The Human Resources Development Fund (HRDF), managed by HRD Corp, is a mandatory levy collected from employers to support employee training and skills development. Employers contribute to the HRDF fund based on the monthly wages of their employees.
Companies with 10 or more Malaysian employees must contribute 1% of each employee’s monthly wage.
Companies with 5 to 9 employees can voluntarily contribute at a rate of 0.5%.
The HRD levy encourages businesses to invest in upskilling their workforce, enabling them to adapt to the changing needs of their industries.
The HRD levy is a mandatory monthly contribution that employers make to HRD Corp (formerly HRDF), designed to fund employee training programs. This levy is collected under the Pembangunan Sumber Manusia Berhad (PSMB) Act 2001. Employers in certain industries with 10 or more Malaysian employees are required to contribute 1% of each employee’s monthly wage (basic salary plus fixed allowances). Employers with 5 to 9 employees can voluntarily contribrate of 0.5%.
While the levy contributions are intended to be used for the upskilling of employees, many employers do not take full advantage of these HRDF funds. To ensure employers actively invest in their employees’ training, HRD Corp has implemented a levy forfeiture policy. If an employer does not make any HRDF claims against the fund within a specific time frame, the unused levy will be forfeited.
To avoid losing these HRDF funds, businesses must stay informed about their HRDF payment schedules and HRDF claim processes.
The levy forfeiture formula is applied after a two-year period. It’s important to understand how the formula works so employers can avoid unnecessary forfeiture of HRDF funds.
The basic formula is:
Levy Balance (from 2 years ago) – Claims made within 2 years – Forfeiture Amount + Levy Contributed within 2 years = Available Balance
Levy balance (from 2 years ago): This is the levy balance available in the employer’s account at the start of the two-year period.
HRDF Claims made within 2 years: The total amount claimed by the employer for employee training or development programs within the last two years.
Forfeiture amount: This is the amount forfeited if the employer did not make any claims during the two-year period. HRD Corp has set a minimum retention balance of RM10,000. After forfeiture, the levy balance must not fall below RM10,000.
Levy contributed within 2 years: The total contributions made by the employer during the last two years.
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