Conscious Transformation

Conscious Transformation

Spotlight on the Agri-BEE Sector Code

The Amended Agri-BEE Sector Code of Good Practice was gazetted and effected on 8 December 2017 and with it the statement that the Code 'derives directly from the Sector's core objective to ensure increased access and equitable participation in the Sector'. 

Over the next weeks we will unpack the legislation in more detail to show not only how transformation makes business sense (as it becomes compulsory when a business wishes to engage in certain transactions, such as for instance trading water rights) but also the importance of partnering with champions of transformation that believe in a structured, measurable engagement method.

Some of the important topics that will be demystified are: 

1.         Generic Codes of Good Practice and recent Amendments

2.         The AgriBEE Scorecard

3.         Elements of the Scorecard

4.         Audit & Verification Preparation

In this edition we will look at the Scope and Objectives of the legislation, and Qualifying Thresholds.

Scope of the Amended AgriBEE Sector Code 2017

2.1       The source of revenue determines which code an organisation must be measured on. If more than 50% of an organisation's revenue is generated from the following activities, the AgriBEE must apply: 

• Primary agricultural production; 
• Provision of inputs and services to enterprises engaged in the production of agricultural products; 
• Beneficiation of agricultural products; in a primary or semi-beneficiated form; and 
• Storage, distribution and/or trading, as well as allied activities related to non-beneficiated agricultural products.

2.2       A business that trades in more than one sector and in theory falls under more than one sector and Sector Code, must be guided by the principles embodied in the Amended Codes of Good Practice.

2.4       AgriBEE also applies to multinationals whose business falls within the scope of the Code as defined in this section. Where a specific regime for multinationals exists in the Amended Codes of Good Practice, this regime will apply.

Objectives of the Amended AgriBEE Sector Code 2017

3.1       Highlighted objectives of the Act and Amendments in order to facilitate B-BBEE is facilitated are:

• Promoting economic transformation in order to enable meaningful participation and empowerment of Black South Africans, rural and local communities in the economy through ownership, management, skills development and entrepreneurship and access to land, infrastructure and the entire agricultural value chain;
• Promoting investment programmes that lead to broad-based and meaningful participation in the economy by black people in order to achieve sustainable development and general prosperity;
• Socially uplifting and restoring the dignity of Black South Africans by improving and promoting the living and working conditions of farmworkers; and 
• Improving protection and standards of land rights and tenure security for labour tenants, farm workers and other vulnerable farm dwellers. 
• Addressing the inherently paternalistic nature of relationships associated with insecure tenure by promoting more permanent forms of tenure, with the emphasis being on the transfer of ownership of land.

Qualifying Thresholds of the Amended AgriBEE Sector Code 2017

Annual turnover determines qualifying thresholds to apply measurement and scoring criteria: 

• Exempt Micro-Enterprises (EME) generate revenue below R10m; 
• Qualifying Small Enterprises (QSE) generate revenue between R10m and R50m; and 
• Large Enterprises generate revenue above R50m. 

A Start-up Enterprise must be measured as an EME under this statement for the first year following its formation or incorporation. This provision applies regardless of the total revenue expected. To qualify as a Start-up Enterprise, independent confirmation of this status is necessary either in the form of an Affidavit or CIPC issued certificate. 

However, in terms of a Start-up Enterprise tendering for any contract, or seeking any other economic activity covered by Section 6 of the B-BBEE Amendment Act, contracts valued between R10m and R50m must be measured on the QSE Scorecard. For contracts valued at R50m or more, measurement on a Large Enterprise Scorecard is a requirement.

Publications Watch

Stakeholders directly involved in the Agri sector will benefit from the latest AGRISETA (Sectoral Education and Training Authority) Sector Skills Plan. You can access the report here AGRI SSP 2019-20. This report is the result of continued research into skills needs in the sector and is the framework that guides the strategic focus and skills development initiatives that are activated and supported by the SETA. This document also gives a clear indication of priority in terms of training and development funding available to the sector to upskill their employees and work towards satisfying the demand for identified scarce and critical skills and occupations (current and emerging) for each of the sub-sectors.

The 18th Commission for Employment Equity report contains the statistical distribution of the national and regional demographics of the Economically Active Population (EAP). Companies must be aware of and integrate these EAP targets into their EE Analysis and Plan. The Amended BEE Codes penalise any large organisations whose Management Control and Skills Development initiatives stray from the demographic profile of the province in which their business operates. Poor consultation, lack of proper analysis and reasonable and achievable plans that are not implemented, could face recommendations from the Department of Labour, resulting in further financial fines for non-compliance. Download the report here CEE Report 2018

Employment Equity Reporting 2019

The Department of Labour's annual EE Reporting season opens on the 1st of September 2019 and the proposed further amendments to the Employment Equity Act are yet to be promulgated meaning that designated employers in terms of the Act of 2013 have not changed. 

Who must report between in 2019?

• All designated employers with 50 or more employees must report every year.
• Employers with fewer than 50 employees who are designated in terms of the turnover threshold applicable to designated employers (Schedule 4 of the Employment Equity Amendment Act No. 47 of 2013).
• Employers who have become newly designated on or after the first working day of April 2019, but before the first working day of October 2019, must only submit their first report on the first working day of October 2020.
• Employers who voluntarily wish to comply in terms of section 14 of the EE Act.

Some noteworthy changes however will be noticed on the electronic submission platform and employers will now utilize the Revised Income Differentials EEA4 form for their reporting on remuneration.

The additional reporting on the following remuneration figures by employers will be able to establish norms and benchmarks to reduce the remuneration gap between the highest paid and the lowest paid employee:

• Reporting on Fixed/Guaranteed annualized salaries per occupational level, race and gender
• Reporting on variable annualized salaries per occupational level, race and gender
• Reporting on average annual pay for the top 10% of an organisations workforce
• Reporting on average annual pay for the bottom 10% of an organisations workforce
• Reporting on average annual pay for the middle earners of an organisations workforce

The turnover thresholds differ depending on the type of industry and are set out in the table below as follows:

A reminder that the scope of the fines that may be imposed on an employer who fails to comply with its reporting obligations are as follows:

For more information contact:

Steph Grobler steph@katikaconsult.co.za or

Katli Ngwane katli@katikaconsult.co.za