Employment Tax Incentive (ETI) > Calculating ETI

This article provides information on how ETI is calculated.

ETI Tables

The value of the ETI the employer may claim per qualifying employee depends on the amount of the monthly remuneration paid to each of them. Employees’ remuneration can fall into one of three brackets, each with its own calculation. Furthermore, different calculations apply in the first and second years of the incentive.

*In determining the first or second 12 month period, only the months in which an employee was a qualifying employee are taken into account. For example, an employee may be a qualifying employee in their first three months but not a qualifying employee in the fourth and fifth months. If the employee is a qualifying employee in sixth month, the sixth month is month number four as far as the 12-month period is concerned.

Employees Working Less than 160 Hours per Month

Where an employee is employed for less than 160 hours in the month, the remuneration amount must be “grossed up” to 160 hours per month to calculate the value of the ETI. The ETI amount claimable can then be determined and “grossed down” in the same ratio. The ratio is determined by dividing 160 by the number of actual hours employed (discussed below).

Example

An employee works for 80 hours per month and earns R1 500. The employee is in their first 12 months of employment. The ETI is calculated as follows:

Remuneration

Remuneration for the purposes of calculating ETI follows the same definition of remuneration in the Fouth Schedule. It there includes all income (including commission and overtime), benefits and allowances.

Actual Hours Employed

When determining whether an employee is employed for at least 160 hours during the month, the following calculations are done:

Fixed Salaried Employees
Actual hours employed
= Scheduled hours as per Regular Hours screen
+ Additional normal hours
+ Overtime hours
– Unpaid leave
– Short hours
————————————————————-
Hourly Paid Employees
Actual hours employed
= Normal hours captured for Basic Salary under Payslip Inputs (the Regular Hours screen is ignored)
+ Overtime hours
+ Sunday hours
+ Public holidays worked
+ Public holidays not worked but paid for
+ Hours of paid leave
You are using the help system of SimplePay, a payroll system that simplifies the payroll process. Designed just for South Africa, it's a fully online solution. Read more.