The Employment Tax Incentive: Free Money for Hiring Young Workers
There is a SARS incentive that pays employers to hire young people — genuinely, in cash, every month — and a surprising number of eligible businesses never claim it. The Employment Tax Incentive is not a refund you wait for; it is a PAYE reduction you take on every EMP201. Here is who qualifies and how to claim without tripping the forfeiture rules.
- ✔ETI is worth up to R1,500/month per qualifying employee in year one.
- ✔Qualifying: aged 18–29, earning R2,500–R7,500/month, valid ID.
- ✔Claim by reducing PAYE on the EMP201 — immediate cash benefit.
- ✔Your own tax compliance is the gate: non-compliant employers cannot claim.
Who qualifies for the Employment Tax Incentive
- Age: 18 to 29 years old at the end of the month claimed.
- Earnings: between the minimum (R2,500/month, or the national minimum wage equivalent for the hours worked) and R7,500/month.
- Identity: a valid South African ID, asylum seeker permit or refugee ID.
- Not connected: not a domestic worker, and not a connected person to the employer (no hiring the family).
- Employer side: registered for PAYE and tax-compliant across all taxes.
The value scales with earnings: up to R1,500 a month in the first 12 months of qualifying employment and R750 a month in the second 12. Three qualifying employees is worth up to R54,000 in year one — real money against a junior wage bill. The full mechanics are in the ETI guide.
How to claim the ETI on the EMP201
The ETI traps that forfeit the benefit
If you have any outstanding return or tax debt (without arrangement) on any tax — VAT, income tax, anything — the ETI claim for that period is forfeited and can be reversed with penalties. Employers sometimes claim ETI while an old return sits unfiled: the incentive evaporates and the reversal hurts.
Other classics: claiming for employees under the minimum wage floor, for months after the employee turned 30, or rolling claims past the 24-month limit. None is complicated; all are checked. Model the numbers with Admin Boss’s free PAYE & UIF calculator, and read the payroll pillar guide for where ETI fits the monthly cycle.
Always confirm current requirements with the official source — rules and deadlines change.
- ✔Monthly PAYE/UIF/SDL calculations & EMP201 filing
- ✔Payslips and payroll records handled
- ✔Request a quote for your team size
Frequently asked questions
How much is the Employment Tax Incentive worth?
Up to R1,500 per month per qualifying employee in the first 12 months and R750 in the second 12 — scaled by earnings between R2,500 and R7,500 a month.
How do I claim the ETI?
On the monthly EMP201: calculate the ETI for qualifying employees and reduce the PAYE payable accordingly. There is no separate application — but your own tax affairs must be fully compliant to claim.
Can I claim ETI for a family member I employ?
No — connected persons to the employer are excluded, as are domestic workers. Qualifying employees must be aged 18–29 with valid IDs and earnings in the band.
Last reviewed: July 2026 · How we research our guides
EmployerGuide.online provides general information about South African employer obligations — not legal, tax or professional advice for your specific situation. Laws, rates and deadlines change; confirm current requirements with the official sources linked above, or ask Admin Boss. See our disclaimer.