The Employment Tax Incentive Act came into effect in January 2014. The Act
proposes a youth wage subsidy aimed at paving the way for on-the-job training.
Problems that youth face in finding jobs
Approximately half of South Africa?s youth are unemployed. The biggest
problems facing youth employment are that they lack the skills to become
employed and, that they lack experience in the workplace. The paper reported
that employers view inexperienced skilled workers as a liability, and further,
education is not a replacement for experience.
The Employment Tax Incentive Act aims to reduce the financial cost on
employers hiring youths and therefore proposes to make the training of those
employees more affordable. The Employment Tax Incentive Act encourages job
seekers to become more active in their job search.
The Youth Wage Subsidy
The Youth Wage Subsidy aims to improve employment prospects for youth.
It seeks to reduce the cost and risk of hiring a young and inexperienced
workforce and aims to provide on-the-job experience and stimulate a demand
The government hopes that this Act will promote employment for young people
and create jobs in special economic zones once this legislation, which aims to
provide for them, has been promulgated. In terms of The Act, employers will
receive a tax incentive to employ young workers for a maximum of two years
under certain conditions.
On-the-job experience is crucial for attaining the appropriate skills, as well as for
future employment prospects.Government is committed to work with the private
sector to enhance employment opportunities and skills development for all
workers, especially for the youth with limited work experience.
Who does the Employment Tax Incentive apply to?
The scheme is available to employers who employ South Africans citizens
and asylum seekers with valid permits aged between 18 and 29. There are
however a few exclusions which include:
? Government departments;
? Public entities; and
? Employers not registered for PAYE.
Employers can also not claim in respect of following employees:
? Employees employed before 1 October 2013;
? Domestic workers;
? Connected persons (employees related to the employer); and
? If the employee is paid less than the minimum wage applicable to the
What can employers claim?
Employers may claim 50% of an employee?s remuneration if the employee
earns less than R 2000 (if the remuneration is not subject to any minimum wage
provisions). In respect of employees earning between R 2 001 and R 4 000 an
amount of R 1 000 can be claimed.For employees earning between R 4 001 and
R 6000 a sliding formula will be used.
Employers can claim the incentive in respect of qualifying employees for a
period of two years. The value of the incentive however halves in the employee?s
second year of employment. The incentive falls away on the commencement of
the employee?s third year of employment.
How to claim Employment Tax Incentive
South African Revenue Service (SARS) will publish further details on how the
incentive will work and how to claim.Checks and balances had been put in place
to ensure the incentive will not lead to discrimination against older workers.
How can Assessment College help you to get the full benefit from the
Employment Tax Incentive?
Assessment College offer the following accredited courses that will benefit
your company in implementing the Employment Tax Incentive.
? Coaching course
The youth that are employed will benefit by having a coach. A coach is a
facilitator who coaches them to be competent performers in the workplace. This
training programme focuses on the coaching process.
? Mentoring course
Mentoring in the workplace is a one-on-one relationship where the mentor
shares knowledge and experience through interactive teaching with the mentee.
This course shows how to apply the mentor model. Mentors will minimise the risk
of hiring inexperienced workers.
? Mastering soft skills for business success skills programme
Soft skills are the ability to communicate effectively, promote teamwork
within your organisation, present ideas, manage projects and people, solve
problems and provide excellent customer care. They are critical to the success of
Our Mastering soft skills for business success skills programmewill prepare
the youth workers for employment.