If your annual payroll is over R500,000 you pay a skills development levy (SDL) of 1%, and you can claim 20% of it straight back through CETA by filing two documents a year. Employment equity is simpler than most small employers fear: from 1 January 2025 only businesses with 50 or more employees are "designated employers", the old turnover test was repealed, and a small trade business below 50 heads does not need an EE plan or EE reports at all.
The skills development levy
- Who pays: any employer registered for PAYE whose total annual payroll exceeds R500,000. Registration happens on the same SARS form as PAYE and UIF (EMP101e); see Employing your first worker.
- The rate: 1% of total remuneration, which includes salaries, wages, overtime, bonuses, commissions, leave pay and fringe benefits.
- Who is exempt: employers with payroll of R500,000 a year or less (no SDL registration required), public service bodies and qualifying public benefit organisations.
- How it is paid: on the monthly EMP201 to SARS by the 7th of the following month, alongside PAYE and UIF.
Getting your money back through CETA
Construction employers fall under the Construction Education and Training Authority (www.ceta.org.za), and the SDL you pay is the pot your grants come from:
- Mandatory grant (20%): submit a Workplace Skills Plan (WSP) and Annual Training Report (ATR) to CETA each year; the window opens 1 February and closes 30 April. Do that and 20% of your SDL comes back in cash or training credits.
- Discretionary grants: for learnerships, apprenticeships, bursaries and skills programmes. The 2026/27 discretionary window opened on 9 January 2026 and closed on 16 February 2026; the window moves each year, so watch ceta.org.za. Larger employers can unlock up to a further 49.5% of SDL through discretionary funding aligned to structured training.
If you train your crew anyway, the WSP and ATR are mostly paperwork describing what you already do. Skipping them is donating your levy. Learnerships also carry a separate tax allowance: see Apprentices and learnerships.
Worked example: R600,000 payroll
A small construction firm pays R600,000 in wages, so SDL is R6,000 a year. It submits a WSP and ATR by 30 April and claims R1,200 back as the 20% mandatory grant. It then registers two learnerships and applies for CETA discretionary funding in the January window, plus the section 12H tax allowance on each registered agreement. The levy stops being a dead cost.
Employment equity after the 2025 changes
The Employment Equity Act was amended with effect from 1 January 2025, and the change is good news for small firms:
- Designated employer = 50 or more employees, full stop. The Schedule 4 turnover threshold was repealed; headcount alone decides.
- Under 50 employees: no EE plan, no EE reports, no affirmative-action obligations under the Act. The unfair-discrimination provisions still protect every worker, of course, regardless of company size.
- 50 or more employees: you are designated, and sector-specific numerical targets apply for the period 1 September 2025 to 31 August 2030 across 18 sectors, construction included.
- State work caveat: if you tender for government contracts, a compliance certificate under section 53 of the Act can still be requested. Confirm what your tender requires with the Department of Employment and Labour.
For a typical bakkie-and-crew outfit of 5 to 20 people, the practical position is: pay your SDL if you are over the payroll line, claim your grants, and ignore EE plans until your headcount approaches 50, at which point get advice before you cross it.
Common mistakes
- Paying SDL and never claiming. The 20% mandatory grant only needs a WSP and ATR by 30 April.
- Missing the discretionary window. CETA's funding windows are short and early in the year; diarise them.
- Counting turnover for EE. Since 1 January 2025 turnover is irrelevant; only headcount counts.
- Assuming "exempt from EE" means "exempt from fairness". Discrimination claims can still go to the CCMA whatever your size; see Dismissals and the CCMA.
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