if 0.3% of the total leviable payroll is spent on learning programmes for disabled black employees.
- A company that participates in learnerships, apprenticeships or internships can claim an additional 4-points if 2.5% of the employees are enrolled for such programmes, and another additional 4 points if 2.5% of the company’s headcount are black unemployed learners. The amendments introduced by the DTI also require that 2.5% of a generic entity’s annual payroll is spent on funding higher education. This is by means of bursaries for black students at higher education institutions, which will earn companies up to four points on the scorecard.
- In addition, 5-bonus points can be earned if all the unemployed learners are gainfully employed upon conclusion of the learnership.
- With the revised B-BBEE scorecard, companies can also earn maximum skills development points if they spend the required 3% or 6% of their annual payroll on skills development programmes such as SETA-accredited training initiatives This is however dependent on the business industry.
While putting in all the effort to score and maximise those points it is also important to keep in mind that there is a prerequisite for recognising any points under Skills Development on your B-BBEE scorecard. This prerequisite is the form of submitting the following:
- Workplace Skills Plan (WSP). A business will only receive points on their B-BBEE scorecard upon proving that a Work Skills Plan has been submitted.
- Pivotal Plan.
- Annual Training Report (ATR) prior to the deadline in April each year.
In closing, it is always important to record training so that it can be submitted in the event of B-BBEE audits.
For assistance on how you can score and maximise your B-BBEE score for Skills Development and Training please contact Cham-training.
Marketing@cham-training.co.za. 010 040 8335.