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Learnerships help businesses benefit from tax rebates. Picture: SUPPLIED/iLEARN
Learnerships help businesses benefit from tax rebates. Picture: SUPPLIED/iLEARN

The official unemployment rate was 32.6% in the first quarter of 2021, according to the SA Unemployment Quarterly Labour Force survey. And when you consider that the burden of unemployment is mostly concentrated among our youth population, at 46.3%, it’s evident that the SA economy faces a severe epidemic, worsened by lack of education and relevant job skills.

By investing in skills training programmes and increasing access to on-the-job training, companies can contribute to fostering economic growth in SA and boosting their bottom line.

“The government is encouraging companies to put employees through learnerships to upgrade their workforce,” says iLearn CEO Richard Rayne.

Traditionally, learnerships are structured, work-based learning programmes where learners (or candidates) gain practical work experience in their chosen career and are given time for learning theory over a fixed period. 

With the rise of the fourth industrial revolution, accelerated by the Covid-19 pandemic, sector education and training (Seta) authorities are now accrediting blended learnerships as a form of qualification delivery, through a combination of classroom and online learning.

Successful completion of a learnership will lead to a nationally recognised qualification. Learnerships play a pivotal role in the skills upliftment in SA and improving access to employment. And companies that institute these accredited learning programmes don’t miss out on opportunities, either, in addition to benefits to their BBBEE scorecard.

Mandatory and discretionary grants

Companies with a payroll of more than R500,000 a year must contribute 1% of their leviable payroll as a skills development levy (SDL). Of this 1%, 80% is allocated to the Setas, while 20% is allocated to the National Skills Fund (NSF).

If companies timeously pay their SDLs and submit their annual training report (ATR) and workplace skills plan (WSP) by April 30 every year, they are entitled to apply for discretionary and mandatory grants from the Seta they belong to. While the WSP is forward looking and lays out a company’s training plans for the year ahead, the ATR provides feedback on the training interventions implemented in the previous year. 


What is a mandatory grant?

Employers who are in good standing with their Setas and have successfully submitted their annual WSPs and ATRs are entitled to its mandatory grant and can claim back 20% of the total amount they have paid towards their SDL contributions throughout the year. 

What is a discretionary grant?

Employers are also entitled to apply for discretionary grants from their Seta, the payment of which is at the sole discretion of the Seta based on the proposed training plans included in the company’s WSPs for the year ahead. Applications for these grants are Seta-specific by submitting a letter of intent. 

Eighty percent of discretionary grants are allocated to pivotal programmes (learnerships, bursaries, work-integrated learning, skills programmes, internships) while the remaining 20% are allocated to non-pivotal programmes (does not lead to a full qualification or the programme is non-credit bearing). These discretionary grants come from the remaining 80% of the SDL. 

Tax incentives

“Learnerships help businesses benefit from tax rebates, which is a great advantage for organisations,” says Rayne.

In terms of S12H of the Income Tax Act, employers who have entered into a registered learnership agreement can apply for tax deductions. Learnerships allow organisations to benefit from a tax rebate of R80,000 a year per able-bodied learner, and R120,000 per disabled learner.

The employee tax incentive (ETI) will reduce the employer or sponsor’s cost of hiring young people through a cost-sharing mechanism with the government. This will reduce the amount of pay-as-you-earn (PAYE) while leaving the wage received by the employee unaffected. The value of the ETI the employer may claim is dependent on the value of the monthly remuneration paid to the qualifying employee.

According to the ETI, if you employ someone who, among other things, is aged between 18 and 29, earns less than R6,000 a month and was newly employed on or after October 1 2013, you can apply for a reduction in the amount of PAYE that you need to pay for that employee.

How to get more BBBEE points for less

Learnerships fall under the skills development pillar of the BBBEE scorecard, which comprises five pillars in total. The skills development pillar is a priority element and the sub-minimum requirement is 40% of the total weighting of points, inclusive of learnerships, but exclusive of bonus points for absorption.

If companies spend between 3% and 6% of their payroll on training initiatives, they could earn maximum skills development points.

If employers enlist 2.5% of employees in learnerships, the organisation will earn four points and gain an additional four points if the trained workforce is made up of 2.5% black unemployed learners.

There are an additional four points if the organisation trains black, disabled employees. The business can claim an additional five bonus points if it can permanently employ the previously unemployed learners at the end of the learnership programme.

Learnerships are an effective strategy to ensure that businesses are empowered by a relevant skills base over the long term. And the bonus is that they are work-based and delivered on-site and now also online.”

This article was paid for by iLearn.


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