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Every year on 16 June, South Africa pauses to remember the students of Soweto who marched in 1976. Young people who demanded better. Young people who paid an enormous price for it.
It feels right, on that day, to ask what we’re actually doing for young South Africans today.
The numbers are uncomfortable. Youth unemployment in South Africa sits above 45%. That means nearly half of people between the ages of 15 and 34 who want to work can’t find it. For many of them, the problem isn’t ability or willingness — it’s the gap between leaving school and getting that first chance.
Employers can help close that gap. And SARS will reduce your tax bill when you do.
The Employment Tax Incentive — most people call it the ETI — was introduced in 2014 specifically to encourage South African employers to hire young, less experienced workers. It works by letting you reduce the amount of PAYE you remit to SARS each month, based on how many qualifying young employees you have on your payroll.
It doesn’t reduce what your employee earns. Their salary stays exactly the same. The saving comes off your tax liability.
The ETI has been extended and is currently available until 28 February 2029, with updated thresholds that came into effect on 1 April 2025.
For an employee to qualify, they need to meet a few criteria:
Age: Between 18 and 29 years old at the end of the month you’re claiming for. There’s no upper age limit if your business operates in a Special Economic Zone.
ID documentation: A valid South African ID, asylum seeker permit, or ID issued under the Refugees Act.
Salary: Their monthly remuneration must fall between R2 500 and R7 500. The incentive tapers to zero above R7 500.
Employment date: They must have been employed on or after 1 October 2013.
Not a connected person: You can’t claim ETI for a family member or someone who is a connected person in relation to your business.
Not a domestic worker: Domestic workers are excluded from the ETI.
One important point — from 1 March 2025, SARS introduced a 100% penalty on incorrectly claimed ETI amounts. This means it’s worth getting it right. If you’re unsure whether an employee qualifies, ask someone who knows.
Updated from 1 April 2025, the maximum ETI value is R1 500 per qualifying employee per month for the first 12 months of employment, dropping to R750 per month for months 13 to 24.
For a business with three qualifying young employees, that’s potentially R4 500 off your PAYE bill every month in year one. R54 000 over the first year. It’s real money.
The calculation tapers as salary increases — the full R1 500 applies to employees earning between R2 500 and R5 500 per month. Above R5 500 it reduces, reaching zero at R7 500.
There’s no separate application form. No special process. You simply calculate the ETI amount for each qualifying employee and offset it against your monthly PAYE payment when you submit your EMP201.
That’s it. If the total ETI exceeds what you owe in PAYE for that month, the excess rolls over to the next month. SARS will also pay out any remaining balance twice a year.
The tricky part is making sure your payroll system is set up to calculate ETI correctly, track the 24-month employment window per employee, and apply the right formula at the right salary band. It’s not complicated when it’s set up properly — but if it’s not set up at all, you’re just leaving money behind.
That’s the part that surprises people. The ETI isn’t new, it isn’t obscure, and it’s not hard to access — but a large number of small and medium businesses in South Africa have never claimed it. Some don’t know it exists. Some think it’s for bigger companies. Some assume their payroll software handles it automatically when it doesn’t.
If you employ people between the ages of 18 and 29, earn below the salary threshold, and hold valid South African ID — there’s a reasonable chance you have qualifying employees right now and aren’t claiming the incentive.
The class of 1976 marched for opportunity. The least we can do is use the tools available to us to create some.
If you’re not sure whether your business is claiming ETI correctly — or at all — we’re happy to take a look. We’ve been managing payroll compliance for South African businesses for 35 years. Getting this right is exactly what we do.
021 001 7240 | help@payslip.co.za
Deadline to file department of Labour Compensation ROE is 31 May 2026. The new maximum assessment amount from 1 March 2026 is R 668 000 per annum. Payroll administrators please use this figure for the projected earnings capped amount when filing your Workmen’s Compensation Return of Earnings declarations.
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