In February, we reported in a newsletter, on a Department of Trade and Industry (the dti) announcement which provided, inter alia, that "[a]ny measured entity which is due to be rated after today [i.e. 9 February 2012] (for the financial period 2011 / 2012) will be rated, in relation to the employment equity scorecard, against the thresholds set for years 6 - 10 in terms of the Employment Equity scorecard. Employment Equity scorecard also applies a subminimum of 40% for each of the targets, which means that if 40% of the higher threshold in respect of each of the targets is not met, the measured enterprise will not score any points in respect of the Employment Equity Scorecard." You can read our February newsletter, by clicking here.

By way of background, the B-BBEE Codes of Good Practice were issued in 2007 (the Codes). Two elements, Employment Equity and procurement had compliance targets set for "Years 0-5" and 'Years 6-10". It was understood that this meant that 5 years after the Codes were issued, the targets for years 6-10 would come into effect. i.e. as from February 2012.

On 7th February 2012 the minister issued a notice giving clarity on when the targets for years 6-10 would be applied. The notice, which had various errors, including making reference to "0-6 year" as opposed to "6-10" and lack of definition of "measurement period", did indeed explain that the new, higher targets would be applied to all entities whose measurement period ended after 9th February 2012. This was understood to imply that if your financial year end was for example 29th February 2012, your next verification would use the targets for years 6-10.

Consequent to the notice, we understand that verifications have taken place using the new targets for businesses whose year end was after 9th February 2012.

On 11th May 2012, the dti sent an email stating that "the dti is in the process of refining the Codes of Good Practice on B-BBEE and therefore the 0-5 year targets will be applied until the process of refining the code is finalised and gazetted. In light of the aforementioned, the dti will withdraw the notice to eliminate the confusion in the market regarding the implementation of the 6-10 targets and provide further guidance on the measurement date."

The effect of the e-mail is that the old targets will continue to be used for the foreseeable future.

Existing certificates issued by verification agencies using the new targets would appear, according to the dti communiqué, to be incorrect, and, despite the fact that such certificates have been calculated against more stringent standards, may need to be withdrawn, recalculated and reissued.

Speculation is that the Codes will only be refined once the B-BBEE Amendment Act is passed by Parliament. As things stand, the dti will be required to first issue draft Codes as per section 9(5) of the current Act, await comments and finally issue the new refined Codes as per section 9(1) of the Act. This process will likely be lengthy.

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