This article by Daniel Orelowitz, managing director at Training Force unpacks how to claim the 20% mandatory grant through the Skills Development Levy (SDL). This article is part one of a two-part story.
Working with an accredited and reputable training provider can be incredibly beneficial for an employer in South Africa looking to claim the 20% mandatory grant through the SDL. Such a training partner is instrumental in helping companies navigate and meet all administrative requirements to claim the grant.
From helping with the creation of a Workplace Skills Plan (WSP) and an Annual Training Report (ATR) to outlining the skills requirements of the business and mapping out the necessary training to address those needs, a training partner will implement training programmes and monitor progress toward ensuring compliance. In addition to assistance with the grant-claiming process, a training partner can provide customised training solutions tailored to the company’s specific needs, boosting workforce skills and productivity, while advising on the best training programmes to maximise the benefits of the SDL and increase the likelihood of success in claiming the mandatory grant.
The SDL is a mandatory levy imposed on employers. Governed by the Skills Development Act and administered by the South African Revenue Service (SARS), this levy is calculated based on 1% of an employer’s total annual payroll, and the funds collected are used to promote training and skills development across various sectors, aiming to address skills gaps, promote employment and enhance productivity by encouraging employers to invest in the development of their workforce.
Funding skills development
Most employers, depending on their legal requirements, are required to register with SARS and submit SDL payments every month, and in compliance with the SDL regulations, employers become eligible to claim the 20% Mandatory Grant, which allows them to recoup a portion of their SDL contributions through the implementation of approved training programmes for their employees. As such, the SDL plays a crucial role in supporting skills development and improving the competitiveness of the South African workforce.
In addition to the 20% Mandatory Grant, there is also an SDL Discretionary Grant, which is awarded to employers at the discretion of the relevant Sector Education and Training Authority (SETA). The grant is used to fund skills development initiatives that align with the SETA sector skills plan.
To be eligible for the SDL Discretionary Grant, employers must be registered with the appropriate SETA, pay the SDL every month, and apply to the SETA by 30 April annually, demonstrating that their proposed skills development initiative is aligned with the SETA’s sector skills plan. It is also of paramount importance that the training interventions mapped out in the Workplace Skills Plan when submitting the mandatory grant are declared upfront. This allows the SETA to better forecast the dissemination of funds nationally and increase the likelihood of funding being awarded to an employer. The amount of the SDL Discretionary Grant is determined by the SETA and can be used to fund a variety of skills development initiatives, including training and development programmes for employees, internships, apprenticeships, learnerships and skills development research and promotion.
What does SDL compliance require?
SDL compliance for businesses entails fulfilling the legal obligations related to the payment of the levy and the utilisation of funds for approved skills development purposes. Employers must accurately calculate and submit SDL payments to SARS based on the prescribed percentage of their payroll and comply with reporting obligations. Compliance requires action, which means that companies must implement approved training programmes and initiatives that align with the company’s workforce development needs in a manner that contributes to addressing skills gaps and promoting employee development. Businesses must maintain records and documentation to demonstrate compliance with SDL regulations in the event of audits or inspections.
Continued in part two…
Source: Training Force