What is the HRDF Levy?
The HRDF levy is a mandatory levy payment collected by the Human Resources Development Fund (HRDF, also known as PSMB) imposed on employers from all industries. The purpose is to enable employee training and skills upgrading of the Malaysian workforce.
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 were originally given an exemption from HRDF levy for 3 months from 1 March to 31 May 2021. The exemption was then extended until Jan 2022 (no levy due for June to Dec 2021 payrolls).
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 this help article.
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
How can I add the HRDF levy in PayrollPanda?
PayrollPanda can calculate your HRDF contribution automatically - for more information please refer to this help article.