BEE Legislation and Laws in South Africa

regulations serve as the guiding framework for economic inclusion, balancing historical disparities, and building a more prosperous future for South Africans. Understanding the legislative foundation of BBBEE is essential for businesses seeking to navigate and align with BBBEE principles. 

This resource is an exploration of the laws and regulations that underpin the BBBEE framework, including the amendments.

Core BBBEE Legislation in South Africa

With BBBEE as the framework, various pieces of legislation shape the implementation and measurement of Broad-Based Black Economic Empowerment. The overarching goal of BBBEE is to address historical economic disparities by creating a more equitable and inclusive economic landscape for black individuals (African, Coloured and Indian citizens). The participation of black people in the economy is an essential aspect of the BBBEE priority elements.

The 5 Acts of Parliament Shaping BBBEE

The following acts of parliament serve as the core foundation of BEE legislation and laws:

• Employment Equity Act of 1998 (Revised in 2023)
• Skills Development Act of 1998 (Revised in 2011)
• Skills Development Levies Act of 1998 (Revised in 2010)
• Preferential Procurement Policy Framework Act (PPPFA)of 2000 (Revised in 2023)
• Broad-Based Black Economic Empowerment Act (BBBEEA) of 2003 (Revised in 2023)

Codes of Good Practice & Sector Codes Governing BBBEE

Generic Codes of Good Practice and specific sector codes strongly govern BBBEE in South Africa. These sector codes provide tailored guidelines for BEE compliance within their respective industries. They may contain industry-specific requirements, metrics, and targets. 

This approach ensures that BBBEE standards are adapted to the unique characteristics and challenges of different sectors, fostering comprehensive transformation across the South African economy. As part of an ongoing process, sector codes are periodically revised by the Department of Trade and Industry to align more closely with the BBBEE Codes of Good Practice and industry transformation charters, promoting consistency and effectiveness in BBBEE implementation.

The Employment Equity Act

A starting point in exploring BEE legislation is the Employment Equity Act (1998). The Employment Equity Act (EEA) is a South African labour law that aims to promote equal opportunities and fair treatment in the workplace by eliminating discrimination and advancing equal representation for designated groups, particularly previously disadvantaged individuals. Designated groups include black Africans, Coloureds and Indians.

The Act requires employers to take proactive measures to address employment imbalances, such as setting affirmative action goals and implementing policies to ensure equitable employment practices. The Act also mandates annual reporting on progress towards achieving employment equity.

 

Employment Equity Act Amendments

On April 12, 2023, President Cyril Ramaphosa signed the Employment Equity Amendment Bill of 2020 into law. This bill modifies the Employment Equity Act of 1998, which seeks to foster workforce diversity and fairness. The main amendment is that businesses with more than 50 employees will be required to comply with the act, regardless of annual revenue. If you meet this criteria, you are considered a “designated employer” and you must submit Employment Equity plans.

Since 2002, the act has seen several amendments to adapt to evolving socio-economic conditions in South Africa. Key changes include the introduction of Employment Equity Reports in 2002, the establishment of the Commission for Employment Equity (CEE) in 2003, and provisions for equal pay for equal work in 2006. These amendments underscore that employment equity is an ongoing, long-term effort that requires commitment from both the private and public sectors, including qualifying small enterprises (micro-enterprises).

The Skills Development Act

In alignment with the Employment Equity Act, the Skills Development Act of 1998 is a South African law designed to promote skills development and training in the workforce. It mandates the establishment of Sector Education and Training Authorities (SETAs) to oversee industry-specific skills development initiatives. Through levies paid by employers, the Act funds these programmes, ensuring that South Africa’s labour force gains the skills and qualifications needed for socio-economic development, growth and competitiveness.

Skills Development Act Amendments

Amendments to the Skills Development Act have fine-tuned the legislative framework for skills development in South Africa. They have introduced changes such as the establishment of the Quality Council for Trades and Occupations (QCTO) and revised regulations on the composition and functioning of Sector Education and Training Authorities (SETAs). These updates aim to enhance the effectiveness of skills development incentives, aligning them more closely with the nation’s economic and educational needs.

Skills Development Levies Act

The Skills Development Levies Act of 1998 requires South African employers to contribute a skills development levy, which funds training and skills development programmes as mandated by the Skills Development Act. This financial support ensures that the objectives of the Skills Development Act, such as improving workforce skills and qualifications, can be effectively carried out and contributes to a more skilled and competitive labour force.

Skills Development Levies Act Amendments

The Skills Development Levies Amendment Act of 2010 entails minor changes to the definitions of “Director-General” and “Minister”. Director-General now refers to the Director of Higher Education and Training. In addition, Minister now refers to the Minister of Higher Education and Training.

Preferential Procurement Policy Framework Act

The Preferential Procurement Policy Framework Act (PPPFA) (2000), was established to create a framework for implementing procurement policies that favour historically disadvantaged groups of people. It aligns with the South African Constitution’s provisions, enabling organs of state to support designated groups through preferential procurement practices. This legislation forms the foundation for promoting inclusive economic activities and equitable access to government procurement opportunities or tenders.

Preferential Procurement Policy Act Amendments

The Preferential Procurement Policy Framework Amendment Bill (2023) proposes adjustments to South Africa’s procurement framework, aiming to increase support for previously disadvantaged individuals and promote broader economic empowerment. Key changes include enhancing preference points for certain designated groups, introducing supplier development programmes and streamlining compliance measures. The amendments reflect the government’s commitment to fostering inclusive and equitable economic growth for black-owned businesses.

Broad-Based Black Economic Empowerment Act

The Broad-Based Black Economic Empowerment Act (BBBEEA) (2003) forms the cornerstone of South Africa’s transformation policies. It drives economic inclusion for previously disadvantaged groups and serves as a framework for the Employment Equity Act, Skills Development Act, and Preferential Procurement Policy Framework Act. These Acts align with the core principles of BBBEE, collectively promoting diversity, skills development, and equitable opportunities in the nation’s economic landscape.

The BBBEE Act mandates that companies actively participate in the nation’s socio-economic transformation journey. Public and private sector businesses are encouraged to implement BBBEE initiatives to address historical disparities from the Apartheid era, promote workforce diversity and engage in preferential procurement practices, which could all contribute to their BBBEE scorecard. This not only aligns them with legal requirements, but also serves as a form of business management control that can strengthen the overall fabric of South Africa’s economy.

BBBEE Amendments

Since its inception, the Broad-Based Black Economic Empowerment Act has seen several amendments to adapt to evolving socio-economic circumstances in South Africa.

Major BBBEE amendments instated by the South African government  include:

• 2002: Employment Equity Reports were introduced as a requirement for businesses to submit to the Department of Labour.
• 2003: The Commission for Employment Equity (CEE) was introduced to oversee BBBEE compliance.
• 2006: Major emphasis on equal pay for work of equal value.
• 2013: Provisions for compliance assessments were introduced, as well as measures to eliminate unfair discrimination.
• 2014: Designated groups were specifically defined as black people, women, and individuals with disabilities.
• 2018: The state pushed for greater transparency in Employment Equity reporting to address BBBEE fronting.
• 2020: Compliance requirements were extended to businesses with over 50 employees, regardless of annual turnover.

Overall, the Employment Equity Act, Skills Development Act, and the Preferential Procurement Policy Framework Act underpin BBBEE, driving both compliance and conscious efforts to redress historical inequalities. These laws collectively shape an economic landscape that has the potential to be more dynamic, diverse, and prosperous, reflecting South Africa’s ongoing commitment to creating an inclusive and equitable society.