The Skills Development Levy Act (1999)

Click here to view a video that explains the Skills Development Levy.

SETAs give grants to cover the cost of learner ships, learning programmes, etc. To do this, they draw on the Skills Levy contributions from their sector, following stringent procedures designed to ensure that the learning matches the principles of the National Qualification Framework.

The Skills Development Act establishes the skills levy system to increase the amount of money available for developing skills that are critically needed. Although many companies spend vast amounts on training, many employers do not invest sufficiently in skills development and such funds are not available to the majority of the population.

The Skills Levy Act generates funds to be used to develop the skills that are urgently needed in the different sectors of the economy. Every employer contributes 1% of the total payroll to the Skills levy and about 80% of the levies are transferred to the SETAs to be used for skills development. About 20% of the levy contributions are transferred to the national Skills Fund, which is used for national skills priorities such as training of unemployed learners.

The SETAs disburse most of the money received from the skills levy in the form of grants to the employers within their sectors, to be used for skills development activities such as developing and implementing their WPSP, learner ships and skills programmes. SETAs also use some of this money for other activities aimed at improving the skills levels within their sectors, such as conducting needs analyses on skills priorities and developing systems to promote the quality of learning in the sectors.

Click here to view a video that explains what PAYE is.

The Act states that employers who are registered PAYE contributors and employers whose remuneration exceeds R 500 000.00 per annum contribute 1% of their total payroll towards the Skills Development Levy. In order to ensure adequate funding for skills development, SETAs receive money from the South African Services which is regulated by this Act.

The Department of Higher Education and Training (DHET) collects the skills development levy to fund education and training for socially and economically marginalized groups in SA. 20% is deducted from the levy paid by companies – this is paid into the National Skills Fund. Funding from this source will be used to increase education and training opportunities for access to the formal and informal labour market by women, people with disabilities, rural and unemployed people.

The balance, 80%, is directed to the SETAs. Companies are able to reclaim 50% of their levies if they fulfil SETA requirements in terms of the submission of the Workplace Skills Plan.