In March 2018, the Department of Trade and Industry proposed amendments to The Skills Development Element set out in Statement 300 of the BBBEE Codes, introducing a separate target for bursaries and increasing the cap on informal training from 15% to 25%.
This is in part to encourage businesses to partner with the government in meeting its commitment to providing free higher education to poor students, but importantly, the amendment also provides an excellent opportunity for businesses who want to help their employees fund their further education studies. They can see development as a chance to invest in the transformation of our economy by assisting black employees and their families to acquire skills that will allow them to participate meaningfully in our economy, while still scoring points on the BBBEE front. Businesses can also secure tax breaks through the provision of bursaries.
Bursaries fall under category A of the learning programmes matrix. Previously there was no separate target for providing bursaries to black people. The new amendments set bursaries at 2.5% of the leviable amount target (6%) for four points. There is no cap on costs such as stipends, accommodation, catering and travelling. The remaining 3.5% must still be allocated to qualifying learning programmes, which may also include additional expenditure on bursaries.
It is important to note that bursary spend does not qualify as skills development if it conditional. For bursary expenses to be recognised, the only conditions that can be imposed are as follows:
the obligation of successful completion in their studies within the time period allocated; or
the obligation of continued employment by the business for a period following successful completion of their studies is not more than the period of their studies.
What does this mean for your business?
The new amendments provide a strong incentive for businesses to prioritise bursary provision because they will now gain BBBEE points for this. Businesses will also get the opportunity to adopt the working student model, as the salaries of bursary recipients can be recognised as a bursary-linked cost. This allows the business to focus on providing on-the-job-training while the theory is addressed by the student studying at a formal, accredited higher education institution. This can be integrated into a coaching and mentorship programme, allowing experienced employees to assist studying employees to integrate their studies with practical real-life examples in the workplace. Again, a portion of the cost of the mentor (salary) can also fall under skills development expenditure.
With regards to unemployed bursary recipients, the business can secure a steady stream of learnership and internship candidates by inviting the students to these programmes upon successful completion of formal studies. The recipients can also be given the opportunity to gain workplace experience during their studies by providing them with vacation work.
Businesses need to be aware that bursaries are just one category in the learning programme matrix. Business still needs to provide the other categories in order to achieve their skills development points. This requires a proper integrated skills development strategy that takes into account not only national priorities but business objectives as well.
