Business Studies
Grade 12
,Term 1 Topic 1 Macro environment: impact
of recent legislation on business
Overview
This chapter covers the effects of the following legislation on South African businesses:
• Skills Development Act No. 97 of 1998
• Labour Relations Act No. 66 of 1995
• Employment Equity Act No. 55 of 1998
• Basic Conditions of Employment Act No.75 of
1997
• Broad Based Black Economic Empowerment Act
No. 53 of 2003
• National Credit Act No.34 of 2005
• Consumer Protection Act No.68 of 2008
1 Introduction
Recap what you learnt in grades 10 and 11 about the different macro environmental factors
that affect a business. The macro environment includes external and uncontrollable factors
that influence a business decision making, and affect its performance. These factors include
economic factors; demographics; legal, political, and social conditions; technological
changes; and natural forces.
Laws are an important part of the business world. The legal system is very complicated and
people who run businesses need to have a good understanding of it.
During the apartheid era, apartheid legislation determined where people were allowed to live and
work. Foreign countries who had invested in South Africa disinvested in protest against apartheid
policies and legislation.
© Via Afrika Publishers
,Disinvestment is when businesses or countries remove all of their investments from a country to
create an economic incentive for that country to change its policies. Disinvestment in South Africa
resulted in capital flight. Capital flight happens when money flows out of a country’s economy very
quickly as a response to a political event.
After 1994, many of South Africa’s laws, especially in the field of labour and the consumer,
were revised to create fair employment and trade conditions for all South Africans.
The responsibility for compliance with any of the Acts rests with management alone. Failure
to comply with the law can have serious consequences such as:
• Criminal or financial penalties
• Make members of a close corporation or directors of a company personally liable for
the businesses actions
• Give the business a bad reputation.
2 The Skills Development Act 97 of 1998 and the Skills Development Levies
Act of 1999
2.1 Nature and purpose
The Skills Development Act and the Skills Development Levies Act were passed in 1998 and
1999 respectively.
The reason behind this was that South Africa was not equipped with the skills it needed for
economic growth, social development and sustainable employment growth.
The National Skills Authority was established in terms of the Skills Development Act of 1998
and was made up of representatives from business, labour, government and other bodies
that reflected community and South African society.
The National Skills Development Strategy aims to:
• Develop the skills and learning capacity of employees
• Make it possible for employers to become more productive and competitive
• Reverse apartheid imbalances
• Create a more inclusive and cohesive society.
© Via Afrika Publishers
, Basic Guide to Skills Development Levies
Employers must pay 1% of their workers’ pay to the skills development levy. The money
goes to Sector Education and Training Authorities (SETAs) and the Skills Development Fund
to pay for training.
The Skills Development Levies Act applies to all employers except:
• The public service
• Religious or charity organisations
• Public entities that get more than 80% of their money from Parliament; and
• Employers –
o Whose total pay to all its workers is less than R 250 000 per year; and
o Who do not have to register according to the Income Tax Act.
SETAs:
• Develop sector skills plans in line with the National Skills Development Strategy
• Approve the workplace skills plans submitted by businesses in their sectors
• Promote and establish learnerships.
• Pay grants to participating businesses, provided that those businesses have
submitted workplace skills plans and implementation reports to their SETA.
2.2 Implications for small and large businesses
• All business can benefit from the skills development initiatives
• A motivated and well-trained work force adds value to the business
• HR managers, line managers and staff managers must know the requirements and
implications of the legislation
• The 1% Skills Development Levy must be paid within seven days after the end of the month
• To create a learnership a formal learnership agreement has to be entered into by both parties
• The employer has the following responsibilities: to employ the learner for the period specified in
the agreement, to provide the learner with practical experience, and to give the learner time to
attend the education and training specified in the agreement
• Employers can be fined or even imprisoned (for a period not exceeding one year) if they commit
an offence under the Skills Levy Act
• The Income Tax Act (also applicable to SLA), requires all employers to keep a record of all the
remuneration paid to every employee, as well as the Employees’ Tax deducted from the
employees’ remuneration and levies paid.
© Via Afrika Publishers
Grade 12
,Term 1 Topic 1 Macro environment: impact
of recent legislation on business
Overview
This chapter covers the effects of the following legislation on South African businesses:
• Skills Development Act No. 97 of 1998
• Labour Relations Act No. 66 of 1995
• Employment Equity Act No. 55 of 1998
• Basic Conditions of Employment Act No.75 of
1997
• Broad Based Black Economic Empowerment Act
No. 53 of 2003
• National Credit Act No.34 of 2005
• Consumer Protection Act No.68 of 2008
1 Introduction
Recap what you learnt in grades 10 and 11 about the different macro environmental factors
that affect a business. The macro environment includes external and uncontrollable factors
that influence a business decision making, and affect its performance. These factors include
economic factors; demographics; legal, political, and social conditions; technological
changes; and natural forces.
Laws are an important part of the business world. The legal system is very complicated and
people who run businesses need to have a good understanding of it.
During the apartheid era, apartheid legislation determined where people were allowed to live and
work. Foreign countries who had invested in South Africa disinvested in protest against apartheid
policies and legislation.
© Via Afrika Publishers
,Disinvestment is when businesses or countries remove all of their investments from a country to
create an economic incentive for that country to change its policies. Disinvestment in South Africa
resulted in capital flight. Capital flight happens when money flows out of a country’s economy very
quickly as a response to a political event.
After 1994, many of South Africa’s laws, especially in the field of labour and the consumer,
were revised to create fair employment and trade conditions for all South Africans.
The responsibility for compliance with any of the Acts rests with management alone. Failure
to comply with the law can have serious consequences such as:
• Criminal or financial penalties
• Make members of a close corporation or directors of a company personally liable for
the businesses actions
• Give the business a bad reputation.
2 The Skills Development Act 97 of 1998 and the Skills Development Levies
Act of 1999
2.1 Nature and purpose
The Skills Development Act and the Skills Development Levies Act were passed in 1998 and
1999 respectively.
The reason behind this was that South Africa was not equipped with the skills it needed for
economic growth, social development and sustainable employment growth.
The National Skills Authority was established in terms of the Skills Development Act of 1998
and was made up of representatives from business, labour, government and other bodies
that reflected community and South African society.
The National Skills Development Strategy aims to:
• Develop the skills and learning capacity of employees
• Make it possible for employers to become more productive and competitive
• Reverse apartheid imbalances
• Create a more inclusive and cohesive society.
© Via Afrika Publishers
, Basic Guide to Skills Development Levies
Employers must pay 1% of their workers’ pay to the skills development levy. The money
goes to Sector Education and Training Authorities (SETAs) and the Skills Development Fund
to pay for training.
The Skills Development Levies Act applies to all employers except:
• The public service
• Religious or charity organisations
• Public entities that get more than 80% of their money from Parliament; and
• Employers –
o Whose total pay to all its workers is less than R 250 000 per year; and
o Who do not have to register according to the Income Tax Act.
SETAs:
• Develop sector skills plans in line with the National Skills Development Strategy
• Approve the workplace skills plans submitted by businesses in their sectors
• Promote and establish learnerships.
• Pay grants to participating businesses, provided that those businesses have
submitted workplace skills plans and implementation reports to their SETA.
2.2 Implications for small and large businesses
• All business can benefit from the skills development initiatives
• A motivated and well-trained work force adds value to the business
• HR managers, line managers and staff managers must know the requirements and
implications of the legislation
• The 1% Skills Development Levy must be paid within seven days after the end of the month
• To create a learnership a formal learnership agreement has to be entered into by both parties
• The employer has the following responsibilities: to employ the learner for the period specified in
the agreement, to provide the learner with practical experience, and to give the learner time to
attend the education and training specified in the agreement
• Employers can be fined or even imprisoned (for a period not exceeding one year) if they commit
an offence under the Skills Levy Act
• The Income Tax Act (also applicable to SLA), requires all employers to keep a record of all the
remuneration paid to every employee, as well as the Employees’ Tax deducted from the
employees’ remuneration and levies paid.
© Via Afrika Publishers
