BEE Absorption: How You Can Earn an Extra 5 BBBEE Points
In a dynamic business landscape like South Africa, becoming B-BBEE compliant and continuously accumulating BEE points can help launch your company towards unparalleled success. Yet, navigating the intricacies of this process may feel daunting. However, by sponsoring an unemployed individual on a learnership programme and absorbing them afterward, you could gain an additional 5 bonus points on your B-BBEE scorecard. This will not only give your scorecard a much-needed boost but will also contribute to the growth of young professionals. In this blog we’ll uncover all there is to know about BEE absorption, its objectives, and how you can gain these 5 points for your company.
What is absorption in BEE?
Absorption, in the context of BBBEE, is the process of giving an individual a long-term contract after they have completed a learnership, internship or apprenticeship programme. By doing so you can add an additional 5 BBBEE points to your BEE scorecard. Watch this short video below to get a better understanding of Absorption.
What are the objectives of BEE absorption?
Absorption, like the rest of the BBBEE system, is in place to allow individuals to contribute to the economy and obtain employment opportunities. When learnerships were originally implemented, it was to meet the need of skills development in the form of upskilling designated groups, but some of these individuals remained unemployed after their learnership period. This is why absorption was introduced, to curb this issue. Once completing a learnership and being equipped with the right skills and experience, absorption serves as a way to guarantee an individual will secure a job after completion.
What are the requirements to gain points for absorption?
While this may sound like a simple process, a few requirements are involved in securing BEE points for absorption. Firstly, the person obtaining the long-term contract will need to be:
- From a Black designated group
- They must not be employed or hold a long-term contract of employment
- The individual must complete a learnership, apprenticeship, or internship programme
Upon completion of this programme the individual must secure a long-term contract of employment with the sponsored company or a company within their field.
What constitutes a long-term employment contract?
This form of contract is exactly as it sounds. It is a legal agreement between the employer and the learnership graduate that states that the individual will work for the company until their mandatory date of retirement.
How are absorption points calculated?
In order to obtain those desirable BEE points, a B-BBEE Rating Agency will consider two factors when evaluating your absorption claim:
1. Targets
Your company must set its absorption targets in line with specific requirements. These are calculated based on 5% of your total employee headcount. A pro-rata system is utilised if the 5% absorption is not fully attained.
For example, a company that has 1000 employees will calculate as follows: 1000 employees x 5% target = 50 learners. If this company puts 50 students on a learnership programme, employs 30 of the students, and facilitates the remaining 20 into industry equivalents, then they will meet the requirements for the absorption points.
2. Timing
Another important factor to consider is the timeframe that the absorption takes place. All Skills Development efforts need to happen within a given time frame called a Measured Period. This is the timeframe that the company is evaluated for compliance and performance against BEE requirements. This could take a year or another designated time period.
If a company were to absorb their learners after the Measured Period, they may lose out on a portion of their bonus points for absorption. Therefore, it’s important to make sure the absorption processes happen within the Measured Period.
Other variables to consider:
In addition to targets and timing there are a few other variables that you need to consider:
- A Black Person who is placed on a learnership with a 12-month fixed-term contract of employment must be counted in the 5% headcount target for absorption. It’s important to note that they are only eligible to be absorbed once their learnership is completed.
- A Black Person who is permanently employed and on a learnership must be counted in the total headcount for absorption but is not eligible for absorption as they are already deemed employed.
- The practice of moving an individual from one learnership to another is also not considered absorption and it is important to note that this will not qualify
How Edge Training has helped clients with absorption:
1. Enterprise and Supplier Development
One of our clients enrolled disabled individuals into Hygiene and Cleaning NQF 1 learnerships with Edge Training. The client wanted to claim absorption points after completion but didn’t have the capacity to take on the individuals.
Edge was able to provide a solution by absorbing the students within Vuka Ukhanye Cleaning Company, a 100% black female-owned company.
The client was able to receive 5 points for Absorption, 1 bonus point for creating a job, and 5 Enterprise Development points.
2. Skills Development
One of our Stories of Hope students, Sthabile Mnyandu, was given the opportunity to complete a Business Administration NQF 3 Learnership that was sponsored by GeoAfrika Technologies. After her completion, she went through a Work Readiness programme with Step In and was later absorbed by HSG Attorneys.
The client was able to receive 5 points for absorbing Sthabile into their company. She has become a valuable asset to their team and works in the Business Administration department. To see Sthabile’s graduation click here.
Next Steps:
Now that you’re more clued up with the BEE absorption process you may feel ready to enroll unemployed individuals on learnerships or absorb them into your company. For all your training needs, Edge Training provides various learnership options for various industries. We have over 22 years of experience in Skills Development and training so we can help you find a solution that best suits your business objectives. To find out more about our learnerships or what we can do to help you with the absorption process, reach out to one of our representatives today!