HRD Corp Malaysia: Employer Responsibilities, Levy Contributions & Benefits Explained

A Comprehensive Guide to HRD Corp’s Levy System, Compliance Requirements, and Training Incentives for Malaysian Employers

March 27, 2025 by

CONZLAB BERHAD 202301040401 (1534320P), Mira

Why HRD Corp Matters for Employers?

In today’s fast-changing job market, businesses must invest in employee training to stay competitive. The Human Resources Development Corporation (HRD Corp), formerly known as HRDF, helps employers upskill their workforce through levy-funded training programs.

Governed by the PSMB Act 2001, HRD Corp now covers all industries, ensuring more businesses benefit from training incentives and workforce development.

The Evolution of HRD Corp

HRD Corp was initially established as a funding mechanism for the manufacturing and services sectors, where registered employers were required to contribute a Human Resource Development (HRD) levy. These contributions were collected to support employee upskilling and reskilling initiatives. However, in 2021, the organization rebranded itself as HRD Corp, expanding its coverage to include all industries under the PSMB Act.

HRD Corp Levy: How It Works

Previously, only employers in the manufacturing and services industries (as listed in the First Schedule of the PSMB Act 2001) were required to pay the HRD levy. The contribution rate was 1.0% of the employee's monthly wages (or 0.5% for voluntary registered employers).

Now, with its extended coverage, all industries that fall under the First Schedule of the PSMB Act must contribute the levy, which ranges from 0.5% to 1.0% of an employee’s fixed monthly salary. It is important to note that non-fixed remuneration such as bonuses, commissions, or incentives are not subject to the levy.

Mandatory Employer Registration with HRD Corp

As per Section 13(1) of the PSMB Act 2001, any employer that meets the criteria outlined in the Act must register with HRD Corp within the prescribed timeframe.

Failing to comply with this requirement can result in:

A fine of up to RM10,000
Imprisonment for up to one year
Or both penalties combined

To avoid legal consequences, employers should ensure timely registration and compliance with HRD Corp’s guidelines.

HRD Corp Malaysia: Sub-Sector / Industries Levy Contribution Guide

Eligible Services Sectors

Employers from the following service industries are required to register and contribute to HRD Corp:

1. Hospitality & Tourism

Hotels
Air transport
Travel agencies (inbound)
Tourism enterprises (outbound)

2. Logistics & Transportation

Freight forwarding
Shipping
Postal or courier services
Port & railway transport services

3. Media & Communications

Advertising
Telecommunication
Private broadcasting services
Information services

4. Technology & Engineering

Computer services
Engineering support and maintenance services
Research and development

5. Education & Training

Training services
Higher education institutions
Early childhood education

6. Healthcare & Wellness

Private hospital services
Health support services
Veterinary services

7. Utilities & Environmental Services

Energy
Water treatment
Sewerage services
Waste management

8. Retail & Commercial Services

Direct selling
Franchise businesses
Hypermarkets, supermarkets & departmental stores
Sale and repair of motor vehicles

9. Entertainment & Events

Event management services
film & media production

10. Building & Security Services

Security services
Building & landscape services

Eligible Manufacturing Sectors

Employers in the following manufacturing industries must register with HRD Corp:

Electrical & Electronics
Metal, Mineral & Steel
Food & Beverage Manufacturing
Transport Equipment & Machinery
Plastic & Rubber Products
Wood, Paper & Furniture
Chemicals & Petroleum (including refineries)
Textile, Apparel & Footwear
Glass, Ceramic & Leather
Printing, Publishing & Optical Products
Tobacco Manufacturing

Eligible Mining & Quarrying Sector

Petroleum & Gas Extraction
Mineral & Stone Quarrying

Eligible New Sectors Added in 2021

1. Agriculture & Natural Resources – Agriculture & farming, livestock & fisheries, forestry & logging

2. Business & Finance – Banking & finance, insurance & takaful, investment, trading & wholesale

3. Construction & Property – Construction, property

4. Retail & Consumer Goods – Cosmetic, fashion & clothes, household goods & services

5. Tourism & Recreation – Tourism, recreation, sports

6. Automotive – Vehicle sales, repair & services

7. Professional & Technical Services – Science & technology, professional services, administration & support

8. Education & Social Services – Education, social welfare, administration of organization membership

9. Culture & Entertainment – Culture, arts & entertainment

10. Personal Services – Personal care & related services

Employer Eligibility for All Sectors / Industries & Levy Payment Rates

Mandatory Registration: ≥ 10 Malaysian employees → 1% levy
Optional Registration: 5 – 9 Malaysian employees → 0.5% levy
Registration Requirement: Industries under new sectors must register with HRD Corp after 1st March 2021
Levy Exemption: Eligible for levy exemption until December 2021

Benefits of HRD Corp for Employers

Employers registered with the Human Resources Development Corporation (HRD Corp) can enjoy various financial incentives to support employee training and skills development. By contributing to the HRD levy, businesses can claim training grants to cover all or part of the training costs for their employees, provided the training directly benefits their business operations.

Key Benefits of HRD Corp

1. Access to Training Grants

Employers who register and contribute to HRD Corp can apply for financial assistance to offset training costs.
Grants cover allowable training expenses, reducing the financial burden on companies.

2. Levy Payment Reimbursement

Contributing employers can claim reimbursements for training expenses through various training schemes offered by HRD Corp.
This allows businesses to maximize their investment in workforce development.

3. Support for Business Growth

Training must align with business needs, ensuring employees acquire relevant skills to improve productivity.
Companies can upskill their workforce, enhancing competitiveness in their industry.

Important Notes

Financial assistance is only available to employers and not for individuals who self-finance their training.
Employers must obtain prior approval as claims cannot be made after training is completed.
For more details, visit HRD Corp official website.

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CONZLAB BERHAD 202301040401 (1534320P), Mira March 27, 2025

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