Article provided by SEESA
As legal consultants, we always strive to introduce the most cost-effective initiatives to our clients regarding B-BBEE expenditure. With the Skills Development element, learnerships falls well within this category.
If structured correctly, learnerships can save you both time and money in the long run and may be well worth your efforts.
What is a Learnership?
A learnership is a workplace education and training programme comprising a practical workplace experience and structured theoretical training and usually runs over a period of 12 months.
An accredited learnership will provide the learner with an NQF level qualification after successfully completing of the learnership. There are different NQF levels to accommodate the various levels of experience of the learners.
Should a business register one of its employees, the business not only empowers its employee, but the employees can also use that knowledge to benefit the business.
Where does a Learnership fit into the B-BBEE scorecard?
Skills Development is one of the elements on the B-BBEE scorecard and is based on a percentage of a business’s total gross payroll for its financial yearend.
With learnerships, you can claim not only the cost of the learnership under the skills expenditure indicator, but you will also be able to claim the learner under the learnership indicator. The learnership indicator on the generic scorecard works with the total workforce of the business.
A business can register a learnership for its employee or a non-employee.
Where a learnership is registered for a non-employee, the learner can be hosted either by the business or a hosting company.
Benefits of a Learnership
The registration cost of the learnership (ex. VAT), and the monthly cost to a company of the employee or stipend of the non-employee, will be taken into consideration as training expenditure for the business’s B-BBEE verification.
Suppose a learnership runs over two financial years, the business will also be able to claim the employee’s salary or non-employees stipend that falls within the next financial year as training expenditure for that year’s B-BBEE verification. With the Generic Scorecard, the learner will also qualify for the headcount for the duration of the learnership.
For example, company ABC has a February year-end and registers a learnership of R40 000 (ex. VAT) for an employee whose monthly cost to company amounts to R10 000.The learnership is registered with effect 1 February 2022 and will end on 31 January 2023.
The registration costs of the learnership, as well as the employee’s salary for February 2022 (R40 000 + R10 000 = R50 000) will be taken into account to claim Skills Development points on the B-BBEE Scorecard for the business’s February 2022 verification.
The employee’s salary for the period 1 March 2022 – 31 January 2023 (R110 000) will be considered as training expenditure for the business’s B-BBEE verification based on its February 2023 financial year-end. There is also a tax benefit for the business, and it is determined by the NQF levels of the learnership (SEESA currently offers NQF 1 – 4 Learnerships).
For NQF 1 – 6 Learnerships a business can claim a total tax allowance of R80 000 per Learnership, which comprises of an initial amount of R40 000, referred to as a Commencement Allowance for the registration of a Learnership (subject to a pro rata calculation over 12 months) and a Completion allowance of R40 000.
This means that if the learner remains on the Learnership programme for the entire 12-month period, the employer can claim the entire R40 000, but if the learner should resign or quit the Learnership before the 12 months is over, the R40 000 will be reduced accordingly.
It is clear from the information above that a learnership is a cost-effective way to claim points on the Skills Development scorecard.
A learnership can also contribute towards Skills Development points over two years if the duration of the course is over two financial years.
Kindly contact your SEESA BEE Legal Advisor for more information or assistance with the benefits of a learnership.
About the author
Cordieu Hamman is the BEE Provincial Manager at our Cape Town Branch. He is an admitted attorney who completed his BA Law and LLB degrees at the University of the North West (Potchefstroom Campus).
- Broad Based Black Economic Empowerment Amendment Act 46 of 2013;
- Broad Based Black Economic Empowerment Amended Codes and Scorecards;
- SEESA Skills Training Memo, Learnership Tax Allowances, Simple Guidelines for Business.