The Skills Development Levies (SDL) Act of 1999 serves to fund the Skills Development Initiative in the country. The primary aim of the Skills Development Act 97 of 1998 is:
- To develop the skills of the South African workforce;
- To increase the levels of investment in education and training in the labour market and to improve return on that investment;
- To encourage employers to use the workplace as an active learning environment, acquire new skills and provide new entrants to marketplace
The Skills Development Levies Act provides ways to make training affordable by
- Implementing payment of skills levies
- Implementing payment of grants
- Requiring the appointment of Skills Development Facilitators (SDFs)
- Requiring Workplace Skills Plans (WSPs)
- Requiring Annual Training Reports (ATRs)
As per the Skills Development Act, certain employers must pay 1% of their payroll to SARS. This is the money used to fund skills development activities in a specific sector.
Who should pay levies?
- According to the Skills Development Levies Act, all employers that have a payroll of more than R500 000 per annum have to pay a skills development levy (SDL).
SARS refers to this as the ‘leviable amount’ and provides clear guidelines on what amounts are included or excluded from this definition.
Exemption
The following categories of employers are exempt from paying the levy:
- Employers whose payroll does not exceed R500 000 per annum;
- Public Service Employers (PSEs) in national and provincial governments. These employers must budget for the training and education of employees at 1% of its payroll;
- National and provincial entities if 80% or more of its expenditure is paid from funds voted by Parliament. These employers must budget for the training and education of employees at 1% of its payroll;
- Any municipality that received a certificate of exemption from the Minister of Labour.
Non-payment of Levies
If an employer fails to pay the levy or any portion thereof at the appropriate time (i.e. not later that seven (7) days after the end of every month), the employer has to pay:
- Interest on the outstanding amount; and
- A penalty of ten percent (10%) of the unpaid amount
Grants
Originally the Skills Development Levies Act of 1998 distinguished two types of grants to be paid to employers:
- mandatory grants and
- discretionary grants.
During 2012, A third grant, the PIVOTAL (Professional, Vocational, Technical and Academic Learning) grant, was introduced by the DHET in an urgent notice in the Government Gazette No 34932 of 2012.
Mandatory Grants
Levy paying employers may claim mandatory grants from their SETA (Sector Education & Training Authority) if they:
- Have submitted a Workplace Skills Plan (WSP)
- And an Annual Training Report (ATR)
- The new regulations stipulate that Mandatory grants of 20% of the total levies paid will be paid monthly.
Discretionary Grants
- Refer to additional funding that companies can apply for over and above their mandatory grants.
- Are granted at the discretion of the specific SETA from the surplus of skills development levies of companies that do not claim levies.
- They fund learnerships, apprenticeships and strategic projects in line with the SETA’s critical scarce skills identified from the workplace skills plans submitted.
- They may be allocated by the SETA in support of the National Skills Development Strategy (NSDS), the National Skills Accord and any other relevant national skills development priorities detailed in the strategic plan of the SETA and as approved by the Minister.
- A SETA may only commit a discretionary fund for learners in pivotal programmes beyond each financial year.
- May be paid to an employer who is not required to pay a levy in terms of the Skills Development Levies Act. The new regulations stipulate
- That 49,5% of the levies paid by employers will be allocated to discretionary grants. 80% of the discretionary grants will be allocated to PIVOTAL grants.
PIVOTAL Programmes is an acronym which means Professional, Vocational, Technical and Academic learning programmes that result in occupational qualifications or part qualifications on the National Qualifications Framework e.g. Learnerships, Apprenticeships, Recognition of Prior Learning, Skills Programmes and Graduate Development.
