BEE compliance (Part 6): The Skills Development element

Oct 3, 2018 | Features

A smaller agency that does not have the capacity to employ trainee agents can for instance sponsor external learnerships with a registered skills development academy.

The key in addressing the ongoing demographic imbalance in the property industry, is skills development. There are various ways in which skills development initiatives can be structured in a way which is both cost-effective whilst simultaneously adding value to the estate agency itself, as well as aiding the transformation of the industry explains Adrian Frewen, associate with the Phatshoane Henney Group of attorneys.

Skills Development is the fourth element contained in the Property Sector Code scorecard used to determine the B-BBEE compliance of estate agencies. The element measures the recognised skills development expenditure on black people by the company as a percentage of the company’s leviable amount. The leviable amount is defined in the Skills Development Act as meaning the total amount of remuneration payable by an employer to his employees as determined in accordance with the provisions of the Fourth Schedule. Remuneration includes inter alia salary, leave pay, allowances, wages, overtime pay, bonuses, and commission.

To calculate an entity’s leviable amount the Skills Development Levy (SDL) figure is used. The SDL figure is found in the monthly EMP201 form submission to SARS. The SDL figure represents 1% of the leviable amount. The leviable amount is the sum of the SDL figures contained in your EMP201 for a given financial year x 100.

Skills Development is a priority element and entities must obtain at least 40% of the total available points on this element in order to avoid being discounted by one level overall.

To QSE entities (companies with an annual turnover of over R2.5 million and less than R35 million), the following targets apply in terms of the Property Sector Code’s Skills Development element: 3% of the leviable amount for skills development expenditure on learning programmes for black people, of which 1% of the leviable amount is targeted toward the skills development expenditure on learning programmes for black women.

Take note: Estate agencies that qualify as Exempt Micro Enterprises (annual turnover of less than R2.5 million) are automatically awarded Level 4 B-BBEE compliance status.

The scorecard for Generic entities (companies with an annual turnover of more than R35 million) is somewhat more detailed, containing separate targets for specific categories of training. The overall target for Generic entities is higher at 5% of the leviable amount for skills development expenditure on black people, of which 0.3% of the leviable amount is targeted at black people with disabilities. A separate target is set for an entity to register a number of learnerships, apprenticeships or internships for both black employees of the entity as well as previously unemployed black people. The target is set at a number of learnerships, apprenticeships or internships for black employees equal to 2,5% of the total number of employees, as well as a number of learnerships, apprenticeships or internships for previously unemployed black people equal to 2,5% of the total number of employees of the entity. Bear in mind that all amounts expended on learnerships, apprenticeships or internships of both black employees as well as previously unemployed black people will also count towards the 5% target for overall skills development expenditure.

Whilst some agencies might have high targets, there are various ways in which skills development initiatives can be structured in a way which is both cost effective whilst simultaneously adding value to the estate agency itself, as well as transformation of the industry as whole.

It need be noted that skills development expenditure is not limited to staff or agents of that estate agency, and formal skills development initiatives on external black persons are also recognisable as part of such agency’s compliance toward the Skills Development element.

A smaller agency that does not have the capacity to employ trainee agents can for instance sponsor external learnerships with a registered skills development academy. There are various academies which offer SETA accredited registered learnerships, and businesses can sponsor a learner who is then placed on a registered learnership and hosted at the academy. Section 12H of the Income Tax Act provides certain tax incentives to companies encouraging them to train employees in a regulated environment enabling skills development and job creation (these tax incentives will be discussed in the next article of this series).

With only 13% of estate agents reportedly being black, estate agencies will have to look at training black practitioners to transform the sector. Ultimately, an estate agency needs to view the entire B-BBEE scorecard holistically in terms of utilising the skills development element in order to upskill current and future employees in order to ensure compliance with the Management Control and Employment Equity elements whilst simultaneously complying with the Skills Development targets.

All the prior articles can be found on the Property Professional website.

The legal requirements around B-BBEE compliance can be complicated to understand about how to go about putting it into practice. Send any questions you may have on this to editor@propertyprofessional.co.za.