Skills Development and B-BBEE Compliance

Skills development is a crucial part of building South Africa’s economy as it creates job opportunities that are otherwise scarce.

Although the country is still swimming in the wake left behind by the global COVID-19 pandemic, there are aspects of learning and development that should not be ignored, especially with regards to B-BBEE.

Business owners have spent the last two years simply trying to survive the devastating blow COVID-19 had on growth and turnover. However, there are some relief measures in place to encourage companies to take on new employees. This relief comes in the form of a generous tax rebate.

The Employment Tax Incentive

In 2014, SARS introduced the Employment Tax Incentive (ETI) as a means to give organizations the nudge they need to hire young job seekers who are less experienced.

Organizations apply for this incentive on a monthly basis and the application is usually done by the finance or payroll departments.

This incentive is effective until 2029 and there are no limits on the number of employees that may be claimed.

For an employer or organization to be eligible for the ETI, they must:

• Must be registered or eligible to register for employee tax (PAYE)
• Not be operating in any spheres of the government (local, provincial, or national)
• Not be a public entity listed in the Public Finance Management Act
• Not be a municipal entity
• Not be disqualified by the Minister of Finance due to:
  • Not meeting the conditions that are prescribed by the Minister via a regulation
  • Displacement of an employee

For an employee to qualify, they must:

• Have a valid asylum seeker permit, South African ID, or an ID issued in accordance with the Refugee Act
• Be between 18 and 29 years old
• Not have personal connections or affiliations with the employer
• Not be a domestic worker
• Be employed by the employer as of the 1^st of October 2013
• Be paid the minimum wage applicable to that employer. If minimum wage is not applicable, they must be paid the amount set out by the Minimum Wage Act but not more than R6 000 per month in the form of remuneration

The Section 12H Learnership Allowance

This learnership allowance was introduced in an effort to encourage employers to upskill their employees. There are two types of allowance available, namely an annual allowance and a completion allowance.

This allowance is a tax incentive and can be included as part of the company’s tax deduction at the end of each tax year.

There are specific requirements which must be met in order for an employer to qualify for the annual allowance. Furthermore, if there is no registered learnership agreement in place during a tax assessment period, the employer will not qualify for any part of the annual allowance.

Why are Learnership Agreements Important?

Full compliance with the Skills Development Act ensures that an organization meets the set B-BBEE targets while fostering meaningful working relationships with their training providers.

Upskilling the workforce empowers individuals by providing them with a dignified opportunity to learn, grow, and contribute positively to society and the overall economic status of the country.

Additionally companies can benefit from tax rebates related to learnership programmes, while training individuals who will ultimately have the knowledge and skillset necessary to drive the company’s success.