Draft Amended Sector Code for the Tourism Sector

In this article, we focus on the Amended Sector Code for the Tourism Sector which was gazetted on 27 September 2019 (Gazette Number 42725) in draft format for which the DTI required all sectors to align their sector-specific Codes to the DTI’s Amended Generic Codes of Good Practice. A transitional period of twelve (12) months, from 1 June 2019 to 30 May 2020 was allocated for this process and this has since passed.

Given that the COVID-19 pandemic has negatively affected the tourism sector it however does not permit entities to overlook the B-BBEE charter requirements and alignment must still be in place.

The Amended Tourism B-BBEE Code applies to all privately owned enterprises and public institutions within the Tourism Sector and all parts of the value chain in that sector as follows:

Accommodation

  • Hotels
  • Resort properties and timeshare
  • Bed and breakfast (B&B’s)
  • Guest houses
  • Game lodges
  • Backpackers and hostels

Hospitality and Related Services

  • Restaurants (not attached to hotels)
  • Conference venues (not attached to hotels
  • Professional catering
  • Attractions, Casinos
  • Consulting and professional services companies

Travel and related services

  • Tour wholesalers
  • Tour operators
  • Travel agents
  • Tourist guides
  • Car rental companies
  • Coach Operators

COMPLIANCE TO PRIORITY ELEMENTS

PRIORITY ELEMENTS AND SUB-MINIMUM REQUIREMENTS (clause 10)

The priority elements are:

Ownership
The sub-minimum requirement for Ownership is 40% of Net Value (40% of the 8 points) based on the Time Based Graduation Factor provided in Annexe TSC100 (E).

Skills Development
The sub-minimum requirement for Skills Development is 40% of the total weighting points (excluding bonus points) for Skills Development.

Enterprise and Supplier Development
The sub-minimum requirement for Enterprise and Supplier Development is 40% of the total weighting points (excluding bonus points) of each of the three broad categories, within the Enterprise and Supplier Development element, namely Preferential Procurement; Supplier Development and Enterprise Development.

A Large Enterprise is required to comply with all the Priority Elements.
A Qualifying Small Enterprise is required to comply with Ownership as a compulsory element, and either Skills Development or Enterprise and Supplier Development with the exclusion of Black Owned QSEs in terms of clause 14.3 which permits enhanced BEE recognition based on the flow-through principle and certain criteria.

To ensure that compliance is achieved and maintained, a discounting principle negatively affecting the B-BBEE level is a requirement too.

DISCOUNTING PRINCIPLE EFFECT

Non-compliance with the 40% sub-minimum requirements of any of the priority elements, as per clause 10 of the charter will result in the following outcomes for both Large Enterprises and Qualifying Small Enterprises:

The actual points scored by the Measured Entity and the consequent level that the Measured Entity would have achieved were it not for non-compliance with the 40% sub-minimum requirements the Measured Entity’s B-BBEE Status Level and corresponding B-BBEE Recognition Level will be discounted by one level down until the next applicable verification period in which the Measured Entity can demonstrate compliance with the 40% sub-minimum requirements.

The requirement to submit data to the Department of Labour under the Employment Equity Act No.55 of 1998 is only applicable to designated employers who employ 50 or more employees or who exceed the turnover threshold specified by the Department of Labour. For the purpose of measurement, both Large Enterprises and Qualifying Small Enterprises that employ less than 50 employees are required to submit sufficient evidence for verification purposes.

ENTERPRISE TYPE TURNOVER THRESHOLD

  • Exempt Micro Enterprise (EME) R5 million p.a.
  • Qualifying Small Enterprise (QSE) R45 million p.a.
  • Large Enterprise (LE) > R45 million p.a.

Measured Entities that are governed by the Amended Tourism B-BBEE Sector Code must submit on an annual basis their B-BBEE verification certificates and B-BBEE verification report or, where relevant, a sworn affidavit, to the Tourism B-BBEE Charter Council.

Author Craig Tonkin

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