ETI System Changes for Qualifying Months
To avoid unintentional misuse of our ETI functionality which could result in non-compliance with SARS, we’ve made a fundamental change to our system, effective from 1 September 2021. This stricter approach corrects the calculation of ETI months for employers who set ETI up incorrectly, which could result in a sudden spike in the number of qualifying ETI months applicable to an employee.
What is an ETI month?
An employer is entitled to claim ETI for an employee during the first 24 months of that employee’s qualifying employment. This means that every month that an employee meets the qualifying criteria counts as an ETI month towards the total allowable 24 months, regardless of whether or not the employer actually claims the ETI from SARS for those months.
The qualifying criteria states that the employee must:
- have a valid South African ID, Asylum Seeker permit or an ID issued in terms of the Refugee Act;
- be between 18 to 29 years old;
- have been employed by the employer or an associated person to the employer on or after 1 October 2013;
- be paid the minimum wage applicable to that employer or as prescribed in the Minimum Wage Act and not more than R6 500 remuneration;
- not be a domestic worker; and
- not be a connected person to the employer.
ETI Functionality Prior to 1 September 2021
SimplePay’s approach to ETI has always been to check criteria 1 – 3 above using the Basic Info page for an employee and to check criteria 4 by using the salary information captured on the payslip for the employee. When any of the criteria is not met, the employee does not qualify for ETI and it does not count as an ETI month.
For criteria 5 and 6, employers were expected to confirm that the employee meets the criteria and then enable ETI from the employee’s first qualifying month. Where an employee’s first qualifying month had passed, employers could use the Effective from field to backdate when the employee meets the criteria from.
Many employers incorrectly configured their settings so that ETI was only enabled from the month that the employer wished to start claiming ETI. This resulted in the system only counting ETI months from the date that it was incorrectly enabled and not from the month that the employee first qualified for ETI. As a result, some employers’ claims for ETI were rejected by SARS, in cases where they had claimed ETI for employees where the full 24 month qualifying period had already passed.
ETI Functionality From 1 September 2021
From 1 September 2021, SimplePay will assume that all employees meet criteria 5 and 6 and will automatically calculate the ETI months for all periods where criteria 1 – 4 are met from the employee’s appointment date. Where an employee does not meet criteria 5 and 6, the newly revamped Status field on an employee’s ETI Settings page can be used to indicate this.
For more information on configuring the ETI Settings page, refer to our help page here.
This change to the functionality may result in a spike in the ETI months for an employee from September. For example, suppose that an employee was appointed from 1 January 2021. The employee qualifies for ETI from 1 March 2021 but the employer erroneously enabled ETI from 1 June 2021 only. At the end of August 2021, the ETI months under the old system functionality would be 3 months (June, July and August 2021). At the end of September 2021, the new system functionality would determine that the ETI months would be 7 (March – September 2021), rather than 4 (June – September 2021).
In order to effect the new functionality correctly, we have replaced the previously used “Months Unclaimed before Take On Year” field. This field was used to capture the qualifying ETI months which were not claimed by the employer before the Take On Year.
The field has been replaced by the “Disqualified months before starting to use the system” field which will appear on payslips from September 2021. The purpose of this new input is to capture the number of months for which the employee was disqualified from claiming ETI prior to using SimplePay and will allow us to accurately calculate the number of months the employee already qualified for during those months of employment before you started using the SimplePay.
- It’s important to note that you should not enter a value for this input unless you are 100% sure that the employee did not meet the qualifying criteria for ETI.
- Entering a value in this field incorrectly could result in overclaims of ETI.
What happens to your data?
When you previously added a new employee to the system, the Basic Info screen allowed you to choose an employee’s ETI status to reflect “Allow” or “Disqualified”. We have slightly changed the status options for you to ensure that claiming ETI is easy.
If an existing employee on the system was set to “Allow” the employee will now be set to “Qualified – Claiming” This means that the system knows to calculate ETI for that employee and reflect this calculation.
Employees who were previously set to “Disqualified” will remain set on “Disqualified”
If the field was left blank, the employee will now be set to “Qualified – Not Claiming” This means that the system will not calculate ETI for the employee nor reflect any calculations.
Please note the following:
If the ETI field is left blank, the employee’s status will default to “Qualified – Not Claiming”
When adding employees using the bulk excel option, all employees will default to “Qualified – Not Claiming”
Read more about how to correctly use the updated ETI functionality on our help page here.