Proposed changes to Broad Based Black Economic Empowerment (BEE) legislation are set to impact on businesses in various ways, one of which involves the alignment of BEE codes with Employment Equity legislation.
The amendments are set to make it compulsory for businesses with a turnover above the threshold, to comply with employment equity legislation and submit employment equity reports to the Department of Labour. The threshold limits have not changed since December 1999, and many business employing fewer than 50 employees now fall over the turnover thresholds and must comply with the Act.
“Employers that do not comply with employment equity legislation will not be entitled to any points on the employment equity element of the BEE scorecard. Further changes are even more dramatic and one of them will have an impact on KZN based businesses,” said Les Owen, a director of Owen, Adendorff Associates.
According to Owen, the definition of “Black” under the BEE legislation, would be split between African, Coloured and Indian. More points would be allocated towards African employees at a senior, middle and junior management.
“Presently firms based in KZN have managed to score well on the employment equity element due to a higher representation of Indians in the top three occupational levels. The new emphasis on African employees may see the BEE score of some business plummet.
“Businesses will have to pay more attention to the development of a practical and feasible employment equity plan. This implies more effective targeting of Africans through recruitment and selection as well as training, development and promotion. There have been numerous failures in the employment equity arena. After 13 years of the employment equity legislation many lessons have been learnt on implementing best practices,” he said.
“Falling foul to the employment equity legislation may result in fines of up to R900 000 from the Department of Labour. Businesses that fall foul of the proposed BEE code amendments stand to lose points on their BEE scorecard. This will result in a reduction of their BEE status which in turn could result in a decrease in businesses revenues,” he added.
“It is absolutely imperative that all businesses covered by the employment equity and BEE legislation keep abreast of these changes. The changes need to be taken into account when considering your strategic intent. Failure to comply with either the employment equity or BEE legislation may mean your strategic intent will fail simply due to your own lack of knowledge,” said Owen.
* To help businesses understand changes in employment equity and BEE legislation, Owen, Adendorff Associates in association with the Durban Chamber of Commerce and Industry and Independent Newspapers, will host a seminar on the subject on September 18 at the Durban Country Club. To book, call 031 700 3151.
