An employer is entitled to claim ETI for an employee during the first 24 months of that employee’s qualifying employment. This page defines the concept of ETI qualifying months and how these are determined on SimplePay.
What are Qualifying Months?
Every month that an employee meets the qualifying criteria counts as an ETI qualifying month towards the total allowable 24 months. This means that even if the employer does not actually claim ETI from SARS for those months, it is still considered a qualifying month. Therefore, employers who have only recently learnt about ETI or recently started claiming ETI for their company cannot claim the full 24 months of ETI if the employee would have qualified for ETI in an earlier period.
Qualifying Months on SimplePay
If the Status under an employee’s ETI Settings are set to “Qualified – claiming” or “Qualified – not claiming”, each month from when the employee was added to the SimplePay system will count as a qualifying month, provided that the remaining qualifying criteria is met.
If the Status under an employee’s ETI settings are set to “Disqualified”, then each month since they were added to the SimplePay system will not count as a qualifying month, until the Status field is updated to “Qualified”, along with an effective date for when this applies.
For any months that an employee was employed by the company prior to using SimplePay, the qualifying months elapsed will be determined by calculating the number of months from the appointment date until the take-on period, less any months that the employee didn’t meet the criteria, as entered into the Disqualified months before starting to use the system field on an employee’s ETI Settings page.
Example
An employee is appointed on 1 January 2020. The company starts using SimplePay to process payslips for the employee from 1 January 2022. In the period 1 January 2020 – 1 January 2022, the employee qualified for ETI each month, except for March, April and May 2020. The company only claimed ETI from 1 January 2021, when they learnt about the incentive for the first time. The employee qualified for ETI in January 2022, but did not qualify for ETI in February or March 2022. Calculate the number of ETI qualifying months that have elapsed and the number of months that ETI can still be claimed for.
- The payroll administrator should enter “3” into the Disqualified months before starting to use the system field.
- Qualifying months prior to using the system = 21 (1 January 2020 – 1 January 2022 is 24 months, less 3 months that they didn’t qualify for ETI; the number of months actually claimed is irrelevant).
- Qualifying months since using the system = 1 (January 2022 was a qualifying month)
- Total qualifying months = 22
- Number of months that ETI can still be claimed for = 2 (24 total months – 22 qualifying months)