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Skills Development PDF Print E-mail

Introduction of Skills Development Act

The aim of the Skills Development Act is to improve the working skills of South Africans so that the economy can grow and all South Africans can live a better life. The Skills Development Act changes the old way of vocational training by introducing learnerships and skills programmes.

These questions and answers provide information about the obligations of various SETA stakeholders in terms of the Skills Development Act, 1998, and the Skills Development Levies Act, 1999.

What is the purpose of the Skills Development Act?

The short supply of skilled staff is a serious obstacle to the competitiveness of industry in South Africa. The levy grant scheme, imposed by the Skills Development Act, 1998, and the Skills Development Levy Act, 1999, aims to expand the knowledge and competencies of the labour force. Improvements in employability and productivity will be achieved through new approaches to planning for training, learning programmes, incentives and an improved employment service. Participating fully in the scheme will allow you to reap the benefits of a better skilled and more productive workforce.

Who must pay the levy?

Payment towards the levy grant scheme is legislated in terms of the Skills Development Levies Act, 1999. Under this act every employer in South Africa who;
- Is registered with SARS (South African Revenue Services) for PAYE;
- Has an annual payroll in excess of R250,000;
- Must register with SARS to pay the Skills Development Levy.

How does an employer register for the levy?

Every employer who is liable to pay the levy must register for the payment of the levy with SARS by completing a registration form. (Form SDL 101 available from all SARS offices).

In order to register the employer must:

  • Obtain a registration form (SDL 101) from any SARS office, if not received by mail,
  • Choose from a list of registered Sector Education and Training Authorities (SETAs) as indicated in the SETA classification guide provided with the registration form, the one SETA most representative of your activities.
  • Choose a standard industry code (SIC) from the SETA classification guide which most accurately describes the nature of your business.

What is a Sector Education and Training Authority?

"SETA" stands for Sector Education and Training Authority. Twenty-five SETA's were established by the Minister of Labour on 20 March 2000 each of which represents an industry sector in South Africa. The members and stakeholders of a SETA include employers, learners, providers, trade unions, government departments and bargaining councils from each economic sector.

The main tasks of SETAs are:

  • To develop a Sector Skills Plan for the sector;
  • To identify, design, promote and register learnerships for the sector;
  • Be accredited as an Education and Training Quality Authority for standards and qualifications in the sector;
  • Disburse skills development levies.

How does the Skills Development Levy work?

The Skills Development Levy was launched in 2000, this monthly levy, equivalent to 1% of payroll, is mandatory for all companies that pay PAYE or have an annual wage bill of R250 000 or more. This levy is paid to the South African Revenue Services (SARS) who, after deducting a 2% handling fee, allocate the funds as follows:
- 18% goes to the National Skills Fund (NSF) which approves and finances skills development and training projects at a national level, and 80% goes to the appropriate Sector Education and Training Authority (SETA).
- All employers need to complete a form, which is provided by the South African Revenue Services, and select the SETA which best represents your core business, i.e. if you are an insurance company or an insurance intermediary, you will register with the Insurance SETA, INSETA. Once you have completed the form and submitted it to the South African Revenue Services, they will register you with the SETA that you have selected.

What are the benefits of the Skills Development Levy?

If your company promotes training and learning in the workplace and you pay your skills development levy every month, you are entitled to:

  • Skills development grants;
  • Substantial tax allowances when you implement Learnerships in your company.

How do I apply to claim back grants?

Mandatory Grants You can recover 15% of the total levy payment for nominating and registering a Skills Development Facilitator and preparing, submitting a Workplace Skills Plan (which is approved by the SETA). A Workplace Skills Plan or WSP is a document where you describe the skills needs of your staff and the training plans that you wish to implement.

You can recover a further 45% of the total levy payment by preparing and submitting an Annual Training Report of ATR based upon the approval of your WSP. An Annual Training Report describes all the training (in-house and external) you have completed over the past year.

Discretionary Grants

Each SETA is allowed to make Grants available up to 10% of the total levy payment paid by the employer for specific sector skills plans initiatives. Each SETA determines the criteria for these initiatives as well as the amount of the Grant, which is dependent upon the funds available.

How do I determine which SETA I belong to?

If you look at the Skills profile of the company, you will look at what approximately 60% of the employees do and what the primary focus of the business is. Then the company falls within the relevant SETA, and to reap the benefits offered by the SETA companies, must ensure that they are registered with SARS.

How will I know what to do in order to comply with the requirements?

The SETA will send you all the information you need, including the requirements and timetable for action by you. You will be supplied with contact details of employees of the SETA who are available to help you maximise the benefits of your participation.

What if I have not heard from the SETA?

Contact the SETA directly at the telephone number or email addresses on the Contacts page of their web-site.

Are any employers exempt from paying the levy?

Yes. The exemptions are applicable if certain provisions are met. Application for such exemptions are contained in the SDL 101 form, issued by the Commissioner of SARS, who will ultimately adjudicate whether you qualify for exemption or not.

To whom are levies payable?

Levies are payable to the South African Revenue Service, which acts as a collecting  agency for the Department of Labour and the SETA` s.

How are levies payable?

Each month SARS will provide all registered employers with a "Return for Remittance" form (SDL 201), which enables you to calculate the amount payable and effect payment.

What amount is payable?

The amount payable will be calculated as follows:

From 1 April 2001 onwards - 1% of the total amount of remuneration paid to employees. Any prescribed exclusions that are not leviable are subtracted from the total remuneration.

By when is the levy payable?

The levy must be paid over to SARS (after registration), not later than SEVEN days after the end of the month in respect of which the levy is payable, under cover of a SDL 201 return form.

Is there any interest and penalty incurred for late or non-payment?

SARS will impose both interest and penalties for late or non-payment of levies.

How do I register as a Skills Development Facilitator with the SETA?

You can use the online Skills Development Facilitator registration form available under the Facilitators (SDF) section of this web-site or contact your regional co-ordinator. Your registration will be acknowledged as soon as it is processed.

What is the deadline for the Workplace Skills Plans?

Year two: April 2001 to March 2002 - Deadline 31 March 2002. Year three: April 2002 and March 2003 - Deadline 31 July 2002. This does not mean that you do not need to submit your skills plans if you have missed the deadline. It is still important to submit the plan in order to qualify for grants.

Why is it necessary to provide proof of payment?

In order for the SETA to match the amounts with the figures that is given to the SETA from Department of Labour as well as to pick up any discrepancies on the Department of Labour system. The proof of payment is to be submitted when handing the Workplace Skills Plan.

What is proof of expenditure?

Proof of expenditure is very important when completing and submitting your Annual Training Report. Proof of expenditure relates to all training costs that the organization has spent on the employees of the company. If the training was done internally then the organization needs to submit all attendance registers but if the training was done by a training provider than all invoices are required.

What is the purpose of a Workplace Skills Plan?

There is interaction between management and employees as they start to discuss skills in the workplace. Skills as well as shortfalls are identified and discussed. Management starts to discuss the companies' goals with employees who in turn commit to the process of achieving these goals. Management gets the opportunity to discover talent as well as skills that they did know that they had.

What is an Annual Training Report?

Basically this report consists of all attendance registers, proof of expenditure and training provider. Using this report the SETA can establish whether training was done or is in the process of being done. This report will allow the SETA to compensate the employer for money spent when implementing the Workplace Skills Plan for the training that you have funded for your staff.

Why is it important to use an accredited training provider?

It is important to use an accredited training provider because it enables the SETA to establish that the training provider used is not a "FLY BY NIGHT" training provider but instead it is a recognized training provider, with recognized standards.

Does one get 50% of monies spent on training?

NO, this is where the misconception lies. The organization will be refunded on 50% of all monies contributed towards skills development levy and not on monies spent on training.

How long does it take for a company to be transferred from one SETA to another?

The transfer can take place between 2 weeks and 2 months depending on the Department of Labour.

How do all grant monies received benefit the organization?

The employer to increase the competency level as well as to up-skill the staff in the organization making the organization a force to be reckoned with it in it's particular industry will use monies received from grants.

What are the requirements for claiming back Discretionary Grants?

Each funding window has a different set of rules.

Must internal training departments also be accredited by the ETQA?

Yes, if the company intends to claim back for the training provided.

For which different kinds of registered providers can the organisation make a claim for training completed?

There are four kinds of recognised providers for which claims will be recognised;

  • Internal education and training providers, such as human resources or training and development departments.
  • External education and training providers, such as training companies and consultancies.
  • Education Training Quality Assurance providers, who will be responsible for assessing the quality of training, as well as the moderation of learnerships and qualifications.
  • RPL (Recognition of Prior Learning) providers, who will be responsible for assessing and moderating applications for qualifications based on prior learning.

What is the difference between an external provider and a vendor?

A vendor is contracted by a provider to provide training and can be considered as a member of the provider organisation's non-permanent staff. The provider organisation is responsible and accountable for all aspects of training and quality management. A vendor is therefore accountable to the ETQA and does not have to register as a provider, whereas an external provider has to fulfill the stipulated requirements in the same way that internal providers do.

Why is it important for a company to use ETQA accredited and/or registered providers?

According to the Skills Development Act organisations will only be able to claim grants on the basis of NQF registered unit standards and qualifications. While there may be a grace period while the SETA's and SAQA get established, in future, organisations will only be able to register claims if they make use of accredited and/or registered providers.

Does this mean that employers will not be able to claim for employees sent overseas for training?

Any training towards unit standards and qualifications will be eligible. Training not associated with credits for unit standards and towards qualifications will not be eligible for grant funds.

How will workplace assessment be conducted if an organisation uses only external providers?

Organisations will have to ensure that adequate provision is made for the capacity to conduct assessment when external providers are employed to do training in organisations. The external provider will have to assume full accountability for all aspects of training including that of quality assurance.

How do I know which ETQA I should use to accredit my Training Programmes?

SAQA's organising principle for the provider to ETQA relationship is a simple one-to-one relation. Namely, that the provider is accredited by one ETQA on the basis of primary focus. The first issue to be decided would be which ETQA sector the provider falls within and then which are the NQF registered standards or qualifications that it wishes to provide. This should indicate the ETQA to which the provider should apply. There may be some instances in which the indication is not clear as it should be. The provider is then advised to approach SAQA for further guidance. Providers should note that even if they are multi-purpose providers for a range of standards and qualifications in different areas of learning, there will probably be a number of ETQAs involved in the ongoing accreditation and quality assurance of the institution, particularly in relation to the different learning programmes, courses and assessments on offer. To all intents and purposes this multiplicity of relations will not impact on the provider in that the accrediting primary focus ETQA will take the responsibility for organising the necessary evaluations and even site visits with all relevant parties.

If the majority of my learning Programmes (my primary focus) fall within the scope of one SETA ETQA, but some programmes fall within the scope of other ETQAs do I need to apply to the other relevant ETQAs as well to get all my programmes accredited?

If your primary business focus falls within the scope of the one SETA ETQA it is that SETA's responsibility to take the training programmes that do not fall within their primary focus to the relevant ETQA to be accredited. They will sign an MOU with other SETA's in the event of this occurrence and will ensure that the responsible authorities thus accredit the training courses. Please note one Training Provider, one ETQA.

What is the Accreditation Process?

The first step in the accreditation process is the completion of a letter of intent that is submitted to the ETQA body. This is a one-page document that covers aspects such as contact details, the type and form of the training programmes and the titles of the training courses that are offered. This will be looked at to ascertain whether the majority of the education and training provision does indeed fall within the relevant SETA. You will then receive a letter of confirmation of receipt of your letter of intent, and your details will be captured onto our database, after which you will receive the Application for Accreditation Documents that you will need to complete and return to us. The application is then recorded and an initial check for compliance conducted, after which an investigation team is tasked to assess and evaluate the application. The assessment includes staff accreditation and a site visit. The SETQAA's intent to accredit the provider is published on the SETA website for SETA stakeholder comment. Should the Accreditation be granted, the SETA would issue a certificate to that effect.

Where could I find guidelines or Legislation to guide me through the application documentation?

Websites that will be able to assist you with the completion of the documentation are: (Click on publications, then on the left-hand side, the second last link, Guidelines and Criteria for providers).

What do I present to my clients as proof that I am in the process of becoming accredited?

At this moment the only documentation the SETA can provide with regard to proof of a company going through the accreditation process is the confirmation of the receipt of the letter of intent, the confirmation of receipt of application for accreditation letter, confirmation of compliance letter, confirmation letter that provider is in the evaluation for quality phase and the confirmation letter of application to serve in front of ETQA Committee for ratification. It should be noted that providers who only have submitted letters of intent to be accredited means that no evaluation has yet taken place. For this reason the Services SETA is willing to confirm that the provider has applied and is in the process of accreditation.

What will this process cost me?

To date there has been no clear directive from SAQA or the Director General regarding the fee structure that ETQAs may charge for accreditation activities.

If I only want to be accredited as a training centre, do I need to complete all the documentation in the ETQA file?

Yes, all the documentation including the self-evaluation questionnaire needs to be completed.

If I decide to develop more courses or diversify after I have been accredited, do I need to go through the whole process again?

Should you decide to diversify at a later stage, you need only apply for an extension of accreditation for those courses you wish to add. Should the extension means that another ETQA must get involved, the primary focus ETQA will still manage and administer the extension of accreditation, but will establish a framework for collaboration with the secondary ETQA.

What does provisional accreditation mean?

Provisional accreditation means that the provider meets the eight core criteria as specified by SAQA in the document "Quality Management Systems for Education and Training Providers". It also means that the learning programmes are aligned to NQF registered qualifications and unit standards.

What does interim registration mean?

Interim registration means the provider meets the eight core criteria as specified by SAQA in the document "Quality Management Systems for Education and Training Providers". In the absence of NQF registered standards the learning programme(s) is outcomes based designed.

What does "not yet recommended" mean?

Not yet recommended means that the provider does not meet the eight core criteria as specified by SAQA in the document "Quality Management Systems for Education and Training Providers" and/or the programmes are not outcomes based or aligned to NQF unit standards.

What will happen to my business if it is found to be "not yet recommended"?

The SETA ETQA is committed towards the development of Providers and therefore companies (who are paying their skills levies to the SETA) utilizing the education and training services of Providers who are not yet recommended for accreditation and/or registration may still claim grants from the SETA during the four month remediation period a provider has to remediate its application.

What can I do if I need help with my application for accreditation?

To help providers understand the application for accreditation documentation, the SETQAA has trained a group of consultants (internal and external) who will sit with providers at their premises for a maximum of two hours to answer questions. The consultant will not complete the documentation for the provider, but will assist the provider in understanding the requirements of the SETQAA. There is no fee charged to the provider.


Chemical Industries Education and Training Authority Website:

Health and Welfare SETA Website:

Insurance Sector Education and Training Authority Website:

Services Sector Education and Training Authority Website:


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