The Impact of Recent Legislation on Business (Grade 12 NSC Matric Business Studies): Revision Notes

The Skills Development Act (SDA)

What is the Skills Development Act?

The Skills Development Act is crucial legislation that ensures South Africa's workforce becomes skilled and contributes effectively to the country's productivity and economic growth. Passed as Act No. 97 of 1998, the SDA aims to provide more South Africans with access to skills training opportunities that benefit both individuals and society in the long term.

The purpose of the SDA

The Skills Development Act was created to address several important goals in South African business and education:

• Skill development: The Act works to develop the skills of South Africans to improve productivity in workplaces across the country.

• Business encouragement: It encourages businesses to invest in improving the skills of both new and existing workers through structured training programmes.

• Educational investment: The Act promotes investment in education and training initiatives that benefit the South African workforce.

• Addressing inequality: It purposefully works to correct imbalances from the past by providing education and training opportunities to previously disadvantaged groups.

• Employment opportunities: The Act improves job prospects for people who were historically excluded from quality employment opportunities.

• Strategic implementation: It provides systematic implementation of skills development strategies at national, sector, and workplace levels.

The impact of the SDA on businesses

Positive impacts and advantages

The Skills Development Act creates several beneficial outcomes for South African businesses:

Enhanced workforce capacity: Businesses experience an increase in the number of skilled employees with specialised abilities that are often in short supply in the labour market.

Improved productivity: Workplace productivity increases significantly because employees become empowered through comprehensive training programmes, making them more knowledgeable and capable in their roles.

Global competitiveness: South African businesses become more competitive internationally as more employees receive training with upgraded, relevant, and specialised skills that meet global standards.

Better returns: Companies see improved return on investment in education and training programmes, as skilled workers contribute more effectively to business objectives.

Investment growth: There is increased investment in education and training within the South African labour market, creating a cycle of continuous improvement.

Service delivery: Businesses can improve their service delivery because employees work at optimal levels when properly trained and skilled.

Negative impacts and disadvantages

However, the SDA also presents certain challenges for businesses:

Administrative burden: The implementation of the SDA can be time-consuming, expensive, and administratively burdensome, requiring significant amounts of paperwork and administration to comply with requirements.

Financial pressure: The Skills Development Levy places additional financial burden on businesses that may already be struggling financially, particularly smaller enterprises.

Limited support: The government's SDA initiative may not always receive full support from all businesses, creating inconsistent implementation across different sectors.

Monitoring difficulties: Many businesses find it challenging to monitor and control the implementation of the Act's requirements effectively.

Productivity concerns: Workplace productivity may temporarily decline as employees attend training programmes during work hours, affecting daily operations.

Size limitations: Only larger companies and businesses with staff payrolls over R500,000 per year can claim back funds through the Skills Development Levy, excluding smaller businesses from these benefits.

Actions considered non-compliance with the SDA

• Blocking training access: Preventing qualified employees from accessing training opportunities and learnership programmes without valid reasons.

• Discriminatory practices: Preventing employees from accessing training based on unfair discrimination such as pregnancy, age, position, language, gender, sexual orientation, culture, or religion.

• Unfair skills development: Promoting skills development unfairly, such as providing training opportunities to only certain groups of employees whilst excluding others.

• Falsifying documentation: Providing false information in any official documents, including tax documentation submitted to SARS and workplace skills development plans.

• Unregistered services: Providing employment services for profit without proper registration as an employer or with the relevant SETA.

• Misleading information: Deliberately providing incorrect or irrelevant information to employees about learnership opportunities to mislead them.

Penalties for non-compliance with the SDA

• Compliance orders: Non-compliant businesses may receive a compliance order from the Labour Court, which legally forces the business to comply with SDA requirements.

• Legal consequences: Businesses that neglect to comply may face substantial fines and potentially jail sentences for severe violations, depending on the severity of non-compliance.

• SDL restrictions: Businesses that don't pay the Skills Development Levy may be prevented from offering learnerships to employees or claiming grants from SETAs.

• Operational shutdown: Labour inspectors have the authority to indefinitely stop business operations if illegal practices related to skills development are discovered.

• Licence revocation: The most serious consequence is that a business's operating licence may be revoked by the Labour Court, preventing the business from continuing any form of operations.

Ways businesses can comply with the SDA

• Visibility and communication: Display a clear summary of the SDA in the workplace where all employees can easily see and understand their rights and opportunities.

• Equal opportunities: Provide training opportunities to all employees to improve their skills, ensuring fair access across all levels and departments.

• Skills assessment: Regularly assess employee skills to determine and identify specific areas where skills development is most needed.

• Active engagement: Promote and encourage employees to improve their skills and actively participate in available learnership programmes.

• SETA registration: Employers who collect PAYE (Pay As You Earn tax) should register with the appropriate SETA for their industry sector.

• Levy compliance: Employers whose annual payroll exceeds R500,000 should pay $1\%$ of this amount to SETA as the Skills Development Levy.

• Documentation: Employers should submit comprehensive workplace skills plans and provide evidence showing these plans have been properly implemented.

The role and functions of SETAs

Sector Education and Training Authorities (SETAs) are vocational skills training organisations in South Africa that play a vital role in implementing the Skills Development Act. These organisations identify, outline, manage, and create learnerships, internships, and apprenticeships across various business sectors.

Key functions of SETAs

SETAs perform several essential functions to support skills development:

• Registration services: They register various learnerships and learning programmes to ensure quality and standardisation.

• Promotion activities: SETAs actively promote and establish different types of learnerships across their sectors.

• Plan approval: They review and approve workplace skills plans and annual training reports that businesses submit.

• Strategic alignment: SETAs develop skills plans that align with the aims of the National Skills Development Strategy.

• Sector planning: They create and build comprehensive skills development plans for various economic sectors.

• Programme promotion: SETAs promote learnerships and learning programmes by identifying the best workplaces for practical work experience.

How SETAs are funded

SETAs receive funding from multiple sources to support their operations:

• Skills Development Levy: The primary funding comes from Skills Development levies that employers pay to SARS as a government collecting agency.

• Employer contributions: Employers with annual salary bills exceeding R500,000 contribute $1\%$ of their annual salaries as a levy.

• Fund allocation: Different SETAs receive $80\%$ of the levy for organisational expenses, whilst the remaining $20\%$ goes to the National Skills Fund.

• External funding: Additional funding comes from donations and grants received from public, business, and CSI (Corporate Social Investment) programmes.

• Government support: SETAs also receive surplus funds from government institutions and funding from providing various services.

Understanding learnerships

What are learnerships?

Learnerships are theoretical and practical training opportunities that lead to recognised occupational qualifications. These structured programmes provide comprehensive learning experiences that combine classroom education with practical workplace experience.

Key characteristics of learnerships include:

• Structured learning: They provide organised learning programmes that are completed during work hours for a specified period.

• Comprehensive training: Learnerships include both theoretical coursework with learning materials and practical work experience components.

• Multi-party agreement: They involve agreements between learners, employers, and training providers to ensure all parties understand their responsibilities.

• Employment potential: Learnerships may sometimes include guaranteed employment for a specified period after successful completion.

• Qualification outcome: All learnerships lead to nationally recognised qualifications that are registered on the National Qualifications Framework.

Additional information about learnerships

Learnerships represent structured learning programmes that combine theoretical and practical skills development in workplace settings. When learners complete a learnership successfully, they achieve nationally recognised qualifications registered on the National Qualifications Framework (NQF).

These nationally recognised qualifications relate directly to specific occupations, such as healthcare worker, motor mechanic, construction worker, IT technician, or accountant. Learnerships combine structured learning with practical work experience whilst learners are employed by accredited public or private learnership providers.

Learners attend classes at colleges or training centres for classroom-based learning and complete on-the-job training in actual workplaces. Learnerships are outcomes-based rather than time-based, allowing for recognition of prior learning experience.

The duration of learnerships varies, but averages about 18 months. People entering learnerships must be at least 16 years old and younger than 35 years old.

NQF levels for learnerships

The National Qualifications Framework organises learnerships into different levels:

NQF Level	Category	Education Band	Qualification	Provider
4	Artisan	Further Education	National Certificates	Accredited Public/Private Providers
3	Junior	Education	Certificates	Accredited Public/Private Providers
2	Assistant	-	-	-
1	General Education	Grade 9 – ABET Level 4	N2	Public/private schools

National development strategies

The National Skills Development Strategy (NSDS)

The NSDS aims to develop skills, improve education, support and provide training to the South African workforce, improve economic growth, and reduce poverty and unemployment. This strategy was developed following the promulgation of the SDA to introduce more skilled workers into scarce fields in South Africa.

• Programme access: Increases access to programmes that train people in essential skills.

• Language and mathematics: Addresses the low level and shortage of language and mathematical skills among youth and adults.

• Education promotion: Promotes the public Further Education and Training college system with programmes that meet skills needed by SETAs and other organisations.

• Workplace development: Improves workplace-based skills development and encourages small business and community training initiatives.

• Public sector improvement: Increases and improves public sector skills to enhance service delivery.

• Career guidance: Builds career and vocational guidance centres and training facilities.

• Stakeholder responsibility: Sets out responsibilities for education and training stakeholders.

• Social development: Improves social development through focused economic development initiatives.

The Human Resources Development Strategy (HRDS)

The HRDS aims to address equity and reduce poverty and inequality in South Africa by addressing skills deficits in the economy and implementing intervention plans to develop human resources for economic improvement.

• Skills supply: Improves the supply of skills, which directly benefits the country's economic development.

• Social development: Promotes social development, social justice, and helps reduce poverty levels.

• Skills shortages: Addresses critical skills shortages in the South African workplace.

• Economic growth: Achieves faster economic growth, higher employment levels, and reduces poverty in South Africa.

• Workforce development: Develops both short-term and long-term workforce skills.

• Lifelong learning: Increases and encourages employee participation in lifelong learning opportunities.

Both the NSDS and HRDS were developed as results of the SDA's promulgation and are aligned to address current economic needs, increased global competition, and globalisation challenges.