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Draft Amended Tourism Sector Code – what it looks like

Draft Amended Tourism Sector Code – what it looks like

The Department of Trade and Industry (DTI) recently published the draft Amended Tourism Sector Codes for public comment. The public have 60 days to comment on the proposed amendments. Some of the major amendments to the current Tourism Sector Codes will be identified in this article.

EME, QSE and Large Enterprise Thresholds

The Exempted Micro Enterprise (EME) turnover threshold will increase from R2.5 million to R5 million per annum.

Currently, all entities with a total annual revenue between R2.5 million and R35 million qualify as Qualifying Small Enterprises (QSE). In terms of the draft amendments, all entities with a total annual revenue of more than R5 million but less than R45 million will qualify as QSEs.

An entity with a total annual revenue of R45 million, instead of the current R35 million, will qualify as a Large Enterprise in terms of the draft amendments.

Elements on the tourism scorecard

There will only be five elements on the scorecard instead of seven. Both QSEs and Large Enterprises will be expected to comply with all five elements on the scorecard. QSEs will therefore not be able to select elements anymore. These elements are:

  1. Ownership
  2. Management Control (combination of the current Management Control and Employment Equity elements)
  3. Skills Development
  4. Enterprise & Supplier Development (combination of the current Preferential Procurement and Enterprise Development elements)
  5. Socio-Economic Development

Priority elements

Priority elements, similar to those contained in the Amended Codes of Good Practice, will be introduced to the Tourism Sector Code. Should an entity not comply with the applicable sub-minimum targets for each of these elements, its overall score may be discounted by one level. The priority elements will be Ownership, Skills Development and Enterprise & Supplier Development.

Broad-Based Black Economic Empowerment (B-BBEE) recognition levels

The qualification criteria to achieve a specific status level will increase significantly. The following table represents the amended criteria and corresponding recognition levels:

B-BBEE Status Qualification B-BBEE Recognition Level
Level 1 100 or more points 135%
Level 2 95 – 100 points 125%
Level 3 90 – 95 points 110%
Level 4 80 – 90 points 100%
Level 5 75 – 80 points 80%
Level 6 70 – 75 points 60%
Level 7 55 – 70 points 50%
Level 8 40 – 55 points 10%
Non-Compliant less than 40 points 0%

 

Management Control and the Economic Active Population Targets

Certain indicators on the Management Control scorecard will now be aligned with the Economic Active Population (EAP) targets. In order to score well on these indicators, people from all races and genders will have to employed within the entity.

 

Skills Development

Not only will the target for Skills Development Expenditure increase to 6%, but certain indicators on the Skills Development Scorecard will also be aligned with the EAP targets. A huge advantage is that entities will be allowed to not only develop the skills of their own employees but also any black South African citizen, even individuals not employed by the entity. In terms of the current Tourism Sector Code only skills development expenditure on your own employees will be recognised. Just like the Amended Codes of Good Practice, learnerships will become vital in order to score well on this element.

Empowering Suppliers

Entities will also have to be rated as Empowering Suppliers in terms of the proposed amendments. This is a new concept that was included in the Amended Codes of Good Practice as well. If you have a valid B-BBEE certificate, but you are not an Empowering Supplier, your certificate will be of no use to your clients.

General

Apart from the above a number of other changes will also be made in respect of certain targets and indicators. Please contact your SEESA BEE Legal Advisor to discuss the possible amendments with you in more detail. Chances are that the final product will not deviate too much from the draft amended Sector Code.

 

ABOUT THE AUTHOR

Bernard du Preez is an admitted attorney who obtained his B.Com (Law) and LLB degrees from the University of the Free State. Bernard started as SEESA BEE Legal Advisor and currently holds the position of SEESA BEE Provincial Manager at the Cape Town office.

 

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