How You Can Benefit From the Skills Development Levy

Have you been viewing your Skills Development levy as an extra expense every month? If so, you are missing the opportunity. The SDL is in place to encourage businesses to contribute to learning and development in South Africa, and you can benefit from this too. Before we get into how it can better your business, let me clarify how it works…

What is the Skills Development Levy? 

Every month, companies that are registered with SARS for tax purposes and pay over R500 000 a year in salaries and wages, will be required to pay 1% of the total amount paid in salaries, to SARS. This includes overtime payments, leave pay bonuses, commissions, as well as lump-sum payments.

Companies would need to register with their appropriate SETA, being the sector in which they fall. For example – as an education group – Summit falls under the ETDP SETA. SARS will direct your levy to your registered SETA. The SETAs will then distribute your levies 3 ways:

  • Administrative expenses that go to running your SETA.
  • Mandatory grants, where companies will submit their workplace skills plan, along with the annual training report (which should speak to one another). Generally twice a year, businesses can then claim to get a portion of that money back through the submission.
  • Discretionary grants are in place to address the scarce skills in that sector. Every year your SETA will put together a sector skills plan that determines what the current scarce skills are within your sector. For instance, within the CATHSSETA (which includes industries such as hospitality, tourism, sports, arts and culture) we often find that scarce skills needed within this industry would be for jobs inducing chefs, table attendants and receptionists. Your SETA will then set up ads allowing a certain period of time to apply, disclosing the skills gaps they are attempting to fill. They then identify the specific programs, the regions wherein the programs are available, along with the number of people they can accommodate. 

How Can Businesses Benefit From the Skills Development Levy? 

How business finance benefits

If you are granted the funding for training purposes, you will also receive a monthly stipend, which ultimately allows you to employ these learners for the duration of their programme at no extra cost to your business. You will also be able to put out a claim for ETI (Employment Tax Incentive) for those learners. On top of this, when you do your workplace skills plan and annual training report, you can capture any skills development costs incurred and receive a portion of expenses back. 

By ensuring successful report submission, companies also have the opportunity to improve their BBBEE scorecard.

How business functionality benefits

If you have been training learners in your company for a year, chances are that they will be successfully equipped to fill the job roles they have been prasticing in. You could view the year-long learnership as an extended onboarding process and then hire those learners as full-time employees. This ensures that you have high-quality employee candidates within reach, who you are familiar with, and who know your business and are trained. This is the epitome of a win-win situation.

How the country and your sector benefits

Not only do your business and learners benefit from the Skills Development Levy – if taken advantage of – but your entire sector as well as the country will have benefitted from your contribution. With a multitude of skill gaps in varying sectors of South Africa, the SDL incentivises businesses to take part in skills development. The levy makes it possible to fill those gaps and build up a skilled, as well as experienced workforce in our country. 

How Can Summit Offer Admin Relief When Applying for Skills Development Funding? 

We know that applying for skills development funding can be daunting for many businesses, and so we want to relieve that pressure. Although we can apply on behalf of your business, we also realise that you may have sensitive information that you would rather not disclose. Because of this, we generally work with our clients to apply for funding together.

We also apply for funding ourselves. Although Summit is a part of the ETDP SETA, we work mainly with companies in the CATHSSETA, SSETA, W&RSETA and FoodBev SETA, to name but a few. We apply for funding within those sectors and once funding is received, we are able to act as the lead employer and training provider to learners looking for learnership opportunities. We then source from our clients that we know could accommodate these learners, and place them at the host. This way our clients get the benefit of free labour and have the opportunity to trial those learners out if they should want to retain them at the end of the year. 

Summit takes care of all the administration responsibilities relating to stipends, reporting, and wherever else we are needed. We aim to maintain a strong line of communication with supervisors to ensure progress is logged and that we can intervene if there are any disciplinary issues. 

Get in touch with Summit today to gain skills development that results in a substantial return on investment, but doesn’t break your bank!

About the Author

Anthea Kallis: Head of Business Continuity at Summit

Training and Development have been a part of Anthea’s life for 10 years, working in hotels and hospitality related industries. Her experience ranges from coordination of training interventions to developing and executing strategies to ensure all learning programs are completed with strict compliance guidelines. Anthea’s extensive Employment Equity experience places Summit’s customers in steady hands.