BEE, or more correctly B-BBEE (Broad-Based Black Economic Empowerment), is governed by the Broad-Based Black Economic Empowerment Act (“BEE Act”) as well as Codes of Good Practice and various sector charters issued in terms of the BEE Act. The primary objective of BEE is to promote economic transformation to enable meaningful participation of Black people in the economy. Black people, is defined in the BEE Act, as a generic term which includes all Africans, Coloureds and Indians. Our High Court has extended the scope of application by ruling that South African citizens of Chinese descent also qualify for the full benefits of the country’s Employment Equity and BEE laws. BEE legislation is applicable to all private businesses (subject to certain turnover thresholds being exceeded) as well as many public entities.
The main differentiation between Employment Equity and BEE is therefore found in the objectives and beneficiaries thereof. Employment Equity applies only within the context of an employment relationship whereas BEE applies to the whole business on a much broader basis. Furthermore, the beneficiary base of Employment Equity includes all South African citizens except for white males that are not disabled, whereas beneficiary base of the BEE Act is focused on Black persons and per definition excludes white persons, irrespective of gender or disability, from its ambit.
Employment Equity relates to BEE in that it is included in the Management Control component of the BEE Scorecard for measuring the BEE compliance of a business in terms of the BEE Codes of Good Practice. BEE thus incorporates Employment Equity as part of the Management Control component of the BEE scorecard for measuring how prescribed Employment Equity criteria for the employment of Black people in senior, middle and junior management positions are met, with points being awarded or lost based on levels of compliance.
Although BEE verification agencies often require businesses to show that they have complied with the EEA (if applicable) before awarding points under the Management Control element of the BEE scorecard, businesses that comply with BEE legislation do not automatically comply with the EEA and vice versa. Under the BEE Scorecard you can lose points for non-compliance but under the EAA non-compliance can result in stringent penalties.
Compliance with BEE and Employment Equity legislation is a complex and resource intensive exercise for businesses. Government is also prioritizing stricter enforcement of BEE and Employment Equity legislation and are imposing larger penalties for non-compliance. All of this implies that businesses should pay attention to their compliance with both the BEE Act and the EEA and not just assume that they are either not applicable, or that compliance with one equals compliance with the other. These are inter-related but still separate pieces of legislation with differing objectives and requirements for compliance and the assistance of a BEE or legal expert should be obtained to assist you to be fully compliant.