What is HRDF Levy and which employers are eligible to contribute?

What is HRDF Levy?

HRDF levy is a mandatory levy payment collected by the Human Resources Development Fund ( PSMB) imposed on employers from certain industries. The purpose  is to enable employee training and skills upgrading of the Malaysian workforce.


Who is eligible to register with HRDF (PSMB)?

Employers from these sectors are required to register with PSMB as per the PSMB Act 2001, Section 13(1). Any employer who is not registered with PSMB could be fined up to RM 10,000.00, face up-to a year imprisonment or both (Section 13 (2)).

Firms with 10 or more local workers are obliged to register with PSMB, while firms with 10 or less local works 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 standardise the minimum number of local employees to register with PSMB to ten (10) for all employers under the existing 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?

Payment of HRDF levy is based on the eligibility of employers (referring to the number of local workers). Contribution rates are:

  • Employers that have below 10 local workers pay a levy of 0.5%.
  • Employers that have 10 and above local workers pay a levy of 1%.


How is HRDF calculated?

HRDF levy = HRDF Levy% x (Basic Salary + Fixed Allowances).


How can I add HRDF levy in PayrollPanda?

PayrollPanda can auto-calculate your HRDF contribution, please refer to this help article.

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