Should Age Matter When Hiring? Understanding the ETI Advantage

Diverse group of professionals of varying ages in a meeting, symbolizing age inclusion in the workplace — banner for blog post titled 'Should Age Matter When Hiring? Understanding the ETI Advantage.

When hiring new staff, many South African business owners—especially our ONQ clients—often focus on skills and experience. But there’s one factor that may also affect your bottom line: the age of the employee. If you’re not factoring this in, you could be missing out on valuable tax relief through the Employment Tax Incentive (ETI).

Here’s what you need to know about how age, income level, and location can affect your ETI eligibility—and why it should form part of your employment decision-making process.

What is the Employment Tax Incentive?

The Employment Tax Incentive (ETI) is a government initiative designed to encourage job creation by reducing the cost of hiring young and less experienced workers. Employers who meet the criteria can reduce their monthly PAYE liability for up to 24 months per qualifying employee.

 

Who Qualifies for ETI?

 

To claim the ETI, both your business and the employee need to meet specific requirements.

For the employee to qualify, they must:

  • Be between 18 and 29 years old, unless employed in a recognised Special Economic Zone (SEZ)
  • Earn at least the prescribed minimum wage (or sectoral wage) and less than R7,500 per month
  • Have been employed on or after 1 October 2013
  • Work a minimum of 160 hours per month (prorated if fewer hours)
  • Not be a domestic worker
  • Not be a connected person to the employer (e.g. family member, shareholder)

Employees with valid South African ID documents, asylum seeker permits, or recognised refugee status may qualify.

ETI Brackets: April 2025 Update

The ETI amounts you can claim depend on the employee’s monthly remuneration. As of 1 April 2025, the revised SARS brackets are:

Months 1–12 (first year of employment)

  • R0 – R2,499.99 → 60% of monthly remuneration
  • R2,500 – R5,499.99 → Fixed amount of R1,500
  • R5,500 – R7,499.99 → R1,500 less 75% of amount above R5,500

Months 13–24 (second year)

  • R0 – R2,499.99 → 30% of monthly remuneration
  • R2,500 – R5,499.99 → Fixed amount of R750
  • R5,500 – R7,499.99 → R750 less 37.5% of amount above R5,500

There is no ETI if the employee earns R7,500 or more.

When Age Doesn’t Matter: SEZ Exemption

If your business operates within a Special Economic Zone, the age restriction falls away. You may claim the ETI for qualifying employees over 29, provided all other criteria are met.

This is particularly useful for skilled technical hires who may not fall within the typical youth category but still earn within the eligible income bracket.

Common ETI Disqualifications

You cannot claim the ETI if:

  • You hire someone to replace an existing employee just to benefit from the incentive (SARS may apply a R30,000 penalty per displaced worker)
  • You underpay the required minimum wage
  • You or your business is not registered for PAYE
  • The employee is a related party or does not meet the legal documentation requirements
  • You submit false ETI claims or fail to maintain proper records

Real-World Example

Let’s say you hire a 24-year-old office assistant earning R5,000 per month. Under the updated brackets:

  • You can claim R1,500 per month for the first 12 months
  • Then R750 per month for the next 12 months

That’s R27,000 in tax savings over two years—just for hiring one qualifying person.

What This Means for Your Hiring Strategy

While ETI should never be the only reason to hire someone, it’s a useful financial lever. For roles where multiple candidates are equally suitable, choosing a qualifying employee under the ETI may reduce your PAYE burden significantly.

It’s worth assessing each position to see:

  • Whether the role qualifies under ETI
  • If the candidate’s age and earnings fall within the ETI thresholds
  • Whether you can claim safely without triggering disqualification risks

Final Thoughts

In a tight economy, every rand counts. Factoring in ETI can give you a legal, SARS-approved way to reduce employment costs while creating opportunities for younger workers. Just make sure you stay compliant with the eligibility criteria and wage thresholds.

Disclaimer: This article is intended for general information purposes only and does not constitute professional tax advice. For tailored guidance, please speak to a registered tax practitioner.