If you employ young people in South Africa, the Employment Tax Incentive (ETI) can put real money back in your pocket every month — yet many small employers don't claim it. Here's how it works.
What is ETI?
ETI is a government incentive that reduces the PAYE an employer pays over to SARS for qualifying young, lower-wage employees. It's designed to make it cheaper to hire young people and tackle youth unemployment. Crucially, it doesn't cost the employee anything — it's a discount on your PAYE bill.
Who qualifies?
An employee generally qualifies if they:
- Are 18 to 29 years old
- Have a valid South African ID (or asylum-seeker/refugee permit)
- Earn between roughly R2,000 and R6,500 a month
- Were employed on or after 1 October 2013
- Are within their first 24 months of qualifying employment with you
Connected persons (like family in certain cases) and domestic workers are excluded.
How much can you claim?
The incentive is highest in the employee's first 12 qualifying months, and halves in the second 12 months:
- Wages under R2,000/month: 75% of the wage (first year), 37.5% (second year)
- R2,000 – R4,500/month: a flat R1,500/month (first year), R750 (second year)
- R4,500 – R6,500/month: tapering down to R0 as the wage approaches R6,500
- Above R6,500: no ETI
So a qualifying employee earning R4,000 a month can save you R1,500 a month in PAYE in their first year.
How you claim it
You don't apply separately — you simply reduce the PAYE on your monthly EMP201 by the ETI you're entitled to, and keep records to prove eligibility. If your ETI is more than your PAYE in a month, the excess can roll over within the six-month cycle.
Don't leave it on the table
ETI is easy to miss because it depends on each employee's age, wage and months of service — details that change over time. 360books works out ETI automatically on every payslip and applies it to your EMP201, so you claim exactly what you're owed, every month.