In South Africa, the Skills Development Levies Act plays a crucial role in ensuring that businesses actively contribute to the upskilling of the national workforce. It’s not just about compliance, it’s about creating opportunities, reducing unemployment, and building a more competitive economy.

For companies, understanding this Act is the first step toward turning a legal obligation into a strategic advantage.

What is the Skills Development Levies Act?

The Skills Development Levies Act (No. 9 of 1999) was introduced to fund training and development initiatives across the country. It requires eligible employers to contribute a percentage of their payroll towards a national skills fund, which is then redistributed to support accredited training and learnership programmes.

The levy is used to support initiatives led by SETAs (Sector Education and Training Authorities), which are responsible for developing skills strategies for specific industries.

Who Must Pay the Skills Levy?

All employers in South Africa with an annual payroll of more than R500,000 are required to pay the skills development levy. This is set at 1% of the total monthly payroll and must be paid to the South African Revenue Service (SARS).

This applies to:

• • Private companies
  • Government departments
  • Public entities
  • NGOs and NPOs (depending on payroll thresholds)

Small businesses with payrolls below R500,000 are exempt.

Where Does the Money Go?

Once collected, the levy is distributed as follows:

• • 20% goes to the National Skills Fund (NSF) to support national training priorities.
  • 80% goes to the relevant SETA, which uses the funds to support industry-specific training initiatives, including learnerships, internships, and workplace skills plans.

Benefits for Employers

While the levy is mandatory, employers can recover a large portion of their contributions by participating in skills development initiatives. Here’s how:

• • 20% rebate through the Workplace Skills Plan (WSP) and Annual Training Report (ATR) submission.
  • Additional grants through registered learnerships, internships, and bursaries.
  • Improved B-BBEE scorecards, specifically under the Skills Development element.
  • Stronger, more capable teams that deliver better business results.

In short, employers who invest in staff training can claim back much of what they pay—and often more.

Why the Skills Development Levies Act Matters

South Africa faces high unemployment, especially among youth, and a shortage of qualified talent in key sectors. The Skills Development Levies Act is one way to close that gap. By ensuring that companies play an active role in training and development, the Act creates a more inclusive and future-ready economy.

iFundi Can Help You Get the Most From Your Levy

At iFundi, we help businesses turn compliance into opportunity. Our accredited training programmes are aligned with SETA requirements, making it easy for you to benefit from grants while building your team’s skills.

We support organisations with:

• • Learnership implementation
  • WSP/ATR submissions
  • Training aligned with scarce and critical skills
  • Custom learning solutions that deliver measurable impact

Take the Next Step

Paying the levy is required. But how you use it—that’s where the real value lies. Let iFundi help you get a return on your investment by building the skills your business needs to succeed.

Contact us today to learn how you can maximise your Skills Development Levy and invest in the future of your workforce.

Published May 15, 2025