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What would happen to sales in your company if your B-BBEE score  drops by two to four levels? The competition would make inroads into your market!

A key to survival in current times is addressing the challenge the new B-BBEE codes present to business. The new B-BBEE codes will make it much harder to win business for companies that have not adapted. Without proper planning you will be placing your business at risk. It will be very difficult (unless you are at least 51% Black Owned) to obtain a high rating level due to the thresholds that were significantly increased.
Stefan Lauber facilitating the B-BBEE Workshop

Stefan Lauber facilitating the B-BBEE Workshop

One of the easiest way to  boost your rating is through skills development. In essence the new codes demand a far greater investment in skills development with a particular emphasis on accredited training and learnerships.

Shift in the market
Stefan Lauber, the CEO of i-Fundi, has seen a shift in the market. “Instead of looking at learnerships as a compliance exercise, companies are now asking the question: “how can we make sure our training spend earns us a large number of BBBEE points while at the same time making us more competitive”“. This means that employers:
  • Proactively develop the skills necessary to excel in business
  • Invest in their people to retain them longer
  • Create ladders of learning that create career paths
  • Use learnership as an alternative way to attract new recruits
  • Implement these programmes cost effectively by taking advantage of all the available incentives.
For more information download the presentation.
How to maintain your best B-BBEE rating with the new laws coming into play

In the future, buyers will be careful to only choose suppliers whose B-BBEE rating will help them strengthen their own procurement score. If your company depends on sales from government or corporates it will have little choice but to work on its B-BBEE score. There are no short cuts. It will take you at least a year to complete the necessary steps, so don’t wait until the last minute to address this issue. Remember that the alternative of not improving your score could be costly.
The new codes introduce significant changes, according to Hanli Malan who facilitated ”The Revised BEE Scorecard with a Special Focus on Skills Development” at the last Community of Experts workshop.
In the past if the turnover of your company was below R35 million, you could choose the four elements that would make you look the best. Under the new codes you won’t be able to do that.
Key elements of the new B-BBEE codes
In the new codes:
  • Only the Socio-Economic Development element has stayed the same with 5 points. All other elements have become more difficult.
  • Management Control contributes now 15 points instead of 10 points.
  • Ownership has gained in importance; it now counts for 25 instead of 20 points. Unlike in the past, even small business will be assessed in terms of ownership. To understand this element better download the presentation from a previous Community of Experts event on the new B-BBEE codes.
  • Preferential Procurement and Supplier Development have merged. They now account together for 40 points instead of the previous 35. In other words, it will have a major influence on who companies will decide to work with.
  • Skills Development earns 20 points instead of 15 points, an extra 5 bonus points are available.
Hanli Malan facilitating at the B-BBEE Workshop

Hanli Malan facilitating at the B-BBEE Workshop

Priority elements

Of these five elements, ownership, preferential procurement and skills development are considered priority elements. That means that if you do not score at least 40% of the minimum target of these priority elements, you will be marked down by one level on your overall score. For example, you will have to score at least 8 out of the 20 points available for skills development or you will be penalised.

Skills development is one of the easier elements to gain points. Succeeding here will not only help with your score but will also give your business the skills it needs while lowering unemployment.
  • You can earn 8 points if you invest 6% of your payroll on the training of black people. It used to be 3%.
  • Another 4 points can be received if you spend 0.3% of your total payroll on learning programmes for disabled, black employees.
  • By participating in learnerships, apprenticeships and internships you can claim 4 points if 2.5% of your staff is enrolled on such programmes and another 4 points if 2.5% of your company’s headcount are black unemployed learners.
  • You earn an additional 5 bonus points if all your unemployed learners will be gainfully employed at the end of the learnership.
The following table summarises the above:

  Skills Development Indicator

Points Target

1.

Skills Development expenditure on any program specified in the Learning Programmes Matrix as a percentage of the leviable amount (LPM)

1.1

Skills Development expenditure on learning programmes specified in the LPM for black people as a percentage of the leviable amount

8

6%(up from 3%)

1.2

Skills Development expenditure on learning programmes specified in the LPM for black employees with disabilities as a percentage of the leviable amount

4

0,3%

2.

Learnerships, Apprenticeships and Internships:

2.1

Number of black employees participating in learnerships, apprenticeships and internships as percentage of total employees

4

2.5%

2.2

Number of unemployed black employees participating in learnerships, apprenticeships and internships as a percentage of total employees

4

2.5%

3.

Bonus Point

3.1

Number of black people absorbed by the industry at the end of the learnership programme

5

100%

TOTAL SCORE WITH BONUS POINTS

TOTAL SCORE WITHOUT BONUS POINTS

25

20

New benefits under the latest codes
Apart from the changes in the way points are allocated under the new codes you should also be aware that:
  • You can now also claim for training costs of people that are not employed by your company.
  • Learnerships, apprenticeships and internships are a great way to boost your training spend, as you can count the salaries of the learners as a training expenditure.
  • Learnerships for the disabled allow you to score in all the three areas at the same time.
  • Skills development spending can be counted in two elements at the same time, i.e. it can be both part of supplier and enterprise development.
  • The cost for your Skills Development Facilitator can be claimed as a training expense.
  • Only 15% of your training spend can consist of internal training that is not accredited. In other words most of your training will have to be unit standard aligned.
  • Only 15% of your training claim can be for expenses such as travelling, catering or venue hire.
  • SETA grants such as the mandatory, pivotal and discretionary grants can help you to fund your training programmes.
  • SARS offers a tax break of R 60 000.00 per participants on a learnership, which equals a saving of R 16 800.00 per learner per year. For more information, read up on the presentation from a previous Community of Experts event on SARS Tax Breaks.
  • SARS also allows you to deduct R 1 000.00 per young person per month that you employ, which equals an annual saving of R 12 000.00. Terms and conditions apply.
  • You can also benefit from substantial salary savings as previously unemployed learners only need to be paid an allowance instead of the normal salary. Depending on the position under consideration, you can save up to R 2,000 per month per person on a learnership.
  • All of the above amounts a rough saving of approximately R50 000 per participant on a learnership.
As you can see from the above points, there are plenty of incentives available for you to boost your skills development score even if your training budget is limited.
Choose an experienced partner
“Choosing an experienced partner in implementing such programmes is essential to make such programmes a success”, Stefan Lauber says.  As one of the first training companies to implement learnerships, i-Fundi has built a wealth of best practises on how to best implement accredited training programmes.
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It provides an end-to-end solution that allows companies to focus on their core business safe in the knowledge that they work with a company that helps it to deliver the expected results with the least amount of trouble.
Conclusion
“Most companies realise that they have to implement accredited courses and learnerships. Invariably I am asked, how to go about starting these programmes” said Hanli Malan from Business Evolved Verification.
The new codes place a much greater emphasis on accredited training in general, and learnerships in particular.
Click on this link to get a handy checklist of the documentation that your verifier will need.