Introduction to draft Sector Code for the accounting profession

For many years it has been suggested that EEA9 in the Employment Equity Act (EEA) is a flawed structure because it fails to give proper effect to the elimination of disproportionate pay differentials in enterprises as required by s 27 of the EEA. With the publication last Friday of a draft Sector Code for the Accountancy Profession correcting that flawed structure or framework is now urgent.

This is so because the CA Sector Code defines ‘management’ and links it to EEA9. But according to the definition in the CA Sector Code ‘senior management’ purports to include the ‘chief executive officer, the chief operating officer, the chief financial officer and other people holding similar positions’. But such persons only fall into the 5th occupational level of EEA9. Properly interpreted at that level only ‘tactical’ decisions are made, whereas policy and strategic decisions have to be made at the 6th and 7th occupational levels.

The CA Sector Code places enormous stress on the importance of management from the perspective of BBBEE but bases it on a totally flawed EEA9 structure that makes a complete nonsense of the entire exercise.

In this post the flawed nature of the exercise is demonstrated by setting out how the terms are defined in the CA Sector Code and superimposing them on the existing EEA9 structure. ‘Core job outputs’ and the inherent nature of jobs at the various 7 levels have been added to show how the structure can we corrected. We have added a generic straight-line cost curve, which can be scaled to meet specific enterprise needs.

As already mentioned, ‘senior management’ as defined in the CA Sector Code only come in at the 5th tactical occupational level according to EEA9 and this is clearly absurd if that category includes the CEO, etc.

We can assist in ensuring that you know and understand how to create a structure and system that does meet the needs of equity and it is hoped that as many persons as possible will comment on the flawed nature of the entire process.

Public comment invited

On 26 April 2019 (Notice 244 of 2019 in GG 42417) the Dept of Trade and Industry published THE CHARTERED ACCOUNTANCY PROFESSION SECTOR CODE on Broad Based Black Economic Empowerment (BBBEE) (CA Sector Code) and invited public comment and input to be submitted in writing within 60 days to Mr Sipho Solfafa: E-mail:

There appears to be considerable confusion concerning the critical issue of management and the various decision-making levels that could result in serious consequences for the economy.

Management as defined in the CA Sector Code

According to the Draft Sector Code

“‘Management’ typically means those persons who would form the governing body, executive committee or others who take responsibility for managing and implementing significant parts of the strategy. Such other persons would include representatives whose main task consist of –

    • (a) determining and formulating policy and strategic planning; or
    • (b) operational implementation which includes the planning, directing and coordination of the policies and activities of the enterprise.

Management, in terms of the definitions to the Auditing Profession Act, 2005 (Act 26 of 2005), in relation to an entity which is a company, means the board of directors of the company and, in relation to any other entity, means the body or individual responsible for the management of the business of the entity.”

The CA Sector Code purports to link the management provisions to the Employment Equity Act (EEA), more particularly EEA9, but still seems to confuse ‘categories’ with ‘levels’ despite the EEA scrapping categories some time ago.

Social engineering

Before the ‘social engineering’ of our workplaces in the late 70s and early 80s, the step from skilled procedure work to specialist process work was viewed as a critical step in the early learning and development of ‘managers’.  This step is primarily organisational and takes individuals from the ‘theories of management’ into the ‘engine-room’ of organisational effectiveness.  These individuals are the resource pool for future senior management appointments, based on the hands-on experience of ‘what’ makes businesses work.

This critical workplace management development focus has not been a reality since the 80s.  A generation of managers have probably been missed who had the right blend of theory and workplace practice.  Claims of a skills shortage is distressing because it is this level of early management learning and development that makes organisations work through the organic growth of all responsive employees.

Organisational structure

A simple, logical and transparent organisational structure is just as important to understanding workplace discrimination as any policy and terms and conditions of employment.  It is also important for employees to know what they must do to grow their capacity to move up the value exchange ladder.

Creating an intentional and systematic work for pay structure will allow management to:

  • show that the logic of their structure is valid across all occupational levels; and
  • vary the pay of individual employees based on their job readiness and performance.

Consequently, unless there are clear indications of discrimination based on a listed ground, management should have no difficulty in defending their pay for work structure and practices.

Combined Table

This table combines EEA9 with the proposed provisions concerning management and measurement of decision-making and value at various levels.  It is argued that there are serious flaws in the structure of EEA9 in that it fails to give proper effect to the EEA in that EEA9 does not provide for proportionate pay differentials.

“27.   Income differentials and discrimination.

(1)  Every designated employer, when reporting in terms of section 21(1), must submit a statement, as prescribed, to the Employment Conditions Commission established by section 59 of the Basic Conditions of Employment Act, on the remuneration and benefits received in each occupational level of that employer’s workforce.

(2)  Where disproportionate income differentials, or unfair discrimination by virtue of a difference in terms and conditions of employment contemplated in section 6(4), are reflected in the statement contemplated in subsection (1), a designated employer must take measures to progressively reduce such differentials subject to such guidance as may be given by the Minister as contemplated in subsection (4).”

Table showing seven occupational or decision-making levels

Table showing seven occupational or decision-making levels with the outputs required at each level and the inherent nature of the jobs at each level compared with the flawed EEA9 and the confusion that results from attempting to rely on that flawed structure to ‘measure’ the value of management and decision-making at various levels for the purposes of creating a non-discriminatory system of equal pay for work of equal value and for the purposes of BBBEE.


Core job outputs

Draft CA Sector Code


Inherent nature of job

Based on equality and elimination of disproportional pay differentials – EEA section 27  Definitions  Description Arguably flawed schedule as not designed to comply with EEA equality requirements


Core job outputs

Draft CA Sector Code




(Sapiential authority) 





Why’ actions are necessary


Top management / executives:

Controls the functional integration of the business.  Determines the overall strategy and objectives of the business.  Directs the company into the future.  The nature of the work and focus is long term.  Sign-off on policy or strategy.

Management: Executive








What’ the actions involve and manage the overall business impact / risk


Management: Senior






















How’ actions translate into activities












Senior Management’* means an employee of a Measured Entity who is a member of the occupational  category of ‘Senior Management’ as determined using the Employment Equity Regulations.

It includes persons such as the chief executive officer, the chief operating officer, the chief financial officer and other people holding similar positions.





5.2 Senior Management

5.2.1 These persons undertake the day-to-day management of assignments and are actively involved in the implementation of strategy and development of staff, limited to their areas of responsibility.

5.2.2 These persons would generally have 5–10 years’ experience and would be entrusted with large accounts or responsibilities in an administrative or support function.

5.2.3 These person’s levels as reported to Department of Labour and salary should also be taken into account.

Senior management:

Knowledge of entire business area/BU/company or group.  Provide inputs for/formulation of the overall organisational strategy.  Translates the overall strategy into business plans for BU/functional unit, thereby operationalising organisational strategy.  Implements and manages business plan, goals and objectives and ensures the achievement of overall key organisational/BU/functional output.  Manages the development of innovation and change.


Management: Middle













Specialist senior


























‘Who’ will do, ‘Where’ will it be done, by ‘When’ and other required specifications











Middle Management’*

means an employee of the Measured Entity who is a member of the occupational category of ‘Middle Management’ as determined using the Employment Equity regulations.








5.3 Middle Management

5.3.1 These roles are typically entrusted with a supervisory or managerial responsibility.  In the audit context it would include the senior on the assignment who is the equivalent of a manager, assistant manager or senior consultant who has at least 3–5 years’ relevant experience.

5.3.2 These person’s levels as reported to Department of Labour and salary should also be taken into account.


Middle management:

Professionally qualified and experienced specialists

Professional knowledge of sub-discipline or discipline.  Provide input in the formulation of organisational/functional unit business plans.  Formulate and implement departmental/team plans that will support the BU business plans.  Optimisation of resources (finances, people, material, information and technology) to achieve given objectives in most productive and cost-effective way.

Management: Junior


































Procedures – knowing the most effective method, within a range of alternatives









Junior Management* means an employee of the Measured Entity who is a member of the occupational category of ‘Junior Management’ as determined using the Employment Equity regulations





5.4 Junior Management

5.4.1 The roles are typically responsible for the execution of assignments under the guidance of a manager or senior.  Individuals in his category typically have 0–3 years’ relevant experience.

5.4.2 These person’s levels as reported to Department of Labour and salary should also be taken into account.


Junior management

skilled technical and academically qualified/  /supervisors /foremen/ superintendents:

Applies broad knowledge of products, techniques and processes.  Evaluates procedures and applies previous experience.  A good solution can usually be found.  Determines own priorities.  What has to be done is stipulated: but may require initiative in terms of how it should be done.





















2 Practices – strictly in accordance with an established ‘good operating practice’ Semi-skilled and discretionary decision-making Overseer Semi-skilled
1 Elements – do as instructed unskilled and defined decision-making Low-skilled


Proper alignment of critical jobs

This shows where the flaw is in the non-alignment of jobs in the EEA9.  Currently the Semantic descriptions of two of the mid-levels as:


3 (C)

4 (D)

Junior management

Skilled technical and academically qualified /Supervisors/foremen /Superintendents


Professionally  qualified and experienced specialists

The description of OL 3 needs to be changed and OL 4 should be re-created as follows:




Skilled technical and academically qualified employees and foreman Junior Management, supervisors, superintendents and specialists


Mid-management, professionally qualified and experienced specialists


When this is done it is possible to create a true cost curve across the seven levels that ensure proportionate pay differentials.

True cost curve

 Elimination of discriminatory pay practices

This analysis hopefully demonstrates the process required to audit and analyse the payroll of an enterprise and to identify possible areas of risk where claims of discriminatory pay practices may arise.  The requirement of ‘equal pay for equal work’ can only be assessed if the structure of the progressive worth of work is simple, logical and transparent. This is the same structure that supports the measurement of ‘value exchange’.  Consequently, measuring ‘equal pay for equal work’ is as fundamental to the future management of workplace relations as double entry bookkeeping is to the financial management of a business.

Senior managers need to know and understand this simple message and routinely review changes to the monthly payroll.  It is not just a good business practice.  It also supports decisions needed to be made when considering operational capacity to meet the requirements of the EEA, Skills Development and BBBEE.