09/11/2016
Industry representatives have signed off the draft Construction Sector Code that will soon be expected to be Gazetted, allowing for a 60 day commentary period. Until the draft Codes have finally run their course and are promulgated into law, the Construction Sector will continue to be measured under the Amended Codes of Good Practice. Hopefully promulgation will happen after 28 February 2017 and still allow companies falling under the Construction Sector to complete one more verification under the Amended Codes of Good Practice, thus giving them sufficient time to plan and prepare for the proposed changes in the pipeline.
This draft code is very complex and leaves areas open to interpretation and we cannot assume there will be no changes, but this is going to be very close to the real thing. Once again we see ownership creep as is the case in all the Sector Charter Codes.
Here follow some of the key points:
1)The Code will come into effect on its day of publication, however entities with measurement periods prior to this date will be measured under the Amended Codes of Good Practice.
2)Affidavits and CIPC Certificates would not be accepted in the Construction Sector. Only BEE Certificates issued by SANAS Accredited Verification Agencies will be accepted.
3)There are specific provisions for Unincorporated Joint Ventures on how to calculate their BEE score.
4)Black Owned EME’s and QSE’s still qualify for their automatic Level1 and level2 status on condition that they meet the Skills Development priority element requirements. If not, they will be discounted by one level. This does not apply to BEP’s with a turnover of less than R1,8m and Contractors with a turnover of less than R3m per annum.
5)EME thresholds and Automatic level have various sub components that will be dealt with in more detail in a separate e-mail. This includes the enhancement of EME levels
OWNERSHIP
-Targets for voting rights and economic interest has been set at 32,5% increasing to 35% over 4 years.
-Black Woman voting rights and economic interest targets have been set at 10% going up to 14% in 4 years.
-More than 50% of the investors in BEP’s must be professionally registered and be members of executive management.
-Bonus points relate to higher achievements in voting rights.
MANAGEMENT CONTROL
-Black and Black Woman participation at Board level has been set at 50% and 20% respectively.
-Black and Black Woman participation at Senior and Middle Management are subject to EAP based demographic sub groups.
-There is a target of 30% for Black Youth under all staff adjusted for gender
-The Black disabled Staff target is 2% of all employed staff.
SKILLS DEVELOPMENT
-Skills Development target spend is 2% payroll, increasing to 2,5% in year 3 and 3% in year 5
-Professionally registered employees must be 60% black.
-There are no demographic targets for the 6 sub groups in Skills development.
-Learnerships are based on a target of 2,5% of staff and this includes university students.
PREFERENTIAL PROCUREMENT and SUPPIER DEVELOPMENT
-Procurement from Empowering Suppliers has a target of 80%
-Procurement from EME’s and QSE,s are both 15%
-Procurement from 51% Black Owned Suppliers is 20% and 12% of procurement from companies being 35% Black Woman Owned
-Supplier Development has a target of 3% of NPAT over the last 3 years.
-Supplier Development Beneficiaries to qualify for this status may not be more than 20% owned by the Measured Entity, must employ at least 3 people and in possession of a tax clearance and BEE Certificate.
SOCIO ECONOMIC DEVELOPMENT
-Based on 1,25%of NPAT and a further 30% points if contributions are made to disadvantaged communities.
-Contributions to Black Disabled Communities are recognized at an enhanced rate of 1,25%.
Our verification service catered for from 1 January 2017 would be through the SANAS accredited Verification Agency called Platinum Verifications.
