With effect from tomorrow the above Act comes into force, except for section 10 which deals with reimbursements.

The preamble provides the motivation for the Act in that the government –

  • is concerned about the unemployment rate in the Republic;
  • recognises the need to share the costs of expanding job opportunities with the private sector;
  • supports employment growth by focusing on labour market activation, especially in relation to young work seekers; and
  • desires to institute an employment tax incentive.

An employee is defined as

“a natural person (a) who works directly for another person; and (b) who receives, or is entitled to receive remuneration, from that other person, but does not include an independent contractor”.

Qualifying employees

6. An employee is a qualifying employee if the employee—


(i) is not less than 18 years old and not more than 29 years old at the end of any month in respect of which the employment tax incentive is claimed;

(ii) is employed by an employer operating through a fixed place of business located within a special economic zone designated by notice by the Minister of Finance in the Gazette and that employee renders services to that employer mainly within that special economic zone; or (iii) is employed by an employer in an industry designated by the Minister of Finance, after consultation with the Minister of Labour and the Minister of Trade and Industry, by notice in the Gazette;

(b) (i) is in possession of an identity card referred to in section 14 of the Identification Act, 1997 (Act No. 68 of 1997), issued to that employee after application for the card in terms of section 15 of that Act; or

(ii) is in possession of an asylum seeker permit, issued to that employee in terms of section 22(1) of the Refugees Act, 1998 (Act No. 130 of 1998), after application for the permit in terms of section 21(1) of that Act;

(c) in relation to the employer, is not a connected person as defined in section 1 of the Income Tax Act;

(d) is not a domestic worker as defined in section 1 of the Basic Conditions of Employment Act, 1997 (Act No. 75 of 1997);

(e) was employed by the employer or an associated person on or after 1 October 2013 in respect of employment commencing on or after that date; and

(f) is not an employee in respect of whom an employer is ineligible to receive the incentive by virtue of section 4.

Eligible employers

3. An employer is eligible to receive the employment tax incentive if the employer—

(a) is registered for the purposes of the withholding and payment of employees’ tax by virtue of paragraph 15 of the Fourth Schedule to the Income Tax Act; and

(b) is not—

(i) the government of the Republic in the national, provincial or local sphere;

(ii) a public entity that is listed in Schedule 2 or 3 to the Public Finance Management Act, 1999 (Act No. 1 of 1999), other than those public entities that the Minister of Finance may designate by notice in the Gazette on such conditions as the Minister of Finance may prescribe by regulation;

(iii) a municipal entity defined in section 1 of the Local Government: Municipal Systems Act, 2000 (Act No. 32 of 2000); and

(c) is not disqualified from receiving the incentive—

(i) by the Minister of Finance in accordance with section 5(1)(b), due to the displacement of an employee by virtue of section 5(2); or

(ii) by not meeting such conditions as the Minister of Finance, after consultation with the Minister of Labour, may prescribe by regulation, including—

(aa) conditions based on requirements in respect of the training of employees; and

(bb) conditions based on the classification of trade in the most recent Standard Industrial Classification Code issued by Statistics South Africa.