BEE Trumping clause – EconoBEE Newsletter – 5 Nov 2015

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BEE Trumping clause

24th October 2015 was an important date in the history of BEE. It marks exactly one year since the B-BBEE Amendment Act came into effect.

The Amendment Act instituted many issues including penalties for fronting and the appointment of the BEE Commissioner.

One little commented on aspect that has huge implications is section 3(b) of the Amendment Act. It states:
‘In the event of any conflict between this Act and any other law in force immediately prior to the date of commencement of the Broad-Based Black Economic Empowerment Amendment Act, 2013, this Act prevails if the conflict specifically relates to a matter dealt with in this Act.’’.

Point 10 of the Amendment Act states:
Except for section 3(b), this Act comes into operation on a date fixed by the President by proclamation in the Gazette.
Section 3(b) comes into operation one year after the date contemplated in subsection (2).

This means that exactly one year after the proclamation of the Act, section 3 (b) comes into effect. This is so important that the minister issued a special gazette informing the public that it has now happened.

What does it mean?
If there is a conflict between this act and any other act relating to issues of transformation or empowerment, then the BEE Act will take precedence. This is hugely open to interpretation and there are going to be interesting legal precedents set. For example many people see the PPPFA as being inconsistent with the aims of the BEE Act. Section 10 of the Amendment Act states that government and public entities “must take into account and apply any code of good practice” for issuing licenses, procurement policy, sale of state assets and public private partnerships.

The mining industry has its own charter, stating amongst others a mining house must have at least 25% plus 1 black ownership. This trumping clause will force the department of mining to take into account the mining house’s BEE status as well. They have discretion as to how they will “take into account and apply”. It could be to require the mining house to reach a specified BEE level. Based on this trumping clause there is a school of thought that the requirements of the mining charger cannot override the BEE Codes – for example the mining charter cannot continue to insist on 25% plus 1 ownership. This has become a moot point since the dti minister has the discretion to override some of the provisions of the act, which he has done. On Friday 30th October the dti issued a gazetted delaying the mining and petroleum industries from following this trumping clause for another year.

Some industries that will be affected, and which will likely result in companies being required to reach a specific BEE level include: Liquor, gaming, telecommunications, transport, property development, healthcare, finance – virtually every industry that needs a license from government or any state owned entity to operate.

Some people have expressed concern that this also includes cancelling the sector codes. In our opinion this is not the case. The trumping clause only overrides other acts, not the BEE Act itself, and the sector codes were issued in line with the BEE Act. There could be an argument made that since the sector codes were issued in line with the BEE Act of 2003, not the BEE Amendment Act of 2013, the BEE Act of 2003 and all its regulations have been trumped!

Employment Equity and BEE Course

BEE/EE half day workshop
This course will cover the amended BEE codes, but will focus on employment equity in terms of the points calculation and all the reports that need to be submitted to the Department of Labour by 15 January 2016.

Venue: 435 Rugby Avenue, Ferndale
Date: 17th November 2015
Time: 8 30am for 9am until 1pm
Cost: R1 500 excl vat

How to win with dismissals and arbitration – 2 Days
Overview to the Labour Relations Act, with specific case studies of the dismissal and enquiry process, including CCMA cases. This course will prepare you to ensure that you do not have procedurally incorrect or substantively unfair dismissals as they could be hugely costly if referred to the CCMA.

Venue: 435 Rugby Avenue, Ferndale
Date: 19th and 20th November 2015
Time: 8 30am for 9am until 5pm
Cost: R5 000 excl vat

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EconoBEE Newsletter
05 November 2015

In this issue

  • BEE Trumping clause

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