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Guide HRD Corp

HRD Corp levy: which employers must register and pay? A checklist

By [email protected]

Publisher's interest: our publisher, WeLearn2Profit, runs team-building and training programmes.

In short

Employers in covered industries with 10 or more Malaysian employees must register with HRD Corp. They pay a monthly levy of 1% of those employees' wages. Employers with 5 to 9 can choose to register and pay 0.5%. The levy is due by the 15th of the following month.

At a glance

The rule
Pembangunan Sumber Manusia Berhad Act 2001 (Act 612)
Issued by
Parliament (Act 612); administered by HRD Corp (Human Resource Development Corporation)
Who it affects
Employers in covered industries with 10 or more Malaysian employees; 5 to 9 may opt in
Key dates
Wider coverage: 1 March 2021
Levy due: by the 15th of the following month

HRD Corp collects a monthly training levy from many Malaysian employers. Employers can then use their levy balance to pay for approved training.

This guide covers who must register, how the levy is worked out, what to do, and what happens if you get it wrong.

Who must register

It depends on your industry and how many Malaysian employees you have. In the industries the Act covers:

  • 10 or more Malaysian employees: registration is compulsory. The levy is 1% of their monthly wages.
  • 5 to 9 Malaysian employees: registration is optional. If you register, the levy is 0.5%.
  • Fewer than 5: the Act does not cover you, but answer any letter HRD Corp sends (see the checklist).

Since 1 March 2021, the Act has covered 48 industries, from manufacturing and trading to education and health. HRD Corp says federal and state government, local councils and statutory bodies are not covered.

Some non-governmental organisations, such as unions, religious organisations and care homes, may register voluntarily if they have five or more employees.

Who counts as an employee

The Act counts Malaysian citizens employed for wages under a contract of service. Domestic servants are left out.

Foreign workers are not counted, because the definition covers citizens only. Directors count if they are paid a salary; a director who receives only director’s fees does not.

Part-timers are less clear. HRD Corp’s levy guideline says its definition of wages applies “only for full-time employment whether contract or permanent staff”. A 2010 HRD Corp circular is titled “Exemption of Human Resources Development Levy on Part-Time Workers”, but we could not open it.

We could not confirm whether part-timers count towards the 10-employee threshold, so check with HRD Corp.

How the levy is worked out

The levy is a percentage of each Malaysian employee’s basic salary plus fixed allowances. HRD Corp’s formula is: (basic salary minus unpaid leave, plus fixed allowances) × 1%.

These are left out (examples, not a complete list):

  • bonuses and commissions;
  • overtime pay;
  • travel allowances, including petrol and transport allowances;
  • allowances that change from month to month, such as shift, night-work or attendance allowances;
  • production incentives;
  • gratuity on discharge or retirement;
  • your own contributions to EPF and similar schemes.

Illustrative example: a company has 12 Malaysian employees. Their basic salaries and fixed allowances add up to RM40,000 a month, so the monthly levy is RM400.

You pay the levy yourself. HRD Corp says employers “are not allowed to deduct” it from employees’ wages.

Checklist: what to do

  1. Count your Malaysian employees. Include directors who draw a salary. Recount when your headcount changes.
  2. Check your industry. Compare your business with HRD Corp’s coverage page and the 2021 order that lists the industries.
  3. Register if you have 10 or more. Submit Form 1 online through HRD Corp’s e-TRiS portal, linked from its website. HRD Corp asks for Form 9 or another business registration document, and your latest EPF statement. It also asks for a company profile, annual return or audited financial report.
  4. Answer HRD Corp’s letters, even if you think you are not covered. Its FAQ says employers who do not respond within 30 days can be compounded (fined without a court case) up to RM2,000. It advises filling in Form 1 to get an official answer on whether you are covered.
  5. Pay by the 15th. Each month’s levy is due by the 15th of the following month. HRD Corp accepts online banking (FPX), JomPAY and manual payment.
  6. Use the levy. Plan training that your levy can fund, before the balance is forfeited (see below).
  7. Report big changes. If you stop being an employer, notify HRD Corp within 30 days. HRD Corp’s FAQ gives examples: the business stops operating, is wound up, becomes dormant, or is acquired or merged.

Using your levy, and losing it

HRD Corp describes the levy as “an additional training budget for employers”. You use it through HRD Corp’s grant schemes, such as HRD Corp Claimable Courses. Our guide to choosing a training provider covers what to check.

Unused levy can be forfeited. Since 1 January 2020, HRD Corp forfeits levy when no claims are made for two years. It leaves RM10,000 in the balance, and balances under RM10,000 are exempt.

If your headcount falls

Once registered, you stay registered in most cases. You can apply to deregister after three months in a row with fewer than 10 Malaysian employees.

HRD Corp’s conditions include no levy or interest arrears, and no training after you apply on Form 4A. Any levy balance left goes to HRD Corp’s general reserve.

Penalties

  • Not registering (section 13): a fine of up to RM10,000, jail of up to one year, or both.
  • Not paying the levy (section 14): a fine of up to RM20,000, jail of up to two years, or both. You still owe the levy.
  • Paying late (section 18): interest at 10% a year for each day of delay, with a minimum of RM5 for each month or part of a month.
  • Directors, including former directors who were in office when the levy was due, are jointly and severally liable with the company for unpaid levy (section 45). This means each of them can be made to pay the full amount.

The fines and jail terms are maximums: if a case goes to court, the court decides the actual penalty. Late-payment interest applies without a court case.

What changed in 2026

  • Education employers: HRD Corp’s Employer’s Circular No. 01/2026 sets out a levy payment exemption for registered employers in the education industries, for January to December 2026. These include preschools, private schools, skills training centres and private higher learning institutions.
  • No extension announced yet: neither the Budget 2027 speech nor HRD Corp’s Budget 2027 release mentions extending the education exemption into 2027.
  • The levy rate: still 1%, or 0.5% for employers who opted in. In February 2026, the human resources minister said there were no immediate plans to reduce it, The Edge reported.
  • Budget 2027: HRD Corp will offer 3 million skills training opportunities, with RM3 billion in funding. HRD Corp says this money comes from its levy funds.

What is still unclear

  • “10 or more” or “more than 10”? Some HRD Corp pages say “more than 10” when describing Form 1. The Act and HRD Corp’s main pages say 10 or more, and this guide follows them.
  • The 2026 education exemption. The circular says the exemption “is proposed to apply”, but also that it is “effective from January 2026 until December 2026”. We found no gazette order, so confirm your status with HRD Corp.
  • The deadline to register. HRD Corp’s FAQ cites Regulation 4(1): Form 1 must be submitted “not later than 30 days”. It does not say when the 30 days start for an employer that becomes liable later. To be safe, register as soon as you reach 10 Malaysian employees.
  • Part-timers and interns. We found no HRD Corp statement on whether part-timers or interns count towards the threshold.
  • Changes to the Act. HRD Corp’s page on the Act lists nothing newer than two 2021 orders. We could not check Parliament’s records for later amendments.

Official sources

General information, not legal advice.

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