A dearth of skilled staff in South Africa prompted the government to implement the skills development levy (SDL) at the turn of the century.
The administration of this bid to prompt businesses to upskill employees may seem daunting to business owners – especially micro and small businesses.
It is, however, beneficial to have skilled staff.One of the main benefits of participating in the sectoral education and training authority (SETA-) led levy system, is that the SETAs pay for the training, says Naren Vassan, head of quality assurance at the SA Board for People Practices – an umbrella organisation for human resources professionals.
“There is a clear recording and monitoring process for verifying the quality of training provided,” says Vassan.
Ways to utilise the skills development levy
1. Register with your sectoral education and training authority
All the different economic sectors in South Africa have their own sectoral education and training authorities (SETAs). It is imperative to identify the correct one and ensure that your business is registered with them. You will need your Sars-issued skills development levy (SDL) number to register.
2. Appoint a skills development facilitator
Each business needs to designate a skills development facilitator to handle all the SETA-related administration. It could be the person responsible for the payroll or, if the organisation is large enough, the human resources officer.
These facilitators could opt to go for a short training course at accredited training service providers on how the skills development process works.
3. Set up a skills development forum
This workplace forum should consist of the facilitator, a senior manager and at least two non-managers. This forum’s sole aim is to identify training needs in the business. Two or three meetings a year should be held and minutes must be taken and kept for submission with the workplace skills plan.
4. Identify potential training service providers
After identifying the training needs, and to ensure a smooth compilation of the workplace skills plan, it would be a good practice to source quotations from potential service providers. This would enable the business to budget for training.
5. Compile the workplace skills plan
The workplace skills plan can be completed on the SETA’s website. It will require the facilitator to register once. The plan should also set out what training the organisation plans to undertake, given the money budgeted for it.
The training will be listed according to occupational level and the national qualifications framework level at which it will be provided (i.e. NQF-2 or NQF-3). The number of employees to be trained at each occupational and NQF level will be broken down in the plan.
The deadline for submitting these plans is 30?April. It may be extended by some SETAs.
6. The actual training report in subsequent years
From the second year, the business will need to file an actual training report covering the previous year. This report is a summary of what training actually took place and is compared with the previous year’s workplace skills plan. It is filed along with the current year’s workplace skills plan.
How does the grants system work?
Businesses pay a 1% payroll levy on the remuneration (excluding some benefits) of all their employees when they remit their monthly EMP201 return to Sars.Of the total money paid over to Sars, 80% is remitted to the sectoral training and education authorities (SETAs), while 20% is paid over to the National Skills Fund.
The SETAs must disburse their allotment through mandatory and discretionary grants.As an employer, by submitting the annual workplace skills plan and an annual training report, 20% of the levies that the business has paid will be refunded as a mandatory grant, says Naren Vassan, head of quality assurance at the South African Board for People Practices.
Discretionary grants are paid according to each SETA’s financial model.The business that wants to claim a discretionary grant must identify critical or scarce skills required for the development of employees, says Vassan.
Subsequently, they must submit a formal application to the respective SETA it is associated with, he says. If the SETA is satisfied with the request, it will pay the discretionary grant based on its financial model, he says.
How do learnership tax allowances work?
The Income Tax Act makes provision for an allowance to businesses who train existing, new or disabled employees. This allowance can be deducted from a business’ taxable income when its income tax return is filed.
A distinction needs to be drawn between existing and new employees, and whether a learnership is completed or not, according to a guide on learnership allowances issued by Sars.
For an existing employee, the business can claim an amount equal to 150% of the total remuneration of the learner up to a maximum of R20 000. Where such a learner is a new employee, the business can claim an amount equal to 175% of the total remuneration up to a maximum of R30 000.
Where the learner is disabled and an existing employee the maximum amount to be claimed is R40 000 and where the disabled person is a new employee, the maximum rises to R50 000.On completion of the learnership, the company can claim a completion allowance.
Where the learnership was shorter than 12 months, the allowance is equal to the total remuneration of the learner and increases to 175% of this remuneration in the case of a disabled person.
For a learnership exceeding 12 months, the allowance is equal to the annual equivalent remuneration of the learner and increases to 175% of this annual equivalent for a disabled person.
The cap on the completion allowance is R30 000 for a learnership and R50 000 in the case of a disabled person.