Skills Development and BBBEE

Understanding Skills Development is no longer only a nice-to- have, it is a necessity for all
companies. Skills Development has always been regarded as an important pillar for
economic success and stability, however, with practical issues, like a lack of access to
funding, facing South Africa, other avenues had to be explored to upskill and bridge the gap
between experience and certification.

This is where the Skills Development element in the Broad-Based Black Economic
Empowerment Act 53 of 2003 (“BBBEE Act”) comes into play and it is of the utmost
importance for companies to understand the background thereto and how to effectively
comply therewith.

The amended BBBEE Codes of Good Practice (“new Codes”), which came into effect on 1
May 2015, introduced the concept of priority elements namely, Ownership; Skills
Development; and Enterprise and Supplier Development.

Effect of Non-compliance
A minimum 40% threshold applies to certain indicators in respect of these priority elements.
Should a measured entity not attain a sub-minimum of 40% of the target as set for the
element, such measured entity will be discounted a level of compliancy.
Companies with less than 10% black ownership will automatically have their ratings
discounted by 1 level. Even if an organisation has good BBBEE ownership (51%+ black
ownership) they will still be required to score 40% in this element if they don’t want to be
discounted a level.

Understanding Skills Development
As mentioned, the new Codes demand a far greater investment in Skills Development with
an emphasis on accredited training and learnerships – transferring hard skills (qualifications
and accredited courses) to black employees and black unemployed persons. Little weight
(maximum of 15%) is given to soft skills.

The amended generic scorecard (for organisations whose turnover exceeds R 50 million
per annum), allocates 25 points to the Skills Development element and it is thus vital to
score well in this element.

In addition, the Skills Education Training Authorities (“SETA”) Workplace skills plan and
Actual training report and Pivotal skills report, need to be approved by the relevant sector
SETA. Organisations can no longer afford to ignore SETAs but instead need to foster
partnerships with them.

With Skills Development, you can:
*Earn 8 points if you invest 6% of your payroll on the training of black people
*Earn 4 points if you spend 0.3% of your total payroll on learning programmes for disabled,
black employees
*Earn points for external training
*By participating in learnerships, apprenticeships and internships, 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.
*Earn an additional 5 bonus points if all your unemployed learners will be gainfully
employed at the end of the learnership.

How to go about it
The targets are as follows:
*3% of annual leviable payroll for QSE enterprises (turnover of between R10 – R50
million);
*6% of annual leviable payroll for Generic enterprises (turnover of above R50
million)

1. Workplace Skills Plan
It is crucial for an organisation to develop and submit a Workplace Skills Plan to its
applicable SETA in order to qualify to be awarded points on the BBBEE scorecard for skills
training expenditure.

This plan must be submitted before the SETA’s submission due date otherwise the
measured entity will not be awarded any points on the BEE Scorecard for the Skills
Development element, and will be discounted with a compliancy level.

2. Skills and Training & Learnerships
Skills and Training targets are based on the annual leviable payroll of the measured entity,
and the target for Learnerships is based on the total amount of employees.

Important rules to consider:
*Travel, accommodation and catering expenses are limited to 15% of training
expenditure;
*Qualifications and accredited training provided to black employees and black
unemployed persons will carry more points;
*Expenses on scholarships and bursaries do not constitute training expenditure if the
measured entity can recover any portion of these expenses from the employee, or if there
are certain conditions attached to the scholarship or bursary;
*Remuneration of registered learners (employer and or unemployed), as well as interns
and apprenticeships, can be claimed as part of training expenditure;
*Accredited courses carry more weight than non-accredited courses;
*Ensure that the specific programme is accredited before registering for any training
courses. In terms of the Amended Codes, it is important that the programme be accredited,
and not only the institution.