Understanding “Skills Development” for BBBEE purposes

skills developmentUnderstanding 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.

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.

Skills Development carries a lot of weight when it comes to BBBBEE compliance and there are various benefits to complying, for example SARS offers a tax break of R 60 000.00 per participants on a learnership, which equals a saving of R 16 800.00 per learner per year.

However, care should be taken when structuring your company’s BBBEE compliance and the advice of an expert in the field should be obtained as it is clear that non-compliance can be detrimental.

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