The 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.
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 RM10,000.00 and/or face imprisonment of up to a year (Section 13 (2)).
Firms with 10 or more local workers are obliged to register with PSMB, while firms with 5 to 9 local workers have the option to register.
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
PayrollPanda can auto-calculate your HRDF contribution - for more information please refer to this help article.