Governing Legislation
In this section we will focus on:
The Skills Development Act and Skills Development Levies Act:
- SETAs;
- Workplace Skills Plans and Annual Training Reports; and
- Mandatory and Discretionary Grants.
- Designated Employers;
- EE Reporting;
- EE and BEE; and
- An extract from the EE Report.
- Current Act;
- New draft regulations;
- The Preference Point System; and
- Important principles and Implications.
- Definitions;
- Objectives; and
- Complying entities.
1. Skills Development Act 97 of 1998 and Skills Development Levies Act 9 of 1999
The Skills Development Levies Act requires certain employers to pay a levy to SARS, who then allocates a portion to the National Skills Fund and the remainder to the relevant SETA.
The levy that needs to be paid amounts to 1% of leviable payroll/ amount.
The 1% is distributed as follows:
The levy that needs to be paid amounts to 1% of leviable payroll/ amount.
The 1% is distributed as follows:
- 20% to the NSF; and
- 80% to the relevant SETA
Remember: Leviable Payroll Means
The total amount of remuneration paid or payable, or deemed to be paid or payable, by an employer to its employees during any month, as determined in accordance with the provision of the fourth. Schedule to the Income Tax for the purposes of determining the employer’s liability for any employees’ tax in terms of that schedule, whether or not such employer is liable to deduct or withhold such employees’ tax”.
The total amount of remuneration paid or payable, or deemed to be paid or payable, by an employer to its employees during any month, as determined in accordance with the provision of the fourth. Schedule to the Income Tax for the purposes of determining the employer’s liability for any employees’ tax in terms of that schedule, whether or not such employer is liable to deduct or withhold such employees’ tax”.
Sector Education and Training Authorities (SETA)
SETA’s were established to assist with the implementation of the National Skills Development strategy and to increase the skills of South Africans.
According to the Skills Development Act the functions of the SETA are:
According to the Skills Development Act the functions of the SETA are:
- The development and implementation of a sector skills plan;
- To promote learnerships by:
- Identifying workplaces for practical workplace experience;
- Supporting the development of learning materials;
- Improving the facilitation of learning; and
- Assisting with the conclusion of learnership agreements.
- Register learnerships;
- Support the implementation of the National Qualifications Framework (NQF).
Remember: Learnership means a learning programme which -
i) Consists of a structured learning component, the learnership includes practical work experience of a specific nature and duration;
ii) The learnership would lead to a qualification registered by the South African Qualifications Authority (SAQA) and related to an occupation, and
iii) The intended learnership is registered with the Director General in the prescribed manners.
i) Consists of a structured learning component, the learnership includes practical work experience of a specific nature and duration;
ii) The learnership would lead to a qualification registered by the South African Qualifications Authority (SAQA) and related to an occupation, and
iii) The intended learnership is registered with the Director General in the prescribed manners.
Workplace Skills Plans and Annual Training Reports
In order for an organisation to reclaim a portion of the levies, paid over to the SETA’s, in the form of a mandatory grant it is required to submit a Workplace Skills Plan (WSP) and a training report (ATR) annually.The above submission is also a requirement for BEE purposes. In order for an organisation to score any points under the Skills Development Element (Statement 400) it needs to comply with the following requirements:
Is a tool that allows for an organized process through which the employer engages with the employees and management with regards to the training needs of the company and its workers.
Allows for the facilitation of a budget that is made available through the Mandatory Grant rebate system in order to ensure workforce training.
An ATR is:
The implementation report where the planned training is reported on the previous years’ WSP.
- Appointment of a skills development facilitator;
- Compliance with SDA and SDLA;
- Registration with the relevant SETA;
- Development of a WSP and ATR;
- Implemented a plan to develop priority skills for Black people
Is a tool that allows for an organized process through which the employer engages with the employees and management with regards to the training needs of the company and its workers.
Allows for the facilitation of a budget that is made available through the Mandatory Grant rebate system in order to ensure workforce training.
An ATR is:
The implementation report where the planned training is reported on the previous years’ WSP.
The education and training targets in the workplace should be, partly or wholly, funded through the mandatory grants.
Mandatory and Discretionary Grants
Mandatory Grants are payable to companies that pay the Skills Development levy, and equals 50% of the Skills Development levy paid by the employer.
This grant may be claimed based on the submission of a combined WSP and ATR has been approved by the SETA.
Discretionary Grants need to be applied for separately and are approved at the discretion of the relevant SETA. The employer is able to claim a further 10% of the levy paid over to the SETA to fund initiatives that aim to address the critical scarce skills shortage within the sector.
Examples of these initiatives include:
This grant may be claimed based on the submission of a combined WSP and ATR has been approved by the SETA.
Discretionary Grants need to be applied for separately and are approved at the discretion of the relevant SETA. The employer is able to claim a further 10% of the levy paid over to the SETA to fund initiatives that aim to address the critical scarce skills shortage within the sector.
Examples of these initiatives include:
- ABET training;
- Learnerships;
- Internships;
- Bursaries;
- Apprenticeships etc...
2. Employment Equity Act 55 of 1998
Purpose:
The purpose of this Act is to achieve equality in the workplace by:
Who are designated employers?
An organisation is considered to be a designated employer if
The purpose of this Act is to achieve equality in the workplace by:
- Promoting equal opportunity and fair treatment through the elimination of unfair discrimination; and
- Implementing affirmative action measures to redress the disadvantages in employment experienced by disadvantaged groups in order to ensure their equitable representation in all occupational categories and levels in the workplace.
Who are designated employers?
An organisation is considered to be a designated employer if
- Employs 50 or more employees, or
- It employs fewer than 50 employees but has a total turnover equal to or above the following annual turnover thresholds:
- It is a municipality;
- It is an organ of state, and
- It is bound by collective agreement it’s the Labour Relations Act, which appoints it as a designated employer.
Sector or Sub-Sector in Accordance with the Standard Industry Classification
Agriculture Mining and Quarrying Manufacturing Electricity, Gas and Water Construction Retail and Motor Trade and Repair Services Wholesale Trade, Commercial Agents and Allied Services Catering, Accommodation and other Trade Transport, Storage and Communications Finance and Business Services Community, Social and Personal Services | Total Annual Turnover
R 2 million R 7.5 million R 10 million R 10 million R 5 million R 15 million R 25 million R 5 million R 10 million R 10 million R 5 million |
Employment Equity Reporting
All designated employers are obliged to prepare and implement an employment equity plan which will achieve reasonable progress towards employment equity. A designated employer that employs fewer then 150 employees must submit an Employment Equity Report every two years on the first working day of October.
Designated employers with more than 150 employees must submit the report annually on the first working day of October.
Employment Equity and BEE
A notable difference between the Employment Equity Act and the BEE Act is the beneficiaries.
BEE restricts the beneficiaries to Black people and the EEA considers both white women and white people with disabilities as previously disadvantaged.
In most instances the Employment Equity Report, submitted to the Dept of Labour, will be used to measure both the Management Control and Employment Equity Elements.
Below you will find an extract of the EE report that needs to be submitted to the Department of Labour.
This will also give you insight into the different occupational levels that are used when measuring BEE compliance.
Designated employers with more than 150 employees must submit the report annually on the first working day of October.
Employment Equity and BEE
A notable difference between the Employment Equity Act and the BEE Act is the beneficiaries.
BEE restricts the beneficiaries to Black people and the EEA considers both white women and white people with disabilities as previously disadvantaged.
In most instances the Employment Equity Report, submitted to the Dept of Labour, will be used to measure both the Management Control and Employment Equity Elements.
Below you will find an extract of the EE report that needs to be submitted to the Department of Labour.
This will also give you insight into the different occupational levels that are used when measuring BEE compliance.
Section B: Workforce Profile and Core and Support Functions
1. Workforce Profile
1.1 Please report the total number of employees (including employees with disabilities) in each of the following occupational levels: Note: A=Africans, C=Coloureds, I=Indians and W=Whites
1.2 Please report the total number of employees with disabilities only in each of the following occupational levels: Note: A=Africans, C=Coloureds, I=Indians and W=Whites
1.2 Please report the total number of employees with disabilities only in each of the following occupational levels: Note: A=Africans, C=Coloureds, I=Indians and W=Whites
2. Core Operation Functions and Support Functions by Occupational Level
A job could either be a Core operation function or a Support function. Core operation Function positions are those that directly relate to the core business of an organization and may lead to revenue generation e.g. sales production, etc. Support Function positions provide infrastructure and other enabling conditions for revenue generation e.g. human resources corporate services etc.
2.1 Please indicate the total number of employees (including people with disabilities), that are involved in Core Operation Function positions at each level in your organization only.
Note: A=Africans, C=Coloureds, I=Indians and W=Whites
2.2 Please indicate the total number of employees (including people with disabilities), that are involved in Support Function positions at each level in your organization. Note: A=Africans, C=Coloureds, I=Indians and W=Whites.
2.1 Please indicate the total number of employees (including people with disabilities), that are involved in Core Operation Function positions at each level in your organization only.
Note: A=Africans, C=Coloureds, I=Indians and W=Whites
2.2 Please indicate the total number of employees (including people with disabilities), that are involved in Support Function positions at each level in your organization. Note: A=Africans, C=Coloureds, I=Indians and W=Whites.
Section C: Workforce Movement
3. Recruitment
3.1 Please report the total number of new recruits, including people with disabilities.
Note: A=Africans, C=Coloureds, I=Indians and W=Whites
4. Promotion
4.1 Please report the total number of promotions into each occupational level, including people with disabilities. Note: A=Africans, C=Coloureds, I=Indians and W=Whites
3.1 Please report the total number of new recruits, including people with disabilities.
Note: A=Africans, C=Coloureds, I=Indians and W=Whites
4. Promotion
4.1 Please report the total number of promotions into each occupational level, including people with disabilities. Note: A=Africans, C=Coloureds, I=Indians and W=Whites
5. Termination
5.1 Please report the total number of terminations in each occupational level, including people with disabilities.
Note: A=Africans, C=Coloureds, I=Indians and W=Whites
Note: A=Africans, C=Coloureds, I=Indians and W=Whites
5.2 Please report the total number of terminations, including people with disabilities, in each termination category below. Note: A=Africans, C=Coloureds, I=Indians and W=Whites
Section D: Skills Development
6.1 Please report the total number of people from the designated groups, including people with disabilities, who received training solely for the purpose of achieving the numerical goals, and not the number of training courses attended by individuals. Note: A=Africans, C=Coloureds, I=Indians and W=Whites
6.2 Please report the total number of people with disabilities only who received training solely for the purpose of achieving the numerical goals, and not the number of training courses attended by individuals. Note: A=Africans, C=Coloureds, I=Indians and W=Whites
6.2 Please report the total number of people with disabilities only who received training solely for the purpose of achieving the numerical goals, and not the number of training courses attended by individuals. Note: A=Africans, C=Coloureds, I=Indians and W=Whites
Section E: Numerical Goals & Targets
7.1 Please indicate the numerical goals (i.e. the workforce profile) you project to achieve for the total number of employees, including people with disabilities, at the end of your current employment equity plan in terms of occupational levels. Note: A=Africans, C=Coloureds, I=Indians and W=Whites:
7.2 Please indicate the numerical goals (i.e. the workforce profile) you project to achieve for the total number of employees with disabilities only at the end of your current employment equity plan in terms of occupational levels.
7.2 Please indicate the numerical goals (i.e. the workforce profile) you project to achieve for the total number of employees with disabilities only at the end of your current employment equity plan in terms of occupational levels.
8. Numerical Targets
8.1 Please indicate the numerical targets (i.e. the workforce profile) you project to achieve for the total number of employees, including people with disabilities, at the end of the next reporting in terms of occupational levels. Note: A=Africans, C=Coloureds, I=Indians and W=Whites
8.2 Please indicate the numerical targets (i.e. the workforce profile) you project to achieve for the total number of employees with disabilities only at the end of the next reporting period in terms of occupational levels. Note: A=Africans, C=Coloureds, I=Indians and W=Whites
8.2 Please indicate the numerical targets (i.e. the workforce profile) you project to achieve for the total number of employees with disabilities only at the end of the next reporting period in terms of occupational levels. Note: A=Africans, C=Coloureds, I=Indians and W=Whites
Section F: Monitoring & Evaluation
(This section is not applicable to small employers)
9. Disciplinary Action
9.1 Disciplinary action: (report the total number of disciplinary actions during the twelve months preceding this report). Report on formal outcomes only. Note: A=Africans, C=Coloureds, I=Indians and W=Whites
10. Awareness of Employment Equity
10.1 Please indicate which of the following awareness measures were implemented by your organization:
11. Consultation
11.1 Please indicate which stakeholders were involved in the consultation process when developing and implementing your employment equity plan and when preparing this Employment Equity Report:
12. Barriers and Affirmative Action Measures
12.1 Please indicate in which categories of employment policy or practice barriers to employment equity were identified. If your answer is ‘Yes’ to barriers in any of the categories, please indicate whether you have developed affirmative action measures and the timeframes to overcome them.
13. Monitoring and Evaluation of Implementation
13.1 How regularly do you monitor progress on the implementation of the employment equity plan? Please choose one.
13.2 Did you achieve the annual objectives as set out in your employment equity plan for this period?
13.2 Did you achieve the annual objectives as set out in your employment equity plan for this period?
3. Preferential Procurement Policy Framework Act (PPPFA)
Current Act
This Act was released as a result of the Constitutional requirement that required Government to implement a mechanism that would encourage preferential procurement.
This Act specified the components that need to be considered when assessing Government contracts, namely:
Contracts above R 500 000.00 work on a 90/10 principle, where 90% of the points are allocated to price and functionality and the remaining 10% for socio-economic initiatives.
This Act was released as a result of the Constitutional requirement that required Government to implement a mechanism that would encourage preferential procurement.
This Act specified the components that need to be considered when assessing Government contracts, namely:
- Price;
- Functionality; and
- Socio-Economic initiatives.
Contracts above R 500 000.00 work on a 90/10 principle, where 90% of the points are allocated to price and functionality and the remaining 10% for socio-economic initiatives.
New Regulations
The effect of the new regulations is summarised as follows:
The effect of the new regulations is summarised as follows:
- The 80/20 and 90/10 preference point system will be retained;
- The current regulations determine that the Historically Disadvantaged Individual (HDI) status and certain RDP goals should be used to determine preference points in awarding of bids. The new regulations replace the awarding of bids on the basis of HDI status and certain RDP goals with the BEE Rating of a bidder;
- The threshold value to distinguish between the 80/20 and 90/10 preference points systems, is increased from R 500 000.00 to R 1 million in the new regulations. This is aimed at strengthening the contributions towards the development of small, medium and micro enterprises; and
- The application of the new regulations is further extended to apply to all organs of state and not only national and provincial departments, municipalities, Parliament, provincial legislatures and schedule 3A and 3C public entities.
The 80/20 Preference Point System (Up to R 1 million)
- 80 points allocated for price; and
- 20 points will be allocated as indicated in the table
The 90/10 Preference Point System (Over R 1 million)
- 90 points allocated for price; and
- 10 points will be allocated as indicated in the table
Important Principles
- In the event that two or more bids have scored equal points, the successful bid must be the one scoring the highest number of preference points for B-BBEE;
- A consortium or joint venture will qualify for points on the B-BBEE status level as a legal entity provided that the entity submits their B-BBEE status as a consortium or joint venture.
- A person awarded a contract may not sub-contract more than 25% of the value of the contract to a person who does not have an equal or higher B-BBEE status level.
Implications
The most important implication of the new regulations is that from now on wholly white owned business will be given an opportunity to score preference points, whereas previously they would completely forfeit the 10 or 20 points, and win government contracts solely on price. This fact will encourage these organisations to focus on the other elements of transformation in order to maintain a high BEE score and ensure that they are able to get some, if not all, of the preference points that are available.
4. Broad Based Black Economic Empowerment Act 53 of 2003 (The BEE Act)
This is the shortest and most concise Act of them all, and therefore, only the most important points will be discussed.
The BEE Act defines Broad-Based Black Economic Empowerment as:
“the economic empowerment of Black people, including women, workers, youth, people with disabilities, and people living in rural areas through a diverse but integrated socio-economic strategies that include, but are not limited to-
The BEE Act defines Broad-Based Black Economic Empowerment as:
“the economic empowerment of Black people, including women, workers, youth, people with disabilities, and people living in rural areas through a diverse but integrated socio-economic strategies that include, but are not limited to-
- Increasing the number of Black people that manage, own and control enterprises and productive assets;
- Facilitating ownership and management of enterprises and productive assets by communities, workers, co-operatives, and other collective enterprises;
- Human resource and skills development;
- Achieving equitable representation in all occupational levels in the workforce;
- Preferential procurement; and
- Investment in enterprises that are owned and managed by Black people.”
The objectives of the BEE Act are to promote economic transformation and provide meaningful participation of Black people in the economy.
The Act not only provides a framework but also empowers the Codes of Good Practice. The Codes were drafted to address the following issues:
The Act not only provides a framework but also empowers the Codes of Good Practice. The Codes were drafted to address the following issues:
- Interpretation and definitions of Black Economic Empowerment and BEE Entities;
- Qualification requirements for preferential procurement;
- Measurement indicators and weighting compliance for B-BBEE; and
- They provide guidelines for sectors to comply with the requirements of the Act and the Codes.
Who needs to comply with this Act?
Section 10 binds all organs of state and public entities in determining qualification criteria for:
- The issuing of licenses and concessions;
- Preferential procurement policy;
- The sale of state owned assets; and
- Entering into partnership with the private sector.
NOTE:
Private enterprises are not legally compelled to comply with BEE regulations.
Private enterprises are not legally compelled to comply with BEE regulations.
