The Human Resources Development Fund (HRDF) was established under the legal requirements of the Human Resources Development Act 1992 (currently known as the Pembangunan Sumber Manusia Berhad Act 2001). The HRDF is a pool of funds that consists of Human Resources Development levies collected from employers of the manufacturing and service sectors as listed in the First Schedule of the Pembangunan Sumber Manusia Berhad Act 2001 (liable registrants) as well as optional registrants.
In a simpler way to say, the HRDF was established with the aim of developing quality human capital and world-class workforce in order for Malaysia to achieve a high-income economy based on knowledge and innovation.
Who is eligible to register with HRDF?
From 1 March 2021, access to HRDF is expanded to all industries. Firms with 10 or more local employees are obligated to register, while firms with 5 to 9 local employees have the option to register.
Any employer who is required to register but has not registered with HRDF could be fined up to RM10,000 and/or face imprisonment of up to a year.
Important Note: Employers under the newly-included industries are given an exemption from HRDF levy for 3 months from 1 March to 31 May 2021.
How is the HRDF levy calculated?
HRDF levy for each Malaysian employee = HRDF Levy% x (Basic Salary + Fixed Allowances)
|Number of Malaysian Employees||Imposed rate of HRDF levy|
|10 or more Malaysian Employees||1 % of the monthly wages of each of their Malaysian employees|
|5 to 9 Malaysian employees||0.5 % of the monthly wages of each of their Malaysian employees|
For more information on which allowances to include in the calculation, please read here.
Please note, as per HRDF regulations, once you reach 10 Malaysian employees you must continue contributing at 1% for the whole calendar year even if your headcount falls to fewer than 10 employees during the year.
Payment is due no later than the 15th of the following month.
Example of HRDF levy calculation:
If you are contributing 1% and your employee earns RM3,000 plus a fixed allowance of RM250, the calculation for the HRDF levy for that employee is as follows:
(RM3,000 + RM250) * 1% = RM32.50
HRDF Registered Training Provider
HRDF Registered Training Provider refers to the company or organisation that acts as a Training Vendor to HRDF Registered Employers. In general, HRDF registered employers are allowed to make claims by attending trainings conducted by HRDF Registered Training Providers.
The employers under the scheme are eligible for receiving a grant from the fund to spend on their employee training program. The grants offered by the HRDF are quite capable of handling a major portion of the expenses incurred in organizing such training, if not all. It also provides financial aid to employers who are organizing this training.
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