My company currently has a level 4 BEE certificate, which I would like to improve on, but I am not sure how to do so. I am aware that there is something called the Y.E.S Initiative that can be used to improve our BEE level. How does it work and what must I do to benefit from this initiative?
The Y.E.S Initiative can be used to improve your company’s BEE status by up to 2 levels if you create a certain number of jobs for Black Unemployed Youth in South Africa. The number of jobs that need to be created is determined by the company’s specific target and how many levels the company wishes to improve its BEE by.
The target for the number of jobs that a company needs to create is dependent on whether the company is a Generic Entity (annual turnover above R 50 million) or a Qualifying Small Enterprise (QSE – annual turnover between R 10 and R 50 million). If a company qualifies as a QSE, there is a table included in the Government Gazette that sets out the applicable targets based on the company’s number of employees. If a company is a Generic Entity there are 3 possible factors that determine the target namely:
- Employee headcount at a certain point in time,
- Average profit over the last 3 years, and
- The annual turnover of the company.
If a company’s target is met, the BEE level will be enhanced by one or two levels, depending on the option that was opted for. For example, if 80 points is obtained on the BEE scorecard, the company would normally receive a level 4 BEE certificate, but this will now be enhanced by one level and a level 3 BEE certificate will be achieved, for which 90 points are normally required. If a company meets 1.5 times their target, it will be enhanced by one BEE level as well as receive an additional 3 BEE scorecard points. Meeting double the target will mean that the BEE level will be improved by 2 levels.
In order to make use of the Y.E.S Initiative there are some important factors that must be kept in mind. Firstly, the company needs to maintain the BEE level that was achieved the year prior to signing up for the Y.E.S Programme. This means that if a level 4 BEE status was previously achieved, the company will need to maintain the level 4 before enhancing its BEE level through the YES initiative. Should a company not maintain their previous BEE level, the DTI B-BBEE Policy unit can be consulted with justifiable evidence for participation.
The second factor that must be kept in mind is that the pre-scribed sub-minimum requirements must be achieved on the so-called ‘priority elements’ of the BEE scorecard, before a company can make use of the Y.E.S Initiative. A QSE must achieve the sub-minimum for the ownership element as well as the sub-minimum on one of the other 2 priority elements (Skills Development and Enterprise and Supplier Development). Generic Entities must achieve the sub-minimum for all 3 priority elements, alternatively an average of 50% for the 3 mentioned priority elements.
Another factor to be cognisant of is that the jobs created must in actual fact be new jobs and not a replacement of existing people, leaving their jobs. These jobs can be created within your own entity, or within other companies. There is also the option that the employees can be sourced and placed at a host employer, should a company not be able to accommodate this.
It is a viable option to make use of the Y.E.S Initiative to improve your BEE level but you need to ensure that your targets are calculated correctly and that you meet all the relevant requirements. Failure to meet the necessary requirements could result in not getting recognition for the jobs that have been created and the company’s BEE level will not be enhanced. For more information on this matter you can visit the Y.E.S Initiative website (www.yes4youth.co.za) or you can speak to your BEE consultant who can advise you on how to go about signing up for the Y.E.S Initiative.