BUSINESS STUDIES

GRADE 12
TERM ONE
CHAPTER 1
WEEK 3
NOTES ON THE IMPACT OF RECENT LEGISLATION ON
BUSINESSES
2023
PAPER 1

TABLE OF CONTENTS

TOPICS PAGES
Exam guidelines for legislation 2
Terms and definitions 2
Compensation for Injuries and Diseases Act 4
(COIDA)
Purpose of COIDA 4
Impact of COIDA 4-5
Discriminatory actions according to COIDA 4
Penalties for non-compliance with COIDA 4
Ways in which businesses can comply with the 4
COIDA.
Broad Based Black Economic Employment Act 5-6
(BBBEE): Purpose
Revised Pillars 6
Implication of the revised pillars on businesses 6-7
Impact, discriminatory actions &compliance of
BBBEE 8
Discriminatory actions according to BBBEE 9

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Penalties for non-compliance with the BBBEE 10
Ways in which businesses can comply with the 10
BBBEE.

This chapter consists of 10 pages.

IMPACT OF RECENT LEGISLATION ON BUSINESSES

CONTENT DETAILS FOR TEACHING, LEARNING AND ASSESSMENT PURPOSES

 Outline/Describe/Explain/Discuss the purpose of the Compensation for

Occupational Injuries & Disease Act (COIDA)

 Discuss/Explain/Evaluate the impact (positives/advantages and/or negatives/

disadvantages) of COIDA on businesses.

 Outline the BBBEE pillars.

 Recommend/Suggest ways in which businesses could apply the revised FIVE

pillars of BBBEE in the workplace.

 Outline/Explain/Discuss penalties/consequences for non-compliance.

 Outline/Explain/Discuss actions regarded as discriminatory od the BBBEE.

 Suggest/Recommend ways in which businesses can comply with BBBEE.

 Discuss Provisions of the BCEA

Term Definition

Compensation for The Act gives employees who are injured or contract diseases while on
Occupational duty the right to claim compensation.
Injuries and
Diseases
Broad-Based
Act/COIDA Black The Act was introduced to ensure full economic participation of
Economic previously disadvantaged individuals.
Empowerment Act

Penalties Punishment for doing something that is against a law.

Discriminatory Treating a person/people differently, from the way in which you treat
actions other people.

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1 Compensation for Occupational Injuries & Diseases Act

(COIDA)
Purpose of COIDA
 Provides a comprehensive protection to employees who injured while performing
their duties.
 COIDA applies to all casual and full-time workers who become ill/injured/
disabled/killed due to a workplace accident/disease.
 It excludes workers who are guilty of wilful misconduct/workers working outside
South Africa for at least twelve months/members of the SA Defence Force/Police
services.
 It provides for the establishment of a Compensation Board whose function is to
advise the Minister of Labour on the application/provisions of COIDA.

1.2 Impact of the COIDA on businesses

Positives/Advantages
 Promotes safety in the workplace.
 Employees do not contribute towards this fund.
 Claiming processes are relatively simple.
 Eliminates time and costs spent on lengthy civil court proceedings.
 Any compensation to an employee/the family is exempt from income tax.
 Employers are protected from financial burden should an accident occur in the
workplace provided that the employer was not negligent.
 Makes businesses more socially responsible as they cannot just employ workers
at random in dangerous working conditions.
 Workers are treated with dignity and respect as businesses view them as
valuable assets and not just as workers.
 Covers all employees at the workplace if both parties meet all the necessary
safety provisions in the Act.
 Creates a framework for acceptable employment practices and safety regulations.
 Supply administrative guidelines/mechanisms for dealing with/processing claims.
 Employees are compensated financially for any injury/disability resulting from
performing their duties at their workplace.
 In the event of the death of an employee as a result of a work-related accident/
disease, his/her dependent(s) will receive financial support.
 Employees receive medical assistance provided there is no other medical
assistance option. /Cannot claim medical assistance from the fund and medical
aid.
 Medical expenses/other types of compensation are paid to employees and/or
their families depending on the type/severity of the injuries.
 Employers have to pay a monthly amount to the Compensation Fund depending
on the number of employees/the level of risk they are exposed to.

AND/OR

Negative/Disadvantages
 Claiming processes can be time consuming.
 Domestic/Military workers are not covered.
 Workers who are temporarily/permanently employed in foreign countries are not
covered.

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 Employers may be forced to pay heavy penalties if they are found guilty of
negligence/not enforcing safety measures.
 Implementation processes/procedures required by the Act may be expensive.
 Procedures required by this Act may be costly as paperwork places an extra
administrative burden on businesses.
 Employers must register all their workers/make annual contributions to COIDA,
which may result in cash flow problems.

1.3 Discriminatory actions according to COIDA

 Employers who bribe/prevent employees from reporting the accident/injury.
 Providing false information about previous, serious accidents/occupational
diseases.
 Employers who do not contribute to the Compensation fund.
 Employers who do not allow claims for injuries, discriminates against injured
employees.
 Employers that take too long to process claims/delay the claiming process.
 Compensation that is set off against any debt of the person entitled to the
compensation.

1.4 Penalties for non-compliance with COIDA

 Businesses can be fined for refusing to lodge the claim/contravening the Act.
 Businesses can be forced to make large payments if it did not take the necessary
precautions according to the Act.
 They may be forced to pay any recovery costs required by the Compensation
Fund.
 Employees may take businesses to court for not registering them with the
Commissioner of the Compensation Fund.
 If businesses are found guilty of any misconduct, they will have to pay large
penalties/face imprisonment.

1.5 Ways in which businesses can comply with the COIDA.

 Businesses should provide a healthy/safe working environment.
 Ensure that the premises/equipment/machinery is in good working condition.
 Register with the Compensation Commissioner and provide the particulars of the
business.
 Report all incidents causing death/injury/illness of employees.
 Levies must be paid to the Compensation Fund.
 Keep records of employees' income and details of work for four years.
 Submit returns of earnings by no later than 1 March annually.
 Allow regular assessment of the workplace by inspectors to determine the level of
risk their employees are exposed to.
 Employers may not make deductions for COIDA from employees' remuneration
packages.
 Businesses must ensure that claims are lodged within twelve months of the date
of the accident.

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2 Broad Based Black Economic Employment Act (BBBEE)

2.1 Purpose of BBBEE
 Enable wealth to be spread more broadly across all population groups.
 Outline areas that would give the government a platform for bringing equitable
spread of wealth.
 Allows for the development of Codes of Good Practice.
 It aims at targeting inequality in the South African economy.

NOTE: You must first know the implications of BBBEE pillars so that you can
understand the impact BBBEE on businesses.

2.2 REVISED BBBEE PILLARS

 Management control
 Skills development
 Ownership
 Enterprise and supplier development (ESD)
 Socio-economic development/social responsibility

2.3 Implications of the revised BBBEE pillars on businesses

2.3.1 Management control
Implication of management control on businesses
 Business must ensure that transformation is implemented at all levels.
 Appoint black people in senior executive positions/to management.
 Involve black people in the decision-making processes.
 Ensure that black females are represented in management.
 Businesses score points in both management and ownership when selling more
than 25 % of their shares to black investors so that some of them can become
directors.
 Due to a shortage of skilled black managers/directors, some businesses find it
difficult to make appointments.
 Businesses are directly penalised for not implementing this pillar.

NOTE: The word “implication” in this context means “what businesses should
do in order to comply with this Act and what are the things that are preventing
them from implementing this Act.

NOTE that the last sentences of EACH pillar speak to things that prevent
businesses from implementing the pillar.

Ways in which businesses could apply management control in the workplace.

 Business must ensure that transformation is implemented at all levels.
 Appoint black people in senior executive positions/to management.
 Involve black people in the decision-making processes.
 Ensure that black females are represented in management.
 Businesses score points in both management and ownership when selling more
than 25 % of their shares to black investors so that some of them can become
directors.

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2.3.2 Skills development

Implication of Skills Development Act on businesses

 Business must engage black employees in skills development initiatives.
 Provide learnerships and learning programmes to black employees.
 Business must contribute 1% of their payroll to fund the skills development.
programmes.
 Business benefits from the increased pool of skilled/trained workers.
 Business must go the extra mile to train staff where learnerships are not offered.
 Productivity is compromised as mentors/coaches must find the time to participate
in learnerships/training.

Ways in which businesses could apply SDA in the workplace.

 Business must engage black employees in skills development initiatives.
 Provide learnerships and learning programmes to black employees.
 Business must contribute 1% of their payroll to fund the skills development.
programmes.
 Business benefits from the increased pool of skilled/trained workers

2.3.3. Ownership
Implication of ownership on businesses
 Business should include black people in shareholding/partnerships/franchises.
 Encourage small black investors to invest in big companies and share ownership.
 Exempted Micro Enterprises (EMEs) with an ownership of 50% or more of black
people are promoted to level 3 of the BEE scorecard.
 More opportunities are created for black people to become owners/
entrepreneurs.
 Large businesses should form joint ventures with small black owned businesses
and share business risks.
 Businesses sometimes find it difficult to locate suitable black business partners/
shareholders.
 Many black people cannot afford shares in companies/contributions to
partnerships.

Ways in which businesses could apply ownership in the workplace.

 Business should include black people in shareholding/partnerships/franchises.
 Encourage small black investors to invest in big companies and share ownership.
 Exempted Micro Enterprises (EMEs) with an ownership of 50% or more of black
people are promoted to level 3 of the BEE scorecard.
 More opportunities are created for black people to become owners/
entrepreneurs.
 Large businesses should form joint ventures with small black owned businesses
and share businesses risks.

2.3.4 Enterprise and supplier development (ESD)

Implication of Enterprise and supplier development (ESD) on businesses
 Business must create jobs as ESD promotes local manufacturing.
 Identify black owned suppliers that can supply goods and services.
 Outsource services to suppliers that are BBBEE compliant.
 Businesses are encouraged to invest/support black owned SMMEs.

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 Develop the business skills of small/black owned suppliers, e.g. sales techniques,
legal advice, etc.
 Support the cash flow of small suppliers by offering them preferential terms of
payment.
 Invest in/Support black owned SMMEs by contributing loans/donations/consulting
services/advice/entrepreneurial programmes.
 Businesses should invest in/support black owned SMMEs.
 SMMEs will be encouraged to use their own business initiatives to make them
sustainable.
 Develop and implement a supplier development plan/supply chain.
 Small/Large businesses may not be able to afford enterprise development
investment/support.
 Black owned SMMEs may become too reliant on support from other businesses/
unable to take their own initiatives.
 BBBEE suppliers may be without good workmanship.
 Smaller businesses that are not BBBEE compliant lose business.
 Businesses are forced to choose from a smaller pool of suppliers.

Ways in which businesses could apply ESD in the workplace.

 Business must create jobs as ESD promotes local manufacturing.
 Identify black owned suppliers that can supply goods and services.
 Outsource services to suppliers that are BBBEE compliant.
 Businesses are encouraged to invest/support black owned SMMEs.
 Develop the business skills of small/black owned suppliers, e.g. sales techniques,
legal advice, etc.
 Support the cash flow of small suppliers by offering them preferential terms of
payment.
 Businesses should invest in/support black owned SMMEs.
 Contribution can be monetary, e.g. loans/investments/donations.
 Contribution can be non-monetary, e.g. consulting services/advice/entrepreneurial
programmes, etc.
 SMMEs will be encouraged to use their own business initiatives to make them
sustainable.
 Develop and implement a supplier development plan/supply chain.

2.3.5 Social responsibility/Socio-economic development

Implications of social responsibility/socio-economic development on
businesses
 Businesses should focus on critical areas which can affect growth and development
in the country e.g. environmental awareness/education/ housing,
poverty/unemployment etc.
 They should distribute scarce CSI resources to selected beneficiaries in the
community.

2.4 Impact of the BBBEE on businesses

Positives/Advantages
 Encourages businesses to address the demands for redress/equity directly.
 Provides a variety of business codes to improve employment equity.
 Provides for human resources development through training and development.

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 A good BEE rating improves the image of the business.

 Fronting is discouraged, as it may lead to the disqualification of a business's
entire scorecard/BBBEE status.
 Promotes enterprise development, by developing entrepreneurial skills of
designated people to start their own businesses.
 Businesses that comply with BBBEE regarding the pillars will be rated high on the
BEE scorecard/may get government tenders/may attract other BBBEE business
partners/-suppliers.
 Businesses will have a good overview on how it is performing in comparison to
other businesses in the rest of the country.
 By focusing on BBBEE, the business will show commitment towards the
social/education/economic developments in the community/country.
 Once rated, the business will understand how to develop BBBEE strategies that
will increase its BBBEE ratings on an annual basis.
 Share prices of BBBEE compliant businesses are likely to increase as they attract
more business.
 Businesses that support Small, Micro, Medium Enterprises (SMMEs), may
increase their own BBBEE ratings.
 Complying with BBBEE requirements gives businesses experience/exposure to
be able to provide better employment opportunities/staff development.

AND/OR

Negative/Disadvantages
 Businesses could experience large financial implications/penalties if they do not
comply with BBBEE.
 Processes may lead to corruption/nepotism if not monitored properly.
 Processes and procedures may be costly for a business as there are many legal
requirements for scoring enough points to be compliant.
 Investment/Ownership issues can cause unhappiness amongst existing
shareholders/owners.
 Provides for preferential procurement, so certain businesses may be excluded
from supplying goods/services.
 Businesses will have to spend money in areas covered by five BBBEE pillars to
obtain a good BBBEE rating.
 Businesses that want to do business with the government must have their BEE
status assessed annually.
 Businesses must go through the process of having their BBBEE compliance
measured/verified by an independent BEE verification agency.
 Many businesses have been disadvantaged due to BBBEE ratings as they may
not be able to meet all the scoring.

2.5 Discriminatory actions according to BBBEE

 Failing to implement affirmative action to meet BBBEE responsibilities.
 Promoting unsuitable people into a management position at the expense of
qualified PDP’s.
 Refusing to award tenders to black suppliers who are BEE compliant.

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2.6 Penalties for non-compliance with the BBBEE

 Businesses may face imprisonment for non-compliance and fronting practices.
 The penalty could be a fine of up to 10% of the company’s annual turnover.
 Government will cancel any contract awarded that was based on false information
regarding B-BBEE status.
 A business can be banned from participating in government contracts for a period
of 10 years.
 Business licenses may not be renewed, and authorisations may not be issued.
 Businesses that fail to achieve at least a minimum 40% of compliance with
ownership, skills development and new enterprise and supplier development will
be automatically downgraded the by one level.

2.7 Ways in which businesses can comply with the BBBEE.

 Businesses must appoint black people in managerial positions.
 Businesses must sell shares to black employees/people.
 Send black people for black for skill development training.
 Outsource their services to BEE compliant suppliers.
 Implement affirmative action when making appointments.
 Develop small business /SMME’s through ESD.
 Improve the standard of living of the communities in which they operate.