Author: ramatthews45

Originally published 8 June 2023. Employment Equity requirements have continued to develop since publication; obtain current specialist advice before acting on this article.

The Employment Equity Act and the Broad-Based Black Economic Empowerment Act are separate pieces of legislation. They share the objective of transformation, but their requirements are different.

During a B-BBEE verification, a rating agent may assess Employment Equity submissions. Changes to Employment Equity law should therefore not be ignored, but they do not automatically amend the B-BBEE Codes.

Why alignment matters

Employment Equity obligations and B-BBEE Management Control targets can influence workforce planning in different ways. Businesses should avoid treating either framework in isolation.

A practical approach is to compare the applicable Employment Equity requirements with the demographic targets relevant to the B-BBEE Management Control element, identify inconsistencies early and develop a coordinated strategy.

CMS makes use of approved third-party Employment Equity specialists who understand the impact of Employment Equity on B-BBEE. This helps ensure that the two strategies remain properly aligned.

For assistance, contact admin@consultr.co.za.

Originally published 16 May 2023.

A B-BBEE affidavit can be rejected when the wrong format is used, information is missing, or the document is not properly commissioned. Common problems include:

The sector does not allow an affidavit

For example, entities that fall within certain Transport Sector Codes may not use an affidavit as proof of B-BBEE status, irrespective of annual turnover.

The wrong sector template is used

Construction, Property, Tourism and Defence sector thresholds and templates differ from the Generic Codes. The applicable affidavit format must be used.

The affidavit was not signed correctly

The deponent must sign in the presence of the commissioner of oaths. Differing signature dates or inappropriate electronic-signature evidence may raise concerns.

The document was certified rather than commissioned

A stamp reading “certified copy of the original” does not confirm that an oath was taken. Check the commissioner’s stamp carefully.

Required signatures or details are missing

The deponent’s designation, black ownership percentages, turnover, financial period and applicable level must be completed correctly. Missing signatures mean the document is not a valid affidavit.

The commissioner is not impartial

A staff member or another person closely connected to the measured entity may not be considered impartial.

The financial period is outdated

The turnover declared should relate to the most recent relevant financial period.

All the details matter—especially the small ones.

Requirements differ by sector and may change. Confirm the current applicable code and template before relying on an affidavit.

Originally published 16 May 2023.

The short answer is: “Most probably not.”

During the Future of Empowerment conference held in September 2015, the then deputy director-general of the Department of Trade and Industry, Mr Sipho Zikode, said that only approximately 10,000 Chinese people in South Africa were eligible to benefit from black economic empowerment programmes.

When South African citizens were subject to race classification during apartheid, Chinese people were classified as “coloured” and suffered the disadvantages of apartheid legislation.

As reported at the time, the relevant group consists of Chinese South Africans who were present before 1994—not people living in China generally.

Accordingly, if a person is ethnically Chinese and can prove descent from a Chinese person who was classified as coloured during the apartheid era, that person may fall within the applicable definition under the B-BBEE Codes of Good Practice.

This article provides general information only. Individual circumstances and current legislation should be assessed before relying on a classification.

Originally published 16 May 2023.

How often have you asked your accountant to give you a breakdown of the donations account at year end, to determine which ones were to the benefit of black people, so you can claim them for SED points on the B-BBEE Scorecard? If at least 75% of the beneficiaries are black, then those donations are SED initiatives and they earn you B-BBEE points, right? The correct answer is: “maybe”.

While donations fall squarely within the definition of CSI, it is dangerous to assume that all CSI initiatives which benefit black people are SED initiatives. CSI contributions are not necessarily SED contributions.

Corporate Social Responsibility (CSR)

This refers to the responsibility of an enterprise to the environment in which it operates, taking into consideration profits, people and the planet. It is connected to the culture of the enterprise, its ethos and the way awareness of its environment manifests in how it operates.

Corporate Social Investment (CSI)

Corporate Social Investment is what happens when CSR takes action. While CSR is an all-encompassing term, CSI refers to the actual initiatives being implemented. CSI does not generate profit but benefits the community and environment. Initiatives may include contributions of time, money, skills or expertise.

Socio-Economic Development (SED)

Socio-Economic Development is an element of the B-BBEE scorecard and is embedded in B-BBEE legislation. SED seeks a positive, sustainable economic consequence for beneficiaries. The purpose of contributions must therefore be to facilitate income-generating activities or sustained access to the economy.

The importance of CSI cannot be over-emphasised. It supports spiritual wellbeing, animals in need, fire prevention, nature conservation and many other worthy causes, but it does not necessarily qualify as SED.

When an initiative addresses a person’s participation in the economic environment, that is when we see SED in action.