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Chapter 6 - Labour Law

Skills Development Act

The Skills Development Act No 97 of 1998 was passed in order to develop and improve the skills of people in the workplace. The Act does the following:

  • provides a framework for the development of skills of people at work
  • builds these development plans/strategies into the National Qualifications Framework
  • provides for learnerships that lead to recognised occupational qualifications
  • provides for the financing of skills development by means of a levy-grant scheme and a National Skills Fund

The Department of Labour has published a guide called ‘An employer’s guide to the Skills Development Levy’. If you need more information contact your nearest Labour Centre for a copy.

The National Qualifications Framework (NQF)

The NQF is a plan for education and training. The aim is for people to continue accumulating qualification credits as they learn and work. The Skills Development Act defines the following structures to implement the NQF:

  • South African Qualifications Authority (SAQA) - This is the body responsible for overseeing the development and implementation of the NQF and it is accountable to the Departments of Labour and of Education. SAQA establishes National Standards Bodies, Standards Generating Bodies and Education and Training Quality Assurers.
  • National Standards Bodies (NSB) - These bodies set standards about what needs to be learnt in one particular field of learning. SAQA has established 12 fields of learning, such as Agriculture, Communication, Manufacturing each with own sub-fields
  • Standards Generating Bodies (SGBs) - An SGB develops standards called unit standards and qualifications in a particular sub-field of learning.
  • Education and Training Quality Assurers -Anyone who wants to provide education and training will have to be approved by an Education and Training Quality Assurer. Education and Training Quality Assurers will issue qualification certificates to learners.
  • Sector Education and Training Authorities (SETAs) - Each separate economic sector has one SETA. There are 22 SETAs which cover all work sectors in South Africa, including government sectors. All employers must choose which SETA their business falls under. Within its own sector, SETA must develop and implement a sector skills plan including approving workplace skills development plans, promote learnerships, act as the Education and Training Quality Assurer, and pay out Skills Development Grants.

The Skills Development Levy-Grant scheme

The Skills Development Levy was established under the Skills Development Act. A levy is an amount of money that employers have to pay to the South African Revenue Service (SARS) for skills development of employees. If employees undergo training then the employer can claim this amount back from the relevant SETA.

Paying the Skills Development Levy

An employer must pay a skills development levy every month if:

  • the employer has registered the employees with SARS for tax purposes (PAYE), and/or
  • the employer pays over R500 000 a year in salaries and wages to their employees (even if they are not registered for PAYE with SARS)
  • An employer must pay 1% of the total amount paid in salaries to employees (including overtime payments, leave pay, bonuses, commissions and lump sum payments.

The employer must register with SARS and pay the levy monthly. SARS will supply the correct forms to fill in (SDL 201 return form). The levy must be paid to SARS not later than 7 days after the end of every month.

How are the levies used?

The levies paid to SARS are put in a special fund. 80% of the money from this fund will be distributed to the different SETAs and the other 20% will be paid into the National Skills Fund. The SETAs will then pay grants to employers who appoint a Skills Development Facilitator. The National Skills Fund will fund skills development projects that don't fall under the SETAs.

Getting a Skills Development Grant

An employer can get money back from the SETA or the National Skills Fund to use on training and developing their own employees' skills. To qualify for a Skills Development Grant an employer must:

  • have paid Skills Development levies
  • have a Skills Development Facilitator
  • follow all the rules and regulations in the Act

An employer can get back 50% or more of the levies they paid to SARS. These grants are called Grants A, B, C and D. This is how the grant system works:

Grant A - When an employer appoints and registers a Skills Development Facilitator, then Grant A is paid back to the employer. This is 15% of the levy paid to SARS by the employer. Employers can only get Grants B, C and D if they have got grant A.

Grant B - When the employer sends in a workplace skills plan to the relevant SETA and the SETA approves the plan, then Grant B is paid. This is 10% of the levy paid to SARS by the employer. Employers can only get Grant C if they have got grant B.

Grant C - When the employer sends an annual training report based on the approved workplace skills plan, then Grant C is paid. This is 20% of the levy paid to SARS by the employer.

Grant D - SETAs may pay out grant D for specific sector skills initiatives in the workplace. Grant D is 5% of the levy paid to the Fund by the employer.

If employers do not meet the requirements for recovering a grant then they lose the grant.

Skills Development Facilitators

The Skills Development Act makes provision for the employment and use of a Skills Development Facilitator by an employer. This person is responsible for developing and planning the skills development strategy of a business for a specific period. The Skills Development Facilitator must do the following tasks:

  • help the employer and employees to develop a workplace skills plan
  • send the workplace skills plan to the relevant SETA
  • advise the employer on how to implement the workplace skills plan
  • help the employer to draft an annual training report based on the workplace skills plan
  • advise the employer on the requirements set by the relevant SETA
  • serve as the contact person between the employer and the relevant SETA

An employer can appoint an employee or a formally contracted person from outside the business to perform the functions of a Skills Development Facilitator.


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