The Government enacted the Skills Development Levies (SDL) Act 1999 in order to provide a framework to implement strategies that will develop and improve the skills of the South African workforce. Skills Development is the training and development that employers offer.
It is required by law that companies with annual payrolls in excess of R500,000 have to contribute towards this fund by paying a monthly levy to SARS, along with their EMP201, equal to 1% of their total monthly remuneration paid. In terms of the act, companies can claim back 55% of the levy paid by them. Companies failing to pay the SDL will be liable to penalties and fines of 10% of the leviable amount. The following organisations are exempt from paying SDL:
• The public sector;
• Employers with an annual payroll of less than R500,000;
• Religious or charity organisations;
• Public entities that get 80% or more funding from Parliament;
• Municipalities with exemption certificates.
The levy is allocated as follows: 8% is retained by SARS, 12% goes to the National Skills Fund, and the other 80% goes to the SETA from which employers can then be reimbursed for their training expense. There are 27 Sector Education and Training Authorities (SETAs) according to the company’s core activity.
Companies wanting to be reimbursed for training expenses have to:
• Contribute towards the SDL;
• Be registered with their respective SETA; and
• Submit their Workplace Skills Plan (WSP) and Annual Training Report (ATR) for 1 April – 30 March of each year by 30 June of that same year.
It is a misconception that companies can only be reimbursed for training provided by external SETA-registered institutions. Companies can in fact also be reimbursed for structured internal, day to day training as well as Learnerships offered. It is vital for such companies to have a Skills Development Plan or Workplace Skills Plan in place. With a Learnership, a company will only be reimbursed at the end of the 12 months that the Learnership was offered. Discretionary funding is also available from the National Skills Fund, which is money accumulated from employers contributing towards SDL but not claiming it back. Employers can make use of additional refunds from this Fund by ways of bursaries, skills programmes (short courses) and internships.
The SDL Act provides opportunities for individuals to attain skills and qualifications they would otherwise not have been able to obtain and in return, this assists with South Africa’s economic growth.
Benefits for companies are:
• They can access funding from their specific SETA. Each SETA can also provide companies with more information regarding workshops etc
• Employers can get financial incentives
• This provides opportunities for companies to optimise their B-BBEE compliance. The B-BBEE Act 53 of 2003 says of SDL: “Skills development expenditure includes any legitimate expenses incurred for any Learning Programme offered by a Measured Entity to its employees evidenced by an invoice or appropriate internal accounting record”. SDL is only one of the seven elements in B-BBEE, and in order to gain points, the training has to benefit designated black employees, which means Africans, Coloureds and Indians.