Paying South Africa’s Skills Development Levy (SDL) can allow you to access SETA grants, but it doesn’t mean that your training would just be funded automatically. A mandatory grant is available to an eligible levy-paying employer that submits an approved workplace skills plan and training report. Discretionary grants support programmes chosen under a SETA’s own priorities and application rules. Generally, the company that pays the levy would be the party that applies for an employer’s mandatory grant, even if another party is responsible for its payroll processing.
The amounts are worth noting: as of October 2026, SETAs are administering mandatory grants at 20% of SDL paid, subject to the employer meeting the grant conditions. If ten employees each earn R50,000 a month and all of that remuneration is SDL-liable, annual pay is R6 million, SDL at 1% is R60,000, and a successful mandatory-grant application would bring back R12,000. That is 20% of the levy—not 20% of the company’s training bill. The announced increase to 40% has not yet taken effect. Last reviewed: 27 October 2026.
Who pays SDL, and which SETA receives it?
SDL is an employer levy, not a deduction from an employee’s wages. SARS sets it at 1% of relevant remuneration, reported and paid monthly through the employer’s EMP201 declaration. An employer that expects its total SDL-liable remuneration for the next 12 months to be no more than R500,000 is exempt on that ground. Other statutory exemptions also exist. This is a remuneration test, not a rule that every company with fewer than 50 employees is exempt.
At SDL registration, the employer’s business classification connects it to the appropriate Sector Education and Training Authority, or SETA. SARS requires valid SETA and SIC classification codes and warns that missing codes can prevent the levy from being allocated—and a grant from being paid. The relevant SETA follows the registered employer’s classification. It should not be guessed from an overseas parent’s industry label or from the job title of one employee.
The R500,000 exemption closes the mandatory-grant route for an employer that pays no SDL, because that grant is linked to levies paid. It does not necessarily close every discretionary opportunity: the grant regulations permit some non-levy-paying employers or enterprises to receive discretionary funding if the relevant programme’s conditions are met.
Two grant routes, two different decisions
Mandatory grant: what comes back from the levy?
For a levy-paying employer, the mandatory grant is the more predictable route once the conditions are met. The employer submits a Workplace Skills Plan (WSP) for training it intends to provide and an Annual Training Report (ATR) covering training already delivered. The SETA reviews the submission and the employer’s eligibility, including registration and whether SDL payments are up to date. The general annual submission deadline is 30 April. A first-time SDL registrant has a separate rule allowing an application within six months of registration; the relevant SETA’s current instructions still govern how it is filed.
The 20% currently administered rate applies to SDL paid, not to whatever the company chooses to spend on courses. It also is not an automatic credit against the next EMP201. The SETA pays an approved mandatory grant to the qualifying employer. Employers should use the SETA’s current forms and submission window, rather than assume a payroll filing doubles as a grant application. HWSETA’s employer guidance illustrates the separate registration, WSP/ATR approval and payment steps.
Discretionary grant: does the programme fit a SETA priority?
A discretionary grant is a different funding decision. Each SETA sets a policy and publishes opportunities aligned with its sector skills plan; the amount, applicant criteria, evidence and closing date depend on the programme. Funding may support structured learning such as learnerships, apprenticeships, skills programmes or other specified interventions—not simply any training invoice a company already intends to pay. The Services SETA’s 2026/27 funding notice, for example, names eligible learning programmes and sector priorities and makes clear that submitting an application does not guarantee an award.
There is no universal percentage of your SDL that you can claim as a discretionary grant. The employer’s useful question is whether a real training plan matches a current SETA programme closely enough to justify preparing its application. A company may receive a mandatory grant without a discretionary award; the two should be budgeted separately.
What the WSP, ATR and SDF actually do
The WSP says what skills the employer plans to develop. The ATR records training completed in the reporting period. Together they give the SETA a view of the employer’s workforce and training needs, rather than merely proving that an invoice was paid. Records of employees, planned interventions, completed learning and supporting evidence should therefore be organised as training happens, not assembled from memory at the deadline.
A Skills Development Facilitator (SDF) coordinates that work and the submission. The SDF can be someone inside the business or a contracted specialist; outsourcing the role does not transfer the grant application away from the employer. HWSETA describes both options. The grant regulations let employers with fewer than 50 staff use a SETA-provided simplified WSP/ATR form. They also require evidence of consultation and union sign-off, or an explanation, where the employer has a recognition agreement with a trade union. A particular SETA may have additional documentation requirements.
Who handles what when employment or payroll is outsourced?
The name on the payroll service contract does not decide who can apply for an employer’s SETA grant. Start with the party that legally employs the workers and holds the relevant SDL registration. Payroll administration and employment are different jobs.
| Arrangement | Whose SDL registration applies? | Who makes an employer grant application? | What needs coordination? |
|---|---|---|---|
| Your South African employer structure employs directly | Your employing business, if SDL-liable. | Your business, through its authorised SDF or representative, subject to SETA rules. | SDL payments, SETA classification, training plans and evidence. |
| Your business employs; a provider runs payroll | Still your employing business, not the payroll provider. | Still your business. An external SDF may prepare and submit on its behalf if authorised. | Agree who supplies SDL payment data and who manages WSP/ATR work. |
| An EOR legally employs the worker | The EOR employing entity’s registration and levy position, if it is SDL-liable. | For a grant tied to that employer’s levy, the employing entity—not the client paying its service invoice. | Whether the worker’s training can be included, who keeps records, and how any award is treated under the agreement. |
The EOR distinction does not mean that a foreign client could never apply for any separate discretionary programme in its own right. The regulations permit several categories of legal person to receive discretionary grants, including some enterprises that do not pay SDL. That would depend on the particular SETA opportunity. What the client cannot assume is that paying an EOR invoice gives it the EOR employer’s mandatory-grant entitlement, or that any grant received by the EOR will automatically reduce the client’s fee.
A South African team’s training plan, from payroll to application
Consider the foreign-owned software company in the opening example. Its South African business employs ten people and outsources the monthly pay run. The payroll provider calculates SDL and supplies the EMP201 figures, but the employing business retains its SDL registration and any employer grant application. Its finance lead can reconcile the levy paid to SARS; its HR lead can identify training already completed and what the team needs next. An internal or external SDF can turn those records into the WSP and ATR for the business’s registered SETA.
Before choosing a specific course because funding might be available, the team reads that SETA’s current discretionary-grant notice. If the proposed programme fits its priorities, the company prepares a separate application with the evidence that notice requires. If not, it can still plan the training for business reasons and pursue the mandatory grant if it meets those conditions. The relevant SETA depends on the employer’s registered business classification, so this hypothetical does not assume that every software company belongs to the same SETA.
Is a potential R12,000 mandatory grant worth the work? There is no universal answer. A company already maintaining a credible training plan may find the submission straightforward; a company starting from scattered records may need more effort or outside SDF support. A genuine programme that fits a discretionary window may change the economics, but no discretionary award should be treated as budgeted income before approval.
Before the next SETA application window
Put six things on one page: the legal employer and its SDL number; the SETA and classification code; whether you are pursuing a mandatory grant, a particular discretionary programme, or both; the WSP/ATR and training evidence; the named SDF or internal owner; and the current SETA deadline. If payroll is outsourced, include who will supply levy-payment records. If an EOR employs the worker, settle training-record access and any grant treatment in that relationship before assuming the client can claim the funding.
If your company already has a South African employing structure, NNRoad’s South Africa payroll service can support the SDL calculation and reporting-data side of that process; the grant application remains a separate employer/SETA matter. If you need to hire without your own local employer structure, see how a South Africa EOR arrangement changes who employs the worker—and therefore whose SDL registration is relevant.