January 2007

The festive season is over and it seems that there will be a slow start to the New Year as many staff return from leave. We hope that everyone had an enjoyable break and that the New Year will be rewarding and happy for all our clients and their staff.



While we were gearing up for our annual break, the DTI and Cabinet were preparing final touches to the BEE codes. We understand that they have been finalized, and that the gazette is expected to be published before the end of January 2007.

What does it all mean?

Significant changes have been made to the codes and in many ways they have been simplified.

Firstly, the definitions of qualifying companies have been clarified.

  • The generic scorecard is applicable to all companies whose annual turnover exceeds R35 million
  • The scorecard for small enterprises is applicable to all companies whose annual turnover exceeds R5 million, but is less than R35 million
  • Micro enterprises are companies whose turnover is less than R5 million and they are exempt from complying with the BEE codes.

The number of employees in the company is irrelevant, the criteria is focused only on turnover.

Secondly, there is concern about the Parity Principle. When applying any of the codes we must ensure that 40 – 50% of the benefit across all the elements of the scorecard accrues to black women and 2 – 3% accrues to disabled black people.

Thirdly in the Generic Codes the amendments to the scorecard include:

  • Ownership – 3 bonus points are available for the involvement of black new entrants into the enterprise ownership and for involvement of staff in employee ownership schemes.
  • Management – More detail has been given in terms of scoring for black employees in Management position from Directors and Executive Management. 1 Bonus point can be earned for black non-executive board members
  • Employment Equity – Only black employees in Management positions, and disabled black employees, will be measured in these criteria. The code sets targets for years 0 – 5 and for years 6 – 10. The targets range from 2-3% of total employees for black disabled employees. 43 – 60% for Senior Management, 63 – 75% for Middle Management and 68 – 80% for junior managers. The weighting for this element has been increased from 10% to 15%.
  • Skills Development – The weighting for this element has been reduced to 15%. The measurement criteria have not changed, i.e. 3% of payroll, however 3 of these points are for expenditure on training for black disabled learners.
  • Procurement – 3 points are available for spend on QSE and Micro Enterprises. The target indicates that large companies should spend 10% of their total procurement spend on SMME’s and Micro Enterprises and this target will increase to 15% after 5 years. 5 points are available for procurement from suppliers who are more than 50% black owned or 30% owned by black women. Targets have been set for 0 – 5 years and 6 – 10 years.
  • Enterprise Development – The weighting for this element has been increased to 15% and the target is 3% of net profit after tax (NPAT) or 0.375% of turnover.
  • Socio-Economic Dev. – The weighting for this element has been reduced to 5% and the target is set at 1% of NPAT or 0.125% of turnover.

Fourthly the scorecard for SMME’s has a weighting of 25% for each of the seven elements which adds up to 175%. They need to only choose 4 out of the 7 elements to be measured against. The Scorecard has been simplified a great deal and clear targets have been set. Bonus points are also available in some categories.

  • Lower targets than the generic scorecard have been set for
  • Employment Equity (maximum 70% of all employees),
  • skills development at 2% of the leviable amount,
  • Preferential procurement at 50% of total spend,
  • Enterprise development at 2% of NPAT or 0.25% of turnover

Fifthly Micro Enterprises have automatically been given a level four status for BEE which means that for every rand spent on a micro supplier you can claim R1-00 for your procurement element.

In revising the scorecards and the codes, the Department of Trade and Industry have recognized the importance of small and micro enterprises in building the economy and creating employment. In their media release on the 14th December the DTI estimated that only 2% of the total number of economically active entities in South Africa will be required to implement the generic scorecard.

Hopefully the gazetting of the codes will provide a clear guideline for all in implementing B-BBEE and that the unfair business practices which we have all been experiencing since 2003 will disappear. The DTI expects the various industry charters to be finalized and gazetted this year which again will provide more clarity.

Should anyone wish to have more information with regard to the Scorecards they are available from our office as is the DTI’s handbook. Please contact Debbie or Lynette for copies.



Tax Returns

February is rushing up and we will all have to submit our tax forms at the end of the month. Many employers and employees are unaware that any employee who receives income from employment of more than R60 000-00 a year, i.e. R5 000-00 per month, is expected to submit a tax return and must therefore have a tax number. In addition any employee who earns commission or who receives a travel allowance (even if their income is below R60 000-00) a year is required to complete a tax return.

Failure to do so can cause huge problems and we request that all our clients assist their employees by making them aware of the requirement. We have had many sad situations where deceased employee’s dependents have not been able to receive money from provident funds and life insurance because their tax is not up to date and tax numbers do not exist. This causes unnecessary delays and hardship to the dependents.


The receiver is once again allowing employees to claim allowances where their own equipment or premises are used for business purposes. Employees can claim home office expenses and can also claim depreciation against computer equipment. Where employees are required to work at home and maintain an office there, this can be a significant tax saving.


This has proved a very efficient way of paying PAYE and VAT. The receiver of revenue is looking to providing electronic filing of tax returns for those employees whose employers submit their tax returns electronically. We look forward to more information with regard to this.



The training year ends on the 31 March and the training report will need to be completed and submitted to the Seta, together with the training plan for the new training year. It is important to ensure that all the training planned last year, April 06 – March 07 has actually been carried out. Most companies will have to look at increasing their training spend for the next year if they are to comply with the BEE Codes, particularly training spent on black employees.

We are accredited with Services Seta for a number of training interventions the most important of which is:

Life Skills

The purpose of this training is to make employees aware of the importance of setting goals, thinking about their careers and realizing their potential, but most importantly to teach financial management and the importance of avoiding debt. We also cover the HIV/AIDS issues, although this should be dealt with on an ongoing basis as the epidemic is really having an impact now and many of our bright young trainees are affected. With proper management and access to counselling and treatment they could still live a normal life span. It is important that employees are encouraged to talk about their own infections and those of the people in their lives.

Leadership Development

This is a long programme covering 10 days in 10 months. It covers the people management portions of a manager’s job description and includes assignments and assessments. We will be running a course in Johannesburg and Cape Town this year and have had a request for a similar programme for senior managers. We are hoping to offer this in February or March.

Any person interested in the training courses offered by our company should contact Debbie in the office.



The Sectorial Agreement has been with us for four years now and in terms of the minimum wage schedule we are required to increase the salaries paid to domestic servants by CPIX+2 each year from 2005 to 2007. This year the Department of Labour has determined this figure to be 7% and has instructed us to increase the salaries of domestic servants by this amount. The Minimum salary for a domestic servant who works more than 27 hours per month is R5.47 per hour and for a domestic servant who works less than 27 hours per month it is R6.46 per hour.



Our website is currently being redeveloped and we hope to have a new informative website up and running by the end of this month. The Web address remains the same, i.e. www.connold.co.za.

We wish you a successful first quarter and a busy new year.

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