1. Levy System:

Employers pay a levy  into HRD Corp. The rate is generally 1% of the monthly wages (basic + fixed allowances) for companies with 10 or more Malaysian employees.

For companies with 5–9 Malaysian employees, there’s an option to register voluntarily, and the rate is 0.5%.

2. Purpose / Mission:

• - Build a more skilled, competent Malaysian workforce.
• - To promote continuous learning, upskilling, reskilling, and capacity building.
• - Support both employers and employees: employers get financial support to train staff; employees get more development opportunities.
• - Aligns with national goals for economic growth and becoming a high-income, innovation-driven country.

3. How Funds Are Used:

• - Employers who contribute can claim back for training costs: external courses, in-house training, trainer fees, materials, travel, accommodation (if applicable) for approved programs.
• - HRD Corp has different training schemes (e.g., SBL-Khas) to support various types of learning.

4. Legal & Coverage:

• - Governed by the Pembangunan Sumber Manusia Berhad Act 2001.
• - In March 2021, HRD Corp expanded its coverage to all industries, so more companies may need to register and pay the levy.
• - Penalties exist for companies that should register but don't: fines or even imprisonment.

. The HRD Levy is a mandatory monthly contribution imposed on certain employers by HRD Corp (formerly HRDF).

. Its purpose is to build a fund that supports training, upskilling, and development of Malaysian workers.

. The levy is collected under the Pembangunan Sumber Manusia Berhad Act 2001 (PSMB Act).

. Companies with 10 or more Malaysian employees: They must register with HRD Corp, and pay a 1% levy on the eligible payroll.

. Companies with 5–9 Malaysian employees: They have the option to register, and if they do, they pay a 0.5% levy.

- When employers pay the levy, they become eligible for training grants from HRD Corp.

- These grants can help subsidize training costs for their employees, especially for upskilling / reskilling programs.

- Employers need to apply before sending employees for training; then after completion, they can claim back approved expenses (up to the approved limit).

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'simportant 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.