How to apply for a SETA discretionary grant, and why most employers never do

Ask an employer what they get back from the skills development levy and, if they know anything at all, they will say twenty percent. That is the mandatory grant, and it is the smaller of the two routes.

The larger one is the discretionary grant, funded from 49.5% of levy income. Almost nobody outside the field applies for it, and the reasons are structural rather than a lack of interest.

What is the difference between a mandatory and a discretionary grant?

These two grants behave nothing like each other, and treating them as one thing is why employers budget wrongly.

The mandatory grant is close to an entitlement. Submit a compliant Workplace Skills Plan and Annual Training Report by 30 April and 20% of what you paid comes back. It is predictable, it is proportional to your own levy, and it requires no persuasion.

The discretionary grant is a competition. The money is pooled across every levy payer in the sector, and the SETA allocates it against its own priorities for the year. Your levy contribution buys you eligibility, not a share. Employer guidance is unusually blunt about this, warning that paying for an accredited course does not guarantee a mandatory grant, and certainly does not guarantee discretionary funding.

The mandatory grant is what you are owed. The discretionary grant is what you can win. An employer who only ever claims the first is leaving the bigger number untouched.

Where one year of your skills development levy goes

SARS collects 1% of your payroll every month. This is what happens to it, as a share of the total levy paid.

• 20%Mandatory grant. Returned to you on a compliant WSP and ATR lodged by 30 April.
• 49.5%Discretionary pool. Applied for competitively, in windows the SETA sets. Not proportional to what you paid.
• 10.5%SETA administration. Does not come back.
• 20%National Skills Fund. Funds national priorities. Does not come back.

Why do most employers never apply for a discretionary grant?

The windows are not advertised to you

Discretionary grant windows open and close on the SETA's own schedule, published on the SETA's own channels. There is no reminder in the post and no notification from SARS. If nobody in your organisation is watching that specific SETA's announcements, the window opens and closes without you knowing it existed.

This is the single biggest reason employers miss out, and it is entirely a monitoring problem rather than a merit problem.

The application is a motivation, not a form

A mandatory grant claim is largely data. A discretionary application argues a case. It has to say what you will deliver, to whom, through which accredited provider, against which scarce or critical skill in the sector, and what happens to those people afterwards.

Employers used to compliance paperwork are often surprised by how much of it is persuasion.

The eligibility gate sits upstream

Discretionary funding is generally only open to employers who are already compliant, which in practice means a submitted WSP and ATR and an active SDL registration. An employer who has never submitted is not competing badly, they are not competing at all.

That has an awkward consequence. The employers who most need the funding are frequently the ones locked out of it, because the compliance history that qualifies them is the thing they have never built.

What do SETA discretionary grants pay for?

It is targeted at structured programmes with an outcome, not at general training spend. Typically that means learnerships, apprenticeships and artisan development, bursaries, internships and work-integrated learning, skills programmes aligned to scarce and critical skills, and recognition of prior learning projects.

Note what is missing. A day of in-house induction, a supplier product demonstration or an unaccredited short course are not what this money is for, however genuinely useful they are to your business.

What order do the steps have to happen in?

The steps are simple. Doing them out of order is what fails.

1. An active SDL registration with SARS.
2. An appointed Skills Development Facilitator, registered and accepted by your SETA before they act.
3. A submitted WSP and ATR, which unlocks the mandatory grant and establishes the compliance history.
4. Monitoring for the discretionary window on your specific SETA's channels.
5. An application built around a scarce skill the SETA has named as a priority.
6. Delivery through an accredited provider, so the spend counts for the grant and for B-BBEE.

Employers who start at step five, because they have heard there is funding available, discover the first four are prerequisites and the window has closed by the time they are met.

What makes a discretionary grant application competitive?

Two things separate applications that are funded from applications that are filed.

The first is alignment. Every SETA publishes a sector skills plan naming the occupations it considers scarce or critical. An application for training in one of those occupations is arguing with the grain. An application for something the sector has not prioritised is asking the SETA to fund your preference over its own strategy.

The second is absorption. A programme that ends with the learner employed is worth more than one that ends with a certificate, both to the SETA assessing it and to your own B-BBEE scorecard, where absorption carries bonus points. We cover how that works in the piece on where the twenty scorecard points come from.

The part employers underestimate

A funded programme is not the end of the work. Discretionary grants come with reporting obligations, learner agreements, monthly attendance records and completion evidence. Programmes fail on that administration far more often than they fail on the learners.

An employer who wins funding and then loses the paperwork has taken on an obligation and forfeited the benefit, which is a worse position than never applying.

What the money actually funds, in more detail

Learnerships

The most commonly funded item, and the one with the widest reach. A learnership combines structured theory with workplace experience under a registered agreement between employer, learner and accredited provider. Funding usually attaches per learner, and applications involving unemployed learners are generally treated more favourably because they address the sector's employment mandate as well as its skills mandate.

Apprenticeships and artisan development

Where the sector has a trade shortage, this is often where the largest allocations sit. Construction, engineering and manufacturing SETAs in particular direct significant funding here, because artisan scarcity is a named national problem rather than a sector preference.

Bursaries

Study funding, generally aimed at qualifications tied to scarce skills in the sector. Some SETAs run these for existing employees, some for unemployed candidates, and a few for both. The eligibility rules differ enough between SETAs that assuming a neighbour's experience applies to you is unwise.

Internships and work-integrated learning

Placements for graduates who have completed the academic component of a qualification and need workplace exposure to complete it. Administratively lighter than a learnership, and often overlooked for that reason.

Skills programmes and recognition of prior learning

Shorter credit-bearing interventions, and RPL projects that formally assess people who can already do the job. RPL is particularly underused in the trades, where a workforce competent by twenty years of practice holds no certificate for any of it.

What a competitive application actually contains

A mandatory grant claim is data. A discretionary application is an argument, and it is assessed against other employers' arguments.

• The occupation, named. Not "training for our production staff" but the specific occupation, ideally one on the SETA's own scarce and critical skills list.
• The numbers. How many learners, employed or unemployed, over what period.
• The provider. Named, accredited, and accredited for that specific qualification rather than accredited in general.
• The workplace component. Who supervises, what they will actually do, how competence is assessed.
• What happens afterwards. Absorption into employment is the outcome the SETA is funding, and an application that is silent on it is weaker than one that commits.
• Your compliance record. Submitted WSP and ATR history, which is what makes the rest of it credible.

Can a small employer win a discretionary grant?

There is a widespread assumption that discretionary funding is for large employers. It is not, but the process does favour organisations with somebody watching for windows, which in practice means large ones.

A smaller employer competes better by being specific rather than ambitious. One learnership in a named scarce occupation, with a provider already identified and a real vacancy at the end of it, is a stronger application than a general request for training support across the workforce. It is also far easier to administer once awarded, which matters more than employers expect.

What are you obliged to do once a grant is awarded?

An awarded grant is a contract, not a windfall, and the reporting obligations run for the life of the programme.

Expect signed learner agreements, monthly attendance records, progress reporting against milestones, evidence of the workplace component, and completion documentation. Some SETAs pay in tranches against those milestones rather than up front, which means an administrative lapse mid-programme stops the money rather than merely annoying somebody.

This is where funded programmes fail, and they fail quietly. The learners are fine, the training is delivered, and the file cannot demonstrate it. An employer in that position has taken on the obligation and forfeited the benefit.

A realistic timeline

Employers routinely underestimate how far ahead this has to start.

1. Now. Confirm SDL registration and which SETA you are actually in.
2. Before 30 April. Submit the WSP and ATR. This is the eligibility gate for everything below it.
3. Through the year. Watch the SETA's channels for window announcements. There is no reminder.
4. Before the window opens. Identify the occupation, the provider and the vacancy. Applications assembled after a window opens are visibly rushed.
5. Window open. Submit, with the compliance history attached.
6. After award. Contract, register the learners with the SETA, and set up the monthly administration before the programme starts rather than after.

Where to start if you have never applied

Find out which SETA you are actually registered with, because the windows, the priorities and the portal are all specific to it. If you are not certain, that is worth settling first, and our sector and SETA guide sets out how the mapping is decided.

Then get the mandatory grant right. It is smaller, but it is predictable, and it builds the compliance record that discretionary funding is gated behind. If your last submission was queried or rejected, the piece on why submissions fail is the place to start.

If you would rather have someone watch the windows for your SETA than watch them yourself, that is part of what an appointed SDF does, and our services page sets out the scope.

Sources used: SARS on the skills development levy, MICT SETA and HWSETA guidance on mandatory and discretionary grants.