Huge Impact on Construction Companies. Severely affects businesses with a turnover of under R10 million pa

By Lianne Levenstein, CEO of EconoBEE, a BEE advisory firm

Thabo Masombuka, CEO of the Construction Sector Council, has launched the draft Construction Sector Codes for comment before the final version. Quite unexpectedly there are some major changes which could have a huge impact on construction companies including contractors, built environment professionals and newly introduced construction material suppliers. The previous codes scope was only contractors and built environment professionals.

The sector code has 123 points available, as opposed to 118 on the Amended Codes of Good Practice. The Amended Codes of Good Practice allow small companies known as exempted micro enterprises (turnover of less than R10 million per annum) to get a sworn affidavit to prove their BEE status. The construction codes have done away with this and require a verification agency or The Construction Sector Council itself to confirm their BEE status.

EMEs will also vary between level 5 and level 1, with white-owned companies allowed to implement skills development and enterprise and supplier development to increase their level.

Interestingly, the sector enforces compliance with the Employment Equity Act. Clause 3.7.2 states that companies who are designated employers must submit their EE returns to the Department of Labour. If they have not submitted then the company will not be an empowering supplier.

The empowering supplier has been an extremely important addition to the Amended Codes, meaning that if your company is not an empowering supplier, your BEE certificate is effectively meaningless.

The fact is that your certificate can now become meaningless. The Department of Labour, who is the custodian of the Employment Equity Act, can audit your company and issue hefty fines for non-compliance.