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What You Need To Know About B-BBEE

In an effort to encourage greater diversity in the workplace, the Department of Labour introduced the Broad-Based Black Economic Empowerment (B-BBEE) legislation. This initiative may seem foreign to anyone not in the business of running or managing an organisation or a company’s HR department. That said, these policies are not always simple to understand or implement. So, here’s what you should know about Broad-Based Black Economic Empowerment.

business woman in a suit standing

What Is Broad-Based Black Economic Empowerment?

The B-BBEE initiative was introduced to redress the racial inequities of South Africa’s past. This piece of legislation incentivises the hiring of Africans – that is, black, Asian, and coloured South Africans – and encouraging greater diversity in the workplace. Since it was first implemented, it has quickly become the gold standard for the hiring practices in almost all South African businesses. By complying with this legislation and moving up the ranks of the B-BBEE scorecard, your company can enjoy a number of benefits. These include

  • Winning over new clients in government and large corporates by using a high BEE score as an incentive.
  • Favourable tax gains.
  • Enjoy more private sector business as companies get BEE points by being customers of companies with impressive scorecards.

In other words, a favourable BEE scorecard helps you score more business for your company.

The application of B-BBEE differs according to the size of your business. There’s a strong emphasis on large companies and government supporting small businesses that are BEE compliant. To that end, a company’s BEE level of compliance is calculated according to the five categories below.

What Does Being B-BBEE Compliance Look Like?

Equity Ownership: 25% of the weighting in this category concerns the voting rights and shareholding. Black ownership is mainly considered for this criteria and ownership by black women even more so.

Management Control: Making up 15% of the weight with a 4% bonus for certain criteria, this criterion accounts for the extent to which voting rights on a board are held by black members as well as control of the executive board and the percentage of senior management.

Skills Development: With a 20% weighting (with an extra 5% for certain criteria), you are essentially rewarded for investing in upskilling your employees – with a particular focus on employees that fall into the redress category.

Enterprise And Supplier Development: Weighing in at 40% (with a bonus of 4% for certain criteria), enterprise development is focused on the extent to which small, black-owned companies and their development receive support.

Socio-Economic Development: This makes up 5% of the overall waiting and accounts for the level of involvement in corporate social responsibility initiatives.

The Importance Of B-BBEE

As mentioned earlier, this legislation was introduced to give everyone a fair shake in the workplace and business owners have a lot to gain by complying with this policy. However, B-BBEE is played as a long game; it may take some time to build up your compliance score – up to 10 years. Today, this initiative informs the leadership style of many companies, inextricably linking moral responsibility with the daily running of a South African business.

This legislation can be rather difficult to navigate without professional legal council on your side. To make sure you always have a corporate lawyer on standby – without the exorbitant cost – consider investing in business legal cover. For a small monthly fee, business legal insurance can cover the high hourly rate of a lawyer, giving you access to legal guidance and representation for your business when you need it.

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