What is HRDF Levy and Which Employers are Appropriate to Contribute?

What is the HRDF Levy?

HRDF's work is a compulsory retaliation payment collected by the Human Resource Development Fund (PSMB), taken from entrepreneurs in certain industries. The objective is to improve the training and skills of Malaysian workers.

Who is appropriate to register with HRDF (PSMB)?

Employers from this area are required to register with PSMB in agreement with PSMB Act 2001, Section 13 (1). Any employer who is not registered with PSMB can face a fine of up to RM 10,000, confinement for one year or both (Article 13 (2)).

Companies with 10 or more local employees are required to register with PSMB, while companies with 10 or fewer local functions have the option to register.

The Amendment of the First Schedule came into effect 1 April 2017, in summary it states:

Amendment	Imposed rate of HRDF Levy
To regulate the at least number of local employees to register with PSMB to ten (10) for all employers under the current coverage and to delete the requirement for paid up capital for the Manufacturing, Mining and Quarrying sectors.	1 % of the monthly wages of each of their Malaysian employees
To allow for voluntary registration to all employers under the existing 63 sub-sectors that employ five (5) to nine (9) local employees	0.5 % of the monthly wages of each of their Malaysian employees

What are the HRDF contribution rates?

HRDF levy payments are based on employer eligibility (mentioning the number of local workers). The contribution rates are:

·         Employers under 10 local workers pay a 0.5% levy.

·         Employers who have 10 local workers and more pay a levy of 1%.

How is HRDF calculated?

HRDF Retribution = HRDF Retribution% x (Basic Salary + Fixed Benefits).

Read Also: The Registration Process of HRDF in Malaysia