The impact of B-BBEE on Skills Development

Date: 22 Aug 2018

The irony with Skills Development is that it is not mandatory for organisations to submit their applications for Skills Development grants. Once you reach an annual payroll of R500 000 or more, then yes, it is mandatory for you to be registered for paying the Skills Development Levy… but as for the rest, Skills Development is really more about the ethos of training and developing your staff as well as reporting stats through for record-keeping purposes. However Skills Development plays such an integral role in so many areas of your business and human capital, which you would be forgiven for feeling the pressure of the requirements for Skills Development, as being more an obligation, than a social responsibility.

The benefits of Skills Development speak for themselves; in training your employees, an employer guarantees the growth of knowledge and capability of the employees within the organisation. By increasing knowledge, one naturally expects that job performance will increase, thereby increasing your production and turn-over. Employees will feel more appreciated knowing that their employers have invested in their education and training and will think twice before decided to leave for greener pastures. A long and thriving employer / employee relationship will ensue and a focused learning environment will cultivate the longevity of that relationship.

The reality of Skills Development is not quite as idyllic. Even though it is not mandatory, Skills Development does go hand-in-hand with so many areas of your business which all play a role in the survival or your organisation, that it may appear otherwise. Firstly, when it comes to B-BBEE, no matter what your organisation size, you are required to submit your application for grants in the form of a WSP (Workplace Skills Plan). Proof of this submission is a mandatory requirement for your B-BBEE scorecard. The requirements around Skills Development in line with B-BBEE starts to raise the portfolio of Skills Development in your organisation as you now begin to score higher, depending on whether you are submitting PIVOTAL training plans, which SARS also offers tax incentives for. Suddenly, merely reporting on your training and development is no longer the focus.

For B-BBEE, organisations are required to spend 6% of their annual payroll on training and development (3% for small organisations). For large, specialist organisations for example, this could equate to an amount in excess of R30 million per annum. Only 15% of your training budget can go towards training that is not unit standard aligned, meaning that the majority of training that you do, must result in a degree, diploma or SAQA approved qualification of some kind, in order for you to maximise your claim as well as your B-BBEE points. Skills Development also scores you 20 out of your 105 points, accounting for almost 20% of the scorecard, the majority of those points being earned through offering learnerships, apprentices and internships. Maximum points can be earned if these training options are offered to unemployed people. And if you offer the unemployed person a permanent position at the end of their training program, this is a golden goose in terms of Skills Development and B-BBEE.

Submission of your Employment Equity stats is also mandatory for small companies who have less than 50 employees, so usually would not qualify, but who are now pursuing the coveted scorecard. Again, it is mandatory for B-BBEE that the company submit their employment equity reports. As part of your employment equity, you must report on Skills Development within your organisation. In conjunction to the reporting process, legislation requires that employees are consulted on both employment equity issues and stats as well as skills development, tying the 2 areas neatly together under B-BBEE.