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What you should know about the new SETA grant regulations

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The implementation of the Skills Development Act and Skills Levy Act required all employers with an annual payroll of R500 000 or more to pay a skills levy equal to 1% of their annual payroll. In order to qualify for a mandatory grant equal to 50% of the skills levy paid, the employer had to appoint a Skills Development Facilitator, complete an Annual Training Report (ATR) with all training provided to staff  during the reporting period and a Workplace Skills Plan – indicating the planned training for the coming reporting period.  The WSP and ATR had to be submitted to the relevant Sector Education Fund (SETA) by 30 June every year.

Towards the end of 2011 the SETA’s started introducing a PIVOTAL grant. PIVOTAL grant can be defined as professional, vocational, technical and academic learning programmes that result in qualifications or part qualification on the National Qualifications Framework (NQF).  The mandatory grant would be reduced to 40% and the other 10% would be allocated to PIVOTAL grants.  The SETA’s however did not finalise or enforce the PIVOTAL grant during the 2011 and 2012 submission periods.

In December 2012 the Department of Higher Education and Training published the SETA grant regulations regarding monies received by a SETA and related matters.

The intent of the regulations is to:

  • “Regulate the proportion of funds available for skills development that is spent on administration.
  • Provide for SETA’s to contribute to the cost of the work of the Quality Council for Trade and Occupations (QCTO).
  • Discourage the accumulation of surpluses and the carry-over of unspent funds at the end of the financial year.
  • Improve the quantity and quality of labour market information received by SETA’s in the form of WSP, ATR and PIVOTAL training reports, to inform planning.
  • Promote the NQF registered and quality assured PIVOTAL programmes that address priority scarce and critical skills needs identified in sector skills plans.
  • Create a framework within which expanded use is made of public education and training providers for the provision of skills development programmes. “

(Government Gazette, 3 December 2012)

Administration costs

The SETA’s are limited to 10.5% of the total levies paid by employers to use for administration costs.  As from 1 April 2013, all SETA’s will transfer an amount not exceeding 0.5% of the total levy paid to the QCTO.  The purpose of this amount is to ensure quality assurance.  The percentage that has to be transferred will be determined by the Minister by 31 July of each year.

SETA finances

Each SETA has to transfer unclaimed mandatory funds and interest earned there on into the discretionary grant fund and this has to be completed by 15 August each year.  Any administrative funds and interest earned on these funds that are not spent must be moved into the discretionary fund by 31 March of each year.

The amounts in the discretionary fund on 1 April every year and the money received from discretionary levies every month must be spent in the following 12 months.

Every SETA must allocate 80% of its discretionary grants within a financial year to PIVOTAL programmes that address scarce and critical skills.   SETA’s will only be allowed to carry over 5% uncommitted funds to the next financial year and by implication have to have spent 95% of their discretionary funds by 31 March each year.

Any surplus discretionary funds will be paid to the National Skills Fund (NSF) by 1 October of each year.

Mandatory grants

Employers have to submit the WSP and ATR for the 2012/2013 reporting by 30 June 2013, but as of 1 April 2014, the submission deadline will be 30 April of each year.  The period for data compilation for submission is therefore effectively reduced to a 1 month period.  LabourNet will continue to assist clients with the submissions.  Proper record keeping of all training, copies of certificates and proof of payment will have to be kept up to date throughout the reporting period to ensure timeously reporting.

The mandatory grant will be reduced to 20% of an employer’s 1% skills levy.  The reduction is significant and employers will have to utilise the discretionary grant applications.

Mandatory grants will continue to be paid at least quarterly.    Any mandatory grants not claimed will be transferred into the SETA’s discretionary fund by 15 August annually.

A SETA will only pay out an employer’s mandatory grant if the eligibility criteria for payment of mandatory grants are met.

The levy paying employer has to meet the following criteria:
  • Be registered with the Commissioner in terms of the Skills Development Levies Act.
  • Has paid the levies to the Commissioner as required by the SDLA.
  • All levy payments are up to date at the time of the approval and for the reporting period.
  • The WSP and ATR are submitted by the required deadline.
  • As from 1 April 2013, the WSP for the previous reporting period has been submitted and implemented according to the prescriptions for implementation by the particular SETA.
  • Any employer who has a recognition agreement with a trade union or has any union in place will have to provide proof that the WSP and ATR have been subject to consultation with recognised trade unions and the WSP and ATR must be signed off by the labour representative appointed by the recognised trade union unless an explanation is provided.

The above will therefore require employers to plan training that will be implemented and the employer will have to ensure that all training meet the criteria set out by their SETA.  The employer will have to check that if statutory training like First Aid training will be included and do all training have to be accredited training.

Discretionary Grant

The allocation of discretionary grants will be directly related to each SETA’s scarce skills plan and will be guided by an approved Discretionary Grant Policy.  SETA’s will have to ensure that the distribution of grant applications and project proposals forms are done in a way to enable national access and to allow various individuals or institutions to be able to apply for them.

SETA’s are required to focus on addressing scarce skills and critical skills through programmes designed to address skills needs and would include integrated learning.

In order to obtain discretionary funding for PIVOTAL programmes the employer or legal person must complete and submit a PIVOTAL training plan and report using the documents provided in the regulations published in December 2012.

The regulations in the SETA Grant Regulations document will become effective on 1 April 2013.  The most significant changes will be the reduction in the mandatory grant percentage from 50% to 20% and the strict control and criteria to be met in terms of a company’s previous period WSP submitted to the SETA.  Each SETA will require planned and implemented training to meet specific criteria.  LabourNet will assist clients to identify and implement these requirements.

Another significant change is that the submission date for the WSP and ATR will be moved forward to 30 April 2014.  Employers will have to focus on proper record keeping throughout the year to avoid not being able to provide all the correct and required information between the end of the reporting period at 31 March each year the submission deadline of 30 April.  LabourNet will assist clients in preparing a proper record keeping system to ensure a smooth reporting process.

Employers will have to start implementing PIVOTAL grants to ensure they have access to the skills levy they pay.  The purpose of PIVOTAL grants is to provide students with the opportunity to complete a practical part of their qualification and this is usually the last leg that they need to complete in order to obtain their qualifications.  Many students cannot complete their qualification due to the fact that they do not have the opportunity to complete their practical training.  The PIVOTAL grant will allow students to complete their training but also to gain valuable work and industry experience that will make them more employable.  The National Skills Development Strategy provides information on the scarce and critical skills in our country.

LabourNet will be able to provide employers with specific SETA requirements in terms of mandatory and discretionary grant applications and will also assist employers to apply for both PIVOTAL and discretionary grants.
The LabourNet skills product will provide clients with a Skills gap analysis to identify skills gaps within their business, then complete a Training Needs Analysis and prepare personal development plans to bridge the gaps.  LabourNet will be able to assist in aligning the training to the scarce and critical skills and will be able to advice on possible training that can be implemented.

The changes in the grant regulations will require employers to actively plan, source and fund training.  A trained workforce is a motivated and productive workforce and will ultimately increase a company’s Employment Equity Profile as well as the company’s BEE scorecard.