Skills Development: Financial Benefits for your company

Date: 15 May 2019

Skills development is one of the priority elements of the BBBEE scorecard. Skills development measures the extent to which a company carries out initiatives designed to develop the competencies of black people both internal and external to the company.

The sub-minimum requirements for skills development are:

  • 40% of the total weighting points for skills development (on the generic scorecard this is 20 points)
  • black women should form between 40% and 50% of the beneficiaries of the relevant elements of the BBBEE scorecard,
  • black people with disabilities, black youth, black people living in rural areas, and black unemployed people also form part of the beneficiaries.

Points Indicators:

  • 8 points gained for investing 6% of your payroll on the training of black people.
  • 4 points gained for spending 0.3% of your total payroll on learning programmes for disabled, black employees.
  • By participating in learnerships, apprenticeships and internships you can claim 4 points if 2.5% of your staff is enrolled on such programmes and another 4 points if 2.5% of your company’s headcount are black unemployed learners. (See Youth Employment Services (YES) Initiative below)
  • You earn an additional 5 bonus points if all your unemployed learners will be gainfully employed at the end of the learnership (Absorption)

Learnership Allowance

This allowance was implemented to incentivise employers to train their staff in order to encourage skills development and job creation. The initial learnership agreement allowance was due to expire on 1 October 2016, but since this incentive has successfully encouraged employers to create jobs and develop skills in their employees, the allowance was extended to 1 April 2022

To take advantage of this benefit, you must register the learnership agreement with your SETA (Skills Education Training Authorities) and complete an IT180 declaration form and submit it to SARS.

There Are Two Parts to the Learnership Allowance

  1.  Annual Allowance

An annual allowance is claimed for each year of assessment in which the employee is party to a learnership agreement. For instance, if the learnership agreement is for three years, you will be able to claim the allowance for three years in a row.

If the learnership did not run for a full 12 months in the year of assessment, the allowance should be apportioned.

Annual Allowance:

NQF level 1-6: R40,000 (R60,000 if the employee has a disability)

NQF level 7-10: R20,000 (R50,000 if the employee has a disability)

  1.  Completion Allowance

The completion allowance is claimed in addition to the annual allowance. This is a once-off claim in the year of assessment in which the learnership is successfully completed. Should the learnership allowance not be completed for any reason, this allowance cannot be claimed by the employer.

This allowance can be claimed in full regardless of which month it was completed in – it should not be apportioned.

Completion Allowance:

NQF level 1-6: R40,000 (R60,000 if the employee has a disability)

NQF level 7-10: R20,000 (R50,000 if the employee has a disability)

If the learnership agreement exceeded 24 months, the completion allowance is multiplied by the number of completed 12-month periods.

Employment Tax incentives

An employer can claim this incentive by decreasing the amount of PAYE that is payable to the SARS for every qualifying employee that is hired by the employer. This is done by completing the Employment Tax Incentive (ETI) field on the employer’s monthly EMP201 submission to SARS.

Qualifying employees are between the ages of 18 and 29 and earn less than R6000 per month.

The claim is calculated using a SARS formula which is based on the number of qualifying employees. A maximum of R1 000 per employee per month can be claimed. Subsequently, if you had 10 qualifying employees your maximum claim would be R10 000 for that month.

Employees must have one of the following: a green ID book, an asylum-seeking permit or a refugee identity document.

If your company has an ETI claim that is greater than the calculated PAYE, your company will receive a cash refund every six months via EFT into its bank account, tax free.

Learnerships qualify for ETI as long as the learnership employees meet the qualifying criteria.

Skill Development: Grant Submissions

Skills Development Levies are paid monthly through to SARS and are subsequently sent through to your specific SETA. The purpose of the SDL is to encourage employers to apply annually for possible money back in the form of a grant.

Employers with an annual payroll of R500,000.00 or more pay a skills levy equal to 1% of the annual payroll directly to their relevant SETA. These funds are thereafter allocated as follows:

  • 5% SETA administration
  • 20% National Skills Fund
  • 20% Mandatory Grants
  • 5% Discretionary Grants

 

In terms of BEE, the goal is to ensure that previously disadvantaged individuals benefit from a BEE economic environment. For BEE purposes scores will increase the more companies focus on investing in previously disadvantaged individuals and creating opportunities for the currently unemployed.

The focus is to maximise your BEE points through compliance by submitting BEE and Skills Development reports, as well as focusing on training for the Discretionary Grant application.

Discretionary Grants can be accessed through the development of scarce and critical skills through your sector and the focus should be on PIVOTAL training (Professional, Vocational Training and Academic Learning i.e. that which results in a qualification.) This can be academic training or training where there is a trade test or other test which encompasses both work place learning and a test or examination.

All expenses pertaining to training regardless of the type of training, are included in the cost of the training which is declared in the grant submission.

Legitimate training expenses include the following:

  • Costs of training materials
  • Costs of trainers
  • Costs of training facilities including costs of catering
  • Scholarships and Bursaries
  • Course fees
  • Accommodation and travel
  • Administration costs such as the organisation of training, including the costs of employing a skills development facilitator or a training manager, if applicable.
  • Salaries or wages paid to employees participating in a learnership or Category B, C and D (see below for explanation) of the Learning Programme Matrix

The deadline for reporting your training for the purposes of the grant application is 30th of April, annually.

YES INITIATIVE

YES is a business-driven initiative aimed at building economic pathways for black youth. YES aims to create one million jobs for youth over the next 3 years.

A company is required to create new one-year positions for unemployed youth over and above current employment numbers.

If the company doesn’t have the capacity to host young people, there is the option of sponsoring the salary for a one-year starter position at an SMME (allowing the larger company to qualify for B-BBEE recognition, while building SMME capacity and competitiveness.)

Qualifying individuals must be:

  • Between 18 and 34 years old
  • unemployed for more than 6 months
  • lack people (African, Coloured or Indian)

*It is not obligatory but should companies want to claim the Employment Tax Incentive, then the YES youth must be between the ages of 18 and 29

Companies investing in the YES initiative can gain one or two levels on the B-BBEE scorecard.