Bursaries and B-BBEE

The Amended BEE Codes of Good Practice have companies gasping!! There are elements which are problematic and where compliance is difficult. People have questioned the rationale and many are floundering as they attempt to achieve compliance.

The introduction of Skills Development as a PRIORITY ELEMENT – where you have to achieve 40% of the target so as to avoid being discounted by one compliance level – and the increased spend requirement for this element, is also seen by many as problematic.

However, it’s important to note that the required spend can be utilised for the upskilling of employees or non-employees, whereas previously it was only spend on employees that would be considered.

While the required spend is high – 6% of Skills Development Leviable Amount for generic organisations, and 3% for Qualifying Small Enterprises, the good news is that this money can be spent on non-employees.

Bursaries to black South Africans have previously been counted under the Socio-Economic Development element of the B-BBEE scorecard however, this spend can now be included in Skills Development.

So how do you maximise the benefit of this spend?

We all know that employees are the lifeblood of organisations and fostering loyalty and retention should be a focus for all organisations. Bursaries for the black children of staff members can now be included as skills spend – giving the company points and staff a feeling of being appreciated!

In many organisations, there are scarce skills that are required – either for immediate inclusion in the workforce or as part of a succession plan. Bursaries could be offered to deserving applicants who would then form a pool of suitable recruits in the future. Allowing these individuals to work within the organization during their holidays will mean that they become familiar with processes and the culture and will make for an easy transition post their studies.

For any of these bursaries to be considered as Skills Development, they would need to be awarded to Black South Africans, and the claimable amount is the ex VAT amount. Further, the training that is undertaken will qualify only if it meets the following criteria:

  • Is offered by an accredited provider
  • Is independently assessed
  • Leads towards a degree, diploma or certificate

This means that secondary schools fees could be included.

HRTorQue – BEE Status

We are pleased to advise that HRTorQue Outsourcing (Pty) Ltd has scored excellently on the QSE Scorecard, and is categorised a Level 2 Contributor to Broad Based BEE, meaning that our clients can claim 125% of their spend with us on their own scorecard.

Furthermore, due to our categorisation as a “Value-Adding Supplier”, our clients can claim a further 25% on their spend with us.

BEE Rating

We are pleased to advise that HRTorQue Outsourcing has scored excellently on the QSE Scorecard, and is categorised as a Level 2 Contributor to Broad Based BEE, meaning that our clients can claim 125% of their spend with us on their own scorecard.

Furthermore, due to our categorisation as “Value-Adding Supplier”, our clients can claim a further 25% on their spend with us.

BEE Code for Charities Withdrawn

The Department of Trade and Industry (DTI) has withdrawn a broad-based black economic empowerment code which would have seen businesses only receiving their full BEE points if their money went to charities with 100% black beneficiaries.

Despite the U-turn, companies will still have to do a racial audit of beneficiaries if they want to claim full BEE points, and companies can only qualify for full BEE points if they give to charities where 75% of beneficiaries are black.


The Department of Trade and Industry (DTI) on 02/10/12 opened a 60-day period for comment on the revised Broad-based Black Economic Empowerment (B-BBEE) Codes of Good Practice. Some of the preliminary information that was presented at the launch of these Draft Codes is as follows:

The annual revenue thresholds to be measured as an Exempted Micro Enterprise (EME), or as a Qualifying Small Enterprise (QSE) have been adjusted:

  • EME’s increasing from R5 million to R10 million
  • QSE’s increasing from between R5 million and R35 million, to R10 million and R50 million

The current generic scorecard contains seven elements and these have been reduced to five, with a total of 105 points assigned to the five elements. NB: All companies, except EME’s, are to comply with all the elements of the scorecard.

Below are some challenges companies may have to address if these Draft Codes are gazetted unchanged:

  • Ownership:
    This element is given greater recognition – points increase from 20 to 25.
  • Management Control (includes the old Management and Employment Equity):
    Less points, 15 now, whereas previously the 2 elements were worth 25 points together. Also, the sub-category ‘Junior Management’ measured under Employment Equity previously, has been removed and only 2 levels, senior and middle management, are now to be measured.
  • Skills Development:
    Still worth 20 points, but 5 bonus points can now also be scored. There is greater recognition for implementing Learnerships and Apprenticeships, i.e., a total of 8 out of the 20 points, and the 5 bonus points for “Learner Absorption” (presumably for employing them at the end of the learnership period).
  • Enterprise and Supplier Development (includes the old Preferential Procurement and Enterprise Development elements):
    Together worth 40 points (previously 35). Significantly, 13 of the 25 points allocated to procurement are for buying from Black/Black women owned suppliers. Perhaps more importantly, recognition will only be for procurement from value-adding suppliers (i.e., to obtain value-added status, the sum of total labour costs together with net profit before tax must exceed 25% of total revenue). In addition, up to 6 bonus points can be obtained new venture and job creation.
  • Socio-economic Development:
    Still worth 5 points on the Scorecard. There appears to be a shift towards emphasising training and mentoring persons to improve their capacity to work and for self-employment. Once we have the full draft Codes, we will elaborate on this.

For assistance with your BEE requirements please contact Melany Bydawell: melany@hrtorque.co.za.

The New BEE Codes of Good Practice

Cabinet has approved the revised Broad-Based Black Economic Empowerment (B-BBEE) Codes of Good Practice 2012 for public comment.

Some of the key areas of refinement of the codes include:

  1. The reduction of the generic scorecard to five elements, with Employment Equity and Management Control being consolidated, and Preferential Procurement and Enterprise Development merged to form a Supplier Development Element;
  2. All companies, except Exempted Micro Enterprises, will be required to comply with the five elements of the B-BBEE scorecard;
  3. ‘Priority elements’ have been introduced, namely ownership, skills development and supplier development, and large enterprises are to comply with all three priority elements. The priority scores of entities that do not comply with sub-minimum requirements in each priority will be discounted;
  4. Points will be deducted from companies that do not invest in skills and supplier development;
  5. The points for ownership have been broadened to include designated groups in the main points;
  6. Revised qualification points for awarding of B-BBEE recognition levels status;
  7. Thresholds for Exempted Micro Enterprises and Qualifying Small Enterprises (QSE) have been adjusted;
  8. Entities that are 100% black-owned will qualify as Level 1, while entities that are more than 50% black-owned will qualify as Level 2.

It appears there’s much to be understood and digested, as well as preparation for a significantly different set of measures and targets going forward.

For further information please contact Melany Bydawell: melany@hrtorque.co.za.

Bill Aims to Create BEE Commissioner

Article provided by Tony Kruger.

The gazetted Broad Based Black Economic Empowerment (BBBEE) Amendment Bill is aimed at putting in place strict measures to prevent fronting, Minister of Trade and Industry Rob Davies says. “What we are doing is defining it… more closely in the bill so that there is a specific statutory offence of fronting,” Davies said in Pretoria.

Fronting is when a company pretends to be compliant with the act by placing blacks in positions that make it appear that they own the company, or are at a level to make decisions. “Now that would be a fraud as you are trying to do that because you want to get a regulatory benefit, or present yourself as something that you are not,” Davies said.

He was speaking after a presidential BBBEE advisory meeting at which progress made on the legislation and the codes of good practice were reviewed.

He said a commissioner would be assigned to focus solely on fronting. The commissioner would investigate cases of fronting, correct the situation and, in extreme cases, have the authority to prosecute those involved.

“The problem is we haven’t got provisions in place to catch fronting… ordinary law enforcement officers don’t have the capacity to go and investigate transactions of that nature to see where fronting is taking place. “So we are introducing a BEE commissioner who will be charged with looking into the matter.”

Davies said the objective was to provide ways of measuring the degree to which an individual was involved in empowerment. The minister said the amendments to the bill would ensure black economic empowerment contributed to the creation of real entrepreneurs in SA. – Sapa


Nearly five years after the inception of the BEE Codes of Good Practice and companies are still not receiving the BEE scores which they should.

The reason for this is not that companies are not complying! The most common reasons for this are that companies are not fully aware of HOW they can score and what documentation is required to prove such compliance. Verification agencies are not allowed to “assist” or “advise” their clients in this regard – to do so would be to jeopardise their own accreditation – and so companies submit files for verification and are disappointed by the scores that they achieve. Changing requirements are also a challenge because, as the industry matures and companies become more knowing in regard to BEE, certain loopholes have been exposed and so verification agencies have been forced to tighten up their requirements and, as this is not always communicated to the entities being measured, this can be problematic.

Employment Equity and Skills Development are two significant pillars of BEE and yet they are also not fully understood. The correct categorisation of staff (EE) is vital if companies are to earn their BEE points.  Many companies feel that the targets for Skills Development are excessive and hence choose not to focus on this element of BEE.

This is not always correct – there are ways in which it is possible to achieve a positive score for Skills Development – however, this does involve sound recording and collation of documentation.

BEE and the achievement of a positive rating are not nearly as onerous as it seems. What is important is to de-mystify the process and ensure that recording of relevant information is in place. With the gazetting of the amended Preferential Procurement Policy Framework Act, it is imperative that companies have a valid BEE certificate to offer to their clients if they wish to remain competitive.

For more information on consulting and support services please contact Melany: melany@hrtorque.co.za.


New BEE Targets in 2012 for the Generic Dti Codes and for the Tourism Code

1.1 Dti Generic Codes

Please Note: The targets will increase significantly from February 2012 for the Dti Generic and QSE Codes, so it important to start making provision now for the following elements: Employment Equity and Preferential Procurement.

Targets in this 2nd phase will be:


1.2 Tourism Sector Code

If your organisation falls within the Tourism Sector, then very significantly increased new targets will apply as of May 2012. For example, targets will increase as follows: Ownership – from 15% to 20%, Employment Equity – all levels of Management from between 12 and 17% above the current target levels, Preferential Procurement between 5 and 20%. Going forward, other Sector Codes will also be faced with more challenging targets.

2. Interpretive Guide: Ensuring Proper Preparation for a BEE Verification and Rating

There continues to be issues on interpretation of the Dti Codes, compounded by the introduction of the various Sector Codes.

To start with the Ownership element, did you know:

  • The Codes allow for continued recognition of Black ownership, subject to certain criteria being met, even if the Black shareholder has already exited the business, e.g., through sale or loss of shares, death, etc.
  • The bonus points for ‘black new entrants’, employee share schemes, and co-operatives only apply if the overall target of 25% black economic interest has first been met.
  • Black family trusts do not automatically qualify as acceptable forms of Black ownership, but must first meet several qualifying requirements. In particular, that the trust deed must define the beneficiaries and the proportion of their entitlement to receive distributions; also, the Trustees must not have any discretion over the beneficiary’s entitlement to distributions.

Please contact Melany Bydawell for further information: melany@hrtorque.co.za.

The PPPFA has been Amended – How does it affect YOU?

The Preferential Procurement Policy Framework Act has been amended and is due to come into effect on 7 December 2011.

What this means is that anyone tendering for work with any government agency or department will no longer be adjudicated, as previously, as per their ownership demographic but rather according to their BEE level.

The rules will be applied as follows:

1. For tenders up to R1 million in value, points will be awarded for BEE compliance up to a maximum of 20 points:


2. For tenders exceeding R1 million in value, points will be awarded for BEE compliance up to a maximum of 10 points:


The other 80 and 90 points respectively will be allocated as is currently the case; financial soundness, pricing, functionality and the ability to deliver the goods or service.

What does this mean for ALL business?
Anyone doing business with government is going to be required to be verified and have a valid BEE certificate. Part of their compliance will be the compliance of their suppliers and so, the domino effect continues. The most likely result of this is that there is going to be greater pressure on ALL companies (whether they work directly with government or not) to be certified and have a valid BEE certificate to hand.

Is this achievable for YOUR business?
Yes! Despite the myths that surround BEE, achieving compliance is not as difficult as it would appear particularly for those companies turning over less than R35 million annually.

To find out more, please speak to our BEE Specialist: 031 564 1155.