Frequently Asked Questions
What is employment tax incentive? (ETI)
Why is there an ETI?
Millions of young South Africans are excluded from participating in economic
activity, and as a result suffer disproportionately from unemployment, discouragement
and economic marginalisation. High youth unemployment means
young people are not gaining the skills or experience needed to drive the economy
forward. This lack of skills can have long-term adverse effects on the economy.
In South Africa the current lack of skills and experience as well as perceptions
regarding the restrictiveness of labour regulations make some prospective employers
reluctant to hire the youth.
As a South African employer, you now have a great opportunity to boost the
employment of young work seekers.
What is it?
The ETI is an incentive aimed at encouraging employers to hire young work
seekers. It was implemented with effect from 1 January 2014.
What are the benefits for employers?
The benefits of the ETI are:
It will reduce the employers cost of hiring young people through a cost-sharing
mechanism with government, by allowing you to reduce the amount of Pay-As-
You-Earn (PAYE) you pay while leaving the wage received by the employee unaffected.
For example, employers who are registered for PAYE, and who employ a person
for the full month of February 2014 and earns R2000, will get R1 000 off their
monthly PAYE liability (provided that the employee is a qualifying employee
based on all the other remaining requirements). For more information on
how the ETI works visit www.sars.gov.za.
Employers will be able to claim the incentive for a 24 month period for all employees
The incentive amount differs based on the salary paid to each qualifying employee
and whether the qualifying employee was employed during the first 12
months or second 12 months of the ETI programme.
This incentive will complement existing government programmes with similar
objectives e.g. learnership agreements.
The aim of the ETI is to facilitate the increased employment of young work
What is section 12H Allowance?
Section 12H of the Income Tax Act (No. 58 of 1962) (hereinafter ‘Act’) provides an allowance to an employer in addition to any income tax deductions that may otherwise be allowed if the employer entered into a learnership agreement with an employee that is registered in accordance with the Skills Development Act (No. 97 of 1998) before 1 October 2016.
The annual allowance for every 12 full calendar months that the learner is a party to a registered learnership agreement is equal to R30 000 if the learner is a person without a disability or R50 000 if the learner is a person with a disability. The annual allowance must be apportioned should the employee not have been a party to a registered learnership agreement for the full 12 months during the year of assessment. A completion allowance is also provided on successful completion of the registered learnership agreement which would amount to R30 000 or R50 000 (depending on whether the employee has a disability) if the
learnership agreement is less than 24 months or R60 000 or R100 000 (depending on whether the employee has a disability) if the learnership agreement is for 24 months or longer.
Employment Tax Incentive
The Employment Tax Incentive is available to eligible employers who employ employees between the ages of 18 and 25 and may be deducted from the monthly PAYE that the employer pays over to SARS. In addition to the age requirement, the following requirements must be met:
Wage regulating measure applicable to that employer or if the wage paid to the employee is not subject to a wage regulating measure, R2000;
The monthly wage paid to the employee is not more than R 6000;
The employee is in possession of a South African identity card or asylum seeker permit;
The employee is not a connected person (i.e. family) in relation to the employer;
The employee is not a domestic worker; and
The employment commences on or after 1 October 2013;
If the remuneration of the employee is R2000 or less, 50 per cent of the remuneration paid to the employee;
If the remuneration of the employee is more than R2000 but less than R4001, an amount of R1000;
If the remuneration of the employee is more than R4000 but less than R6000 an amount determined by subtracting from R1000 halve of the remuneration exceeding R4000.
For the second 12 months, the monthly incentive would be equal to 50
per cent of the monthly incentive during the first 12 months.
What is a Learnership?
What is a learnership?
A learnership is a work based learning programme that leads to an NQF registered qualification. Learnerships are directly related to an occupation or field of work, for example, electrical engineering, hairdressing or project management.
Learnerships are managed by Sector Education and Training Authorities (SETAs). They were introduced by government to help skill learners and to prepare them for the workplace.
Learnership programmes can help you to gain the necessary skills and workplace experience that will open up better employment or self-employment opportunities.
Learnerships are based on legally binding agreement between an employer, a learner and a Training Provider. This agreement is intended to spell out the tasks and duties of the employer, the learner and the Training Provider. It is designed to ensure the quality of the training and to protect the interests of each party.
A learnership requires that a learner enter into a fixed term employment contract with the company whilst studying towards a qualification registered on the National Qualifications Framework (NQF), which is in line with the learnership (the cost of the qualification falls to the Company). Once the qualification is completed, the learnership will also end.
Why are learnerships important?
Learnerships promote access to education and training, as they allow you to work and get started on your career while also studying for an educational qualification.
SETAs oversee learnerships and ensure that they offer qualifications related to a specific occupation or sector of the economy. All 21 SETAs have developed NQF-aligned programmes that will help you gain recognised qualifications while getting on-the-job experience.
SETAs manage the registration of learnerships in order to meet the skills development needs across the sectors.
How do learnerships work?
Learnerships require you to complete a theoretical course as well as practical training, which is done at a workplace, in order to graduate. The workplace component of the qualification involves hands-on, practical learning under the guidance of a mentor, while the theoretical component is provided by an education and training provider. Together they form an integrated and comprehensive learning programme.
Top Tip: The number of credits needed to graduate varies from learnership to learnership, so make sur e that you understand the minimum requirements if you want to complete a learnership. Find out from the relevant SETA.
Who is eligible for a learnership?
Learnerships are available for young people who have completed school, college or learning at other training institutions. You must be older than 16 and younger than 35 to be eligible for a learnership.
Unemployed South Africans can only participate in a learnership if there is an employer prepared to provide the required work experience.
How to participate in a learnership?
By now you have already put some thought into your career path, and as a result you will be able to identify a learnership that will support your career goals.
Your career path should be in fluenced by your interests, skills and strengths. The responsibility rests with you to investigate and research the different learnership options. You should find out as much as you can, including information on the criteria and requirements for entering a learnership.
What are the entry requirements?
Different learnerships have different entry requirements. We recommend that you contact the provider of the learnership for full details on the specific requirements for the learnership of your choice.
For many learnerships, the minimum entry requirement is a National Senior Certificate or National Certificate: Vocational, but there may be more specific subject requirements or even skills requirements such as computer literacy.
What are the benefits for learners?
- You may have better employment opportunities after completing a learnership;
- You have a fixed-term employment contract for the duration of the learnership;
- Learnerships improve on the job performance so you are able to do things relevant to the job;
- You obtain a nationally-recognised qualification that is relevant to the sector; and
- You earn a learner allowance for the duration of the learnership.
How long does it take to complete a learnership?
Learnerships will last as long as it takes to complete the qualification. This means that if the duration of the qualification is two years, then the learnership will last for that period of time.
What does a learner receive on completion?
During the learnership, learners will be required to complete assignments, tasks and practical tests and projects. They will be formally assessed in the classroom and workplace.
If all these assignments are completed successfully, they will be awarded an NQF-registered qualification, that is recognised nationally. They will receive a certificate stating the qualification and the area of skill development.
What is required to enter into a learnership?
If you are accepted you will need to sign two legal documents:
Learnership Agreement: this is an agreement signed by you, the organisation employing you, and the education and provider offering the theoretical training component of the learnership. This agreement clearly outlines the rights and responsibilities of all three parties.
Employment contract: this is a contract you will sign with the employ er, which is only valid for the time period of the learnership.
Will I get a job after completing the learnership?
Employment is not guaranteed, but once you have successfully completed your learnership, you will be in a much better position to market yourself as you will now have both work experience and theoretical training. You may also be in a better position to start your own business and generate an income that way.
Can a learnership be terminated ?
Yes, a learnership can be terminated under certain circumstances:
An employer can terminate the contract of a learnership if:
- The duration specified in the learnership agreement has expired;
- The employer and learner have agreed in writing to terminate the learnership agreement, or if there is no such agreement, the SETA t hat registered the agreement approves the termination; or
- The learner is fairly dismissed for a reason related to the learner’s conduct or capacity as an employee.
For more information, contact the SETA that manages the learnerships in the field in which you are interested.