Management control on the B-BBEE scorecard, Statement 200 (Large/Generic Entity) and Statement 600 (Qualifying Small Enterprise) of the Amended codes of Good Practice - seeks to address the human resource aspect of transformation through employment equity for the economically active population (EAP) as provided by the annual reports of the Commission for Employment Equity. It measures the meaningful representation and voting rights of black people at executive board level with the intention of changing the face of executive directorship of companies. It also measures the representation by disabled persons and the Involvement of Black People, with an emphasis on Black Women in the daily operations and strategic decision making at management level, specifically Junior, Middle, Senior and Executive management. In essence, it aims at encouraging the employment of black people in management positions which are core to the company.
In an effort to achieve equity in the workplace and ensure that all citizens enjoy equal opportunity and fair treatment, the Employment Equity Act, No. 55 of 1998 , as amended (Employment Equity Amendment Act: Act 47 of 2013) was enacted into law. This act feeds directly into B-BBEE practice as verification agencies verify that companies are adhering to the act through the provision by the measured entity of specific documents submitted to the Department of Labour.
The Economically Active Population (EAP) is based on the Commission for Employment Equity Annual Report informed by data from Statistics South Africa. The EAP includes people from 15 to 64 years of age who are either employed or unemployed and seeking employment. National and provincial EAP Targets are taken into consideration for your B-BBEE Scorecard so planning for you workforce profile to be aligned to the EAP would assist you in scoring more points per indicator for the Management Control element. Employers should consider the EAP to determine resource allocation and interventions needed to achieve an equitable and representative workforce.
"In essence, it aims at encouraging the employment of black people in management positions which are core to the company."
For the purposes of the Management Control Scorecard, we are particularly interested in the employment of the EAP according to the gradings of executive, Senior, Middle and Junior management. The EEA2 is the overview of the company’s workforce profile which splits all employees by race and job grading as defined in the EEA9. The EEA9 document provides guidance on the grading of roles within an organization to measure jobs according to their content and establish the comparative worth between them.
The EEA4 then details the statement of income differentials across the workforce reported on the EEA2. The objective of the EEA4 Form is to collect information for the assessment of the remuneration gap between the highest paid and lowest paid employees and, at the same time, to assess inequalities in remuneration in relation to race and gender in the various occupational levels. These are questions that your B-BBEE Rating Agency will ask as part of the verification process should any anomalies be identified.
The Employment Equity Act further refers to “Designated Employers” who must comply with the Act. A Designated Employer is defined as:
• Having 50 + Employees
• Having an annual turnover equal to or above thresholds specified for your industry in schedule 4 of the Employment Equity Act.
• An organ of State
• An employer bound by a collective agreement
"National and provincial EAP Targets are taken into consideration for your B-BBEE Scorecard so planning for you workforce profile to be aligned to the EAP would assist you in scoring more points per indicator for the Management Control element."
A Measured Entity who meets the above criteria will have to submit employment equity reports, the EEA2 and the EEA4, to the Department of Labour by 15 January annually. Failure of a Designated Employer to submit these reports may lead to penalties and fines incurred, and may also result in the Management Control element not being measured completely, or at all by your B-BBEE Rating Agency as these form part of the mandatory documents requested.
As is the case with Ownership, Management Control is measured at current with the latest available workforce and payroll data. Here is a non-exhaustive list of documents that will be requested from you during your verification process:
· Latest submitted EEA2 and EEA4 forms submitted to the Department of Labour
· Proof of submission of the EEA2 & EEA4
· A recent CIPC report disclosing all Directors
· The most recent board meeting minutes
· The most recent payroll report
Staff members per management level will also be sampled for interviews in order to validate the information submitted for them, and these staff should be available for these interviews on the day of the on-site verification, which at this point in time could either be remotely conducted or in person.
Contact MSCTBEE Services today for any questions related to Management Control and the verification process!