Stipends: Managing Their Mismanagement

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Training providers are ultimately responsible for determining fair stipends. Stipends, a fixed monthly allowance paid to candidates as part of a learnership, internship or apprenticeship, are intended to provide learners with financial assistance to pay for transport, meals and other basic needs whilst completing these 12-month programmes.


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According to Rajan Naidoo, the Managing Director of EduPower Skills Academy, unless stipends and learners are correctly managed by the training provider, this valuable earn-while-you-learn model can hijack the learnership.

“Used in the right way, a stipend is an enabler that assists learners with the expenses they will incur whilst obtaining a valuable accredited qualification and work experience,” says Naidoo.

Unfortunately, though, many learners abuse this income, which can have devastating consequences on their ability to complete the learnership.

“The majority of learners are young and for many, a stipend is the first time they have ever received a regular income,” he explains. “Many do not understand budgeting, nor do they have a role model to help them manage their money. As a result, this can get them into hot water very quickly.”

Mismanagement

With years of experience in the Skills Development sector, Naidoo has first-hand experience with learners abusing stipends. He says the most common include:

  • Learners registering for two or more learnerships concurrently to benefit from compounded stipends.
  • Learners using the stipend to support their families with the result that there are insufficient funds for transport to attend training, which is in breach of the learnership contract.
  • Learners registering for a learnership to access the stipend who then do not comply with the stipulated requirements of attending training and/or refusing to do work experience.

In each of these cases, the learner will be absent so if the training provider has the right checks in place, this can be established very quickly. If it’s caught early enough, it can be nipped in the bud by providing the learner with some basic financial education.

In certain cases, though – such as when learners are registered for more than one learnership – legal action may be the next step. “We encourage our sponsors to be firm but fair when applying disciplinary processes against learners who are caught abusing the system,” Naidoo states.

What is a fair stipend?

Legislation

When candidates are registered for a learnership, they generally sign limited-duration employment contracts for a period of 12 months. These are aligned to the Labour Relations Act as well as Basic Conditions of Employment and while there are regulations for stipends under the national minimum wage legislation, it forms its own specific section with its own set of rules.

“Despite there being legislation governing stipends which stipulates a minimum amount for learnerships, it is dependent on the qualification level and the credits already earned,” notes Naidoo. “Therefore, when a sponsor of a learnership wants to pay below minimum wage, the training provider needs to ensure that the learners will receive a sufficient and fair stipend to deliver on the learnership requirements.”

How much is enough?

“Stipends must match the circumstances of the learnership,” he continues and adds that if learners are expected to attend training once a week but the work experience component is online, a lower stipend will be needed.

If, however, a work readiness model is the focus (as is the case with EduPower), learners are expected to keep normal hours, five days a week. This requires a minimum wage stipend at the very least as they have to travel to work daily.

“The fact is that contractually, the training provider is responsible for ensuring that their learners complete the programme. If candidates drop out because the stipend is too low to cover all their costs, the sponsors lose the benefit of a completion bonus in terms of SARS Sec 12H. It is thus, in everyone’s interests – the sponsor, the learner and the training provider – that a suitable stipend is negotiated for candidates to ensure the learnership’s successful completion,” advises Naidoo.

The Learnership programme was developed in South Africa as a modern way to advance apprenticeships to meet the modern demands of the workplace. Learnerships also manage to formalise the learning and workplace experience - which is usually sadly lacking in internships offered by companies.

Another significant benefit of Learnerships over internships is that Learnerships come with a formal pay structure where learners will be paid a monthly stipend, or payment, for the time they are on the Learnership. Also, internships do not have a learning component, while Learnerships are all linked directly to a formal qualification.

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Learnerships are an essential resource to future-proof your business. Black Broad-Based Economic Empowerment (B-BBEE) is only effective in meeting its goals if the transformative ethos of the legislation is embraced, according to Rajan Naidoo, the Director of EduPower Skills Academy.

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