Companies in the Manufacturing, Services, or Mining & Quarrying sectors are required to register with HRDF if they employ 10 or more Malaysian employees. For companies with 5 to 9 Malaysian employees in these sectors, registration is optional under the Pembangunan Sumber Manusia Berhad Act, 2001 (PSMB Act 2001).

The eligibility rate of levy payment for employees registered under HRDF rate can be explained by using the following table: 

What wages are subject to HRDF levy?

The levy is calculated based on wages, which include:

• Basic salary

• Fixed allowances

• Other fixed cash payments (including leave pay and arrears of wages)

Payments not subject to levy calculation:

• Bonuses and commissions

• Gratuity on discharge/retirement

• Employer contributions to funds/schemes

• Travel, petrol, or transport allowances

• Apprenticeship payments

• Special expenses

Examples of variable allowances not counted towards the levy: 

• Overtime
• Night/shift allowance
• Attendance allowance (if the amount changes monthly)
• Production incentive, and other similar variable payments.

How is the HRDF contribution calculated?

For the company with 10 or more Malaysian employees, the HRDF will be calculated using this formula:

For the company with 5-9 Malaysian employees, the HRDF will be calculated using this formula:

➡ More details: Levy Calculation Guideline

What happens if my company registers but doesn’t pay the levy?

Failure of payment before the stipulated time will result in;

➡ Source: HRD Corp