The purpose of the Skills Development Levy Act

The future of South Africa depends on a skilled and capable workforce. But skills don’t develop on their own; they require training, time, and investment. That’s where the Skills Development Levies Act comes in.

This legislation ensures that companies take responsibility for growing the skills base of the country. More than just a legal requirement, it’s a tool for economic transformation and business growth.

Why Was the Act Introduced?

The Skills Development Levies Act (SDLA) was passed in 1999 as part of a national effort to address South Africa’s critical skills shortage. For too long, training was inconsistent and underfunded, especially for historically disadvantaged groups. The Act was introduced to:

    • Encourage employers to invest in training
    • Fund national and sector-based skills development initiatives
    • Improve employability and productivity
    • Support transformation and economic inclusion

By requiring companies to contribute financially to training efforts, the Act aims to create a stronger, more competitive workforce for the country.

How Does the Skills Levy Work?

All employers with a payroll of more than R500,000 per year must pay a 1% monthly levy on their total payroll to SARS. These funds are then distributed to:

    • SETAs (Sector Education and Training Authorities) – to fund industry-specific training and learnerships
    • The National Skills Fund (NSF) – to support national training priorities

In return, companies can recover part of their contribution by submitting training plans, offering learnerships, and participating in accredited development programmes.

Key Purposes of the Skills Development Levy

    • Increase investment in employee training
      The levy ensures businesses actively invest in upskilling their staff instead of treating training as optional.
    • Promote equity in education
      By targeting youth, women, and previously disadvantaged groups, the levy helps bridge the gap between opportunity and access.
    • Boost economic growth
      A skilled workforce leads to better productivity, innovation, and global competitiveness, benefiting both employers and the country.
    • Support compliance and transformation
      Businesses that use their levy wisely can improve their B-BBEE scorecards, claim SETA grants, and align with national development goals.
    • Create workplace-ready graduates
      Through learnerships and internships, employers help young people gain real-world experience while contributing meaningfully to their organisations.

Turning Compliance Into Opportunity

Many companies view the skills levy as just another tax. But those that engage in real training see the true value: motivated employees, better performance, and a return on investment through SETA incentives and rebates.

With the right partner, compliance becomes a strategic advantage.

How iFundi Supports Your Skills Development Strategy

iFundi offers accredited training programmes that are aligned with the Skills Development Levies Act and SETA requirements. We help you:

    • Develop and submit your Workplace Skills Plan (WSP) and Annual Training Report (ATR)
    • Implement learnerships and internships
    • Upskill employees through NQF-aligned courses
    • Access grants and improve your B-BBEE score

Let’s Build the Workforce of Tomorrow

Paying the levy is the first step. Using it wisely is where real transformation begins. If you want to align your training efforts with compliance, empowerment, and business impact, iFundi is ready to help.

Contact us today to start building a skilled, capable, and competitive team.