It is every employer obligation to register with Human Resources Development (HRD Corp) — formerly HRDF — in order to avoid penalty up to RM10,000 or face imprisonment up to a year, or both according to PSMB Act 2001.
On 31 May 2021, the government has officially confirmed to exempt payment of HRD levy for June 2021 under the Permerkasa Plus initiative.
Even after the announcement made, many employers and HR can be seen raising their questions in popular Malaysian HR Facebook groups regarding the HRD levy. Although HRD Corp has released the FAQs about HRD levy exemption, some employers are still not aware about the HRD levy news and confused about how it works.
Seeing the amount of questions that were raised on Facebook, we at Swingvy have decided to compile every single information regarding HRD levy to guide every Malaysian HR professional and employer in this article.
Before we start, it's important to first check whether your company has been registered with the Human Resources Development Fund (HRD Corp). If your company has not registered with HRD Corp or make any HRD levy contributions, continue to read on. Otherwise, you may skip this part and jump straight into the article section of important dates to take note on HRD levy exemption.
What is HRDF (HRD Corp) in Malaysia?
Better known as HRDF which recently rebranded to HRD Corp — Human Resources Development Fund (HRD Corp) — is a government agency under the Ministry of Human Resources which is currently known as Pembangunan Sumber Manusia Berhad Act 2001 (PSMB).
The PSMB Act 2001 aims to provide for the imposition and collection of a human resources development levy for the purpose of promoting the training and development of employees, apprentices and trainees, the establishment and the administration of the Fund by the Corporation and for matters connected therewith.
On 26 February 2021, the PSMB Act 2001 has been amended and gazetted, to improve its regulatory and funding support while streamlining the eligibility criterion of Malaysian employers across all industries, effective from 1 March 2021.
The expansion is a crucial step towards overall development of Malaysia's human capital to increase the number of skilled local workers.
Who should register with HRD Corp?
Companies with 10 or more Malaysian employees are required to register, while a company with 5 to 9 Malaysian employees are optional.
According to the expansion scope of PSMB (Amendment of First Schedule) Order 2021 (PSMB Order 2021), below is the list of industries which are subject to the levy.
What is HRD levy and how is HRD levy calculated?
If your company falls under the act are obligated to register with HRD Corp and requires to contribute HRD levy every month. The levy fee for registered employers is 1% of the monthly salary of each employee. In comparison, employers under the optional category who choose to register will be 0.5% of each employee's monthly salary.
HRD levy = HRD levy% x ( Basic Salary + Fixed Allowances)
To find out more details on how the percentage is imposed on employee salary, visit page 3 of this PDF file prepared by HRDF. Additionally, the employer shall make all HRD levy payments no later than the 15th day of the following month. For example, the levy for March 2021 must be paid on or before 15th April 2021.
How to register for HRDF?
Below is the step-by-step guide to register with HRD Corp:
- Step 1: Ensure you have scanned required documents (form ROC/ROB, form 8, form 9, form B; latest EPF/SOCSO; company's profile/annual report)
- Step 2: Visit HRD Corp website to download checklist
- Step 3: Once you have go through the checklist, submit your registration via Form 1 here
For more information on submitting your HRD application, you may visit HRD Corp's website here.
How can I make use of the HRD contribution?
Skim Bantuan Latihan (SBL) is the main scheme provided by HRD Corp to encourage employers to retrain and upgrade their employees' skills according to their operational and business requirements.
Under Skim Bantuan Latihan (SBL), employers are free to identify their own training needs and implement the training programme in stages.
For more detailed information on Skim Bantuan Latihan (SBL) type of training, visit here.
How can I claim HRD?
Claims application can be made online via eTRiS portal under Skim Bantuan Latihan (SBL). Read the guide here on how to make your HRD claims.
Your application should include the required document as below:
Application Required Document:
- Online application through eTRiS system
- Invoice / Quotation
- Training Schedule / Course Content
- Trainer's Profile
Claim Required Document:
- Itinerary (airfare) - if any
- Receipt & Invoice (transportation) - if any
Notable training programmes must commence within six (6) months from the date of training grant applications are made, and training claim submissions must be made not more than six (6) months from the date the training programmes are completed.
HRD levy exemption under PEMERKASA+
Under Permai, it was announced that companies which were unable to operate during MCO and CMCO periods are to be exempted from HRD levy. Subsequently under PEMERKASA, it was announced that companies in tourism and retail sectors are to be exempted from HRD levy up to June 2021.
Under PEMERKASA+ which was announced on 31 May 2021, the HRD levy exemption will be extended to all employers registered with the HRD Corp for the month of June 2021.
Now, here's where things get tricky for employers registered with HRD Corp. Although it is said that there will be an exemption given to all registered employers, not all companies are eligible for 6 months exemption.
Below is the HRD levy exemption period for the registered companies falling under the scope of:
- Expanded scope (PSMB Order 2021): 6 months exemption for new companies registering with HRD Corp from 1 Mar - 30 June 2021
- Original scope (PSMB Act 2001): 1 month exemption for existing HRDF registered companies
Note: If you register with HRD Corp this year, most likely you will be falling under the expanded scope which means you will get 6 months exemption. Otherwise, HRD Corp representative will directly confirm with you.
Important FAQs on HRD levy exemption
Q1: Do employers need to make application for the levy exemption?
No. All registered employers from the Tourism and Retail sectors will automatically be exempted from paying the HRD levy
Q2: For which months are employers exempted from levy contributions?
Employers are exempted from paying levy for the months of January 2021 to June 2021. Please refer to Table 1 below:
Q3: When do employers resume their payment after the 6 months’ levy exemption?
Employers are required to resume their levy payment for the month of July 2021 with levy payment made before or on 15 August 2021. (Please refer to Table 1 above)
Q4: Will employers’ levy statement show any levy amount during the exemption period?
No. During the levy exemption period from January 2021 to June 2021, employers’ levy statement will be stamped as Zero Levy.
Q5: Will there be any refund for employers who have made levy payment during this exemption period?
Yes. Any levy payments that are exempted during the six (6) months period will be automatically refunded to the employers. The employers do not have to apply for a refund.
Q6: Are employers exempted from paying levy or interest arrears during the levy exemption period?
No. Employers are not exempted from paying their levy or interest arrears during the exemption period.
Q7: Can employers defer their levy or interest arrears repayments?
Employers with outstanding levy arrears are advised to continue paying the arrears without delay to avoid new charge of Interest.
Q8: Can employers submit their training claim(s) during the exemption period?
Yes. HRDF registered employers can continue with their training claim submission(s) during the six (6) months exemption period as long as their available levy balance exceeds 50 per cent of the total amount claimed.
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For more questions regarding to HRD levy exemption, you may refer to this latest FAQ sheet prepared by HRD Corp.
If you would like to get in touch with HRD Corp representative, you may contact HRD Corp Call Centre at:
- Call Centre (Toll Free) : 1800 88 4800
- Email: support@hrdf.com.my or levysupport@hrdf.com.my
How can I add the HRD levy in Swingvy Payroll Software?
Swingvy payroll software is approved by LHDN / IRB will automatically calculate your HRD contribution - all you need to do is just check off the box for "contribute to HRDF" in the system. Read more here.
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