In South Africa, Broad-Based Black Economic Empowerment (BBBEE, or BEE as it is more commonly known) is a complex system of rules and guidelines designed to effect socio-economic transformation by levelling the playing field for people of all races. While the major legislation involved is the Broad-Based Black Economic Empowerment Act, No.53 of 2003 as supplemented by the Codes of Good Practice, it is supported by and intertwined with other laws. One key example is the Employment Equity Act, No. 55 of 1998. The Employment Equity (EE) Act and BEE Act have many overlapping aims and functions.
Under the old BEE legislation, EE was one of the seven pillars of the BEE scorecard. To ensure a good score, businesses had to show compliance with the requirements of the EE Act in their workplace. Since the revision of the Codes, which officially came into effect in May 2015, the number of pillars has been reduced to just five, and EE has been merged with what used to be the separate category of management control. To achieve high points in this category, businesses still need to show that they have measures in place to meet EE targets. Low or no compliance can result in a poor rating.
BEE is aimed at bringing about fairer representation and greater equality in businesses and organisations around the country to help remedy the injustices of the past. This calls for equity measures – the foundation of real, tangible equality. EE effectively serves a very similar purpose, but is focused specifically on the human resources aspect of change. Businesses are encouraged to ensure their staff fleet represents the demographics of the country, developing a diverse, inclusive culture.
In order to earn points for the EE part of the BEE scorecard, business managers need to present a forward-thinking EE plan that will see the smooth transformation of their organisations over a specified period – often five years or longer. They need to indicate the targets they are working to reach in different areas of employment, for example the number of black disabled staff members they intend to have as a percentage of their total workforce by 2020. They also need to show the percentages of black employees, and specifically black female employees, they are aiming to have across junior, middle and senior levels of management. The targets should have specific criteria for different race groups in accordance with the EE Act.
Even though the practices have been part of the employment landscape in South Africa for many years now, there is still a good deal of confusion about what BEE and EE mean for businesses. Misconceptions abound – and the two terms are often conflated. While there is overlap and they work together, both types of legislation are needed to bring the country to a more progressive, equitable space in the business world.
To find out more about Employment Equity and Broad-Based Black Economic Empowerment, and how you can leverage the former to boost your BEE score, contact one of our consultants today.