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South Africa – Empowerment code amendments could create more temporary jobs

03 February 2014

The amended Broad-Based Black Economic Empowerment (B-BBEE) Codes published on 11 October 2013 will prove problematic to the current B-BBEE status of many South African businesses, according to labour law specialist, John Botha.

“However, businesses that make use of temporary employment services (TES) could stand to benefit from the changes,” Mr Botha explained.

B-BBEE is a specific government policy to advance the economic transformation and enhance the economic participation of black people in the South African economy, according to seda.org.za. Compliance with the policy is determined by a verification score calculated using a points system.

Mr Botha continued: “The recent amended Codes include a number of provisions that are likely to place pressure on businesses’ B-BBEE verification scores, as they attempt to retain their current status as B-BBEE compliant.”

The incentive for businesses to make use of TES’ stems from the opportunity to save between 5% and 15% of their payroll by meeting the policy’s requirements through temporary workers. Mr Botha explained:

  • Preferential Procurement from Empowered Suppliers carries 25 points in total; using TES contributes directly to 18 of these points,
  • Skills development spend as a percentage of payroll has been increased from 3% to 6%. The fact that TES invoice the client allows for lower payroll amounts, and a subsequent lower spend requirement on skills development,
  • A total of 5% of workforce spend must be on learnerships, internships, and apprenticeships, and using TES means that fewer learners are required.   

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