The Human Resources Development Corporation (HRD Corp), established under the Human Resources Development Act 1992 (now knows as Pembangunan Sumber Manusia Berhad Act 2001), manages a fund sourced from HRD Corp levy. These levies are collected from employers in the manufacturing and service sectors, which are compulsory registrants according to the Act, and from voluntary registrants.
Simply put, the HRD Corp was set up to foster a skilled and globally competitive workforce in Malaysia, aiming to transition the country into a high-income economy driven by knowledge and innovation.
Credits: HRDC
Benefits of HRD Corp Malaysia
HRD Corp Malaysia offers an extensive array of benefits designed to significantly enhance the professional development and operational success for both employers and employees. Here’s an expanded overview of the key advantages each group can enjoy from engaging with HRD Corp’s diverse programs and resources: –
Benefits for employees: –
- Access to Training and Development
Through HRD Corp funding, employees can participate in various training programs designed to enhance their skills and qualifications. This support not only boosts their competitiveness in the job market but also aligns their capabilities with evolving industry demands.
- Career Advancement Opportunities
Participating in HRD Corp-funded programs enables employees to acquire new skills, significantly boosting their potential for promotions within their current organization or increasing their qualifications for more advantageous positions elsewhere. This investment in personal development through HRD Corp not only elevates employees’ career trajectories but also broadens their professional opportunities.
- Financial Assistance
Some HRD Corp programs offers financial aid to employees undergoing training, significantly enhancing the accessibility and affordability of professional development opportunities.
- Improved Job Security
Broadening their skill set can significantly increase employees’ job security, as it makes them more indispensable and versatile assets to their employers.
- Staying Relevant
HRD Corp programs emphasize current, in-demand skills, enabling employees to stay abreast of evolving industry trends and technological advancements, ensuring they remain competitive and effective in their roles.
Benefits for employers: –
- Increased Productivity
A skilled workforce, developed through training and upskilling, tends to be more productive, resulting in increased output and improved outcomes for the company.
- Enhanced Innovation
Training programs play a crucial role in fostering a culture of innovation by providing employees with the essential knowledge and skills needed to generate innovative ideas and solutions, thereby enhancing the organization’s creative capabilities.
- Improved Employee Retention
Companies that invest in employee development showcase their commitment to their staff, which can lead to enhanced job satisfaction, fostering loyalty and significantly reducing staff turnover.
- Access to a Wider Talent Pool
A company known for its robust training opportunities becomes highly attractive to prospective employees, particularly those who are keen on career advancement and professional growth. This reputation helps attract a broader and more talented pool of candidates.
- Improved Employee Morale and Motivation
When employees feel their skills are being developed and their career growth is supported by the company, it can lead to a significant boost in morale and motivation. This translates to a more positive work environment, increased employee engagement, and potentially a reduction in absenteeism.
HRD Corp Levy Calculation Forfeiture
HRD Corp levy forfeiture means losing unused contributions for employee training if they are not claimed within 2 years. Employers contribute to the HRDF and can reclaim these funds for approved training programs. It’s essential for employers to utilize these contributions within the allowed period to avoid forfeiture of the funds. Don’t wait too long to claim, or you might lose the money!
Section 25 of the PSMB Act 2001
- An employer will lose eligibility for any unclaimed financial assistance or benefits if they do not make claims within a timeframe set by the Board, counting from either their registration date or the date of their last financial benefit.
- The timeframe for utilizing unclaimed HRD levies was reduced from five years to two years starting January 1, 2020, to promote increased investment in employee skills development.
According to Employers’ Circular No. 7/2019, Levy Contributed for Two (2) Years will be Forfeited when:
- HRDF levies will be forfeited if no claims are made within a two-year period (24 months).
- After forfeiture, an amount up to RM10,000 will be maintained in the HRD Corp levy balance.
*The formula for HRD Corp Levy Balance Forfeiture:
Levy Balance 2 years ago – Claims made within 2 years – Forfeiture amount + Levy Contributed within 2 years
Example of HRD Corp levy that will be forfeited:
| Levy Balance on Jan 31, 2022 | Approved Claim within 2022 – 2024 | Levy Contributed within 2022 -2024 | Forfeited Amount | Available Balance on Feb 2024 |
| RM 150,000 | RM 0 | RM 20,000 | RM 140,000 | RM 30,000 |
Forfeiture amount as we want to remain it with RM10,000:
RM150,000 – RM140,000 = RM10,000
Available balance:
RM 10,000 + RM20,000 = RM 30,000
Example of HRD Corp levy that will not be forfeited:
| Levy Balance on Jan 31, 2022 | Approved Claim within 2022 – 2024 | Levy Contributed within 2022 -2024 | Forfeited Amount | Available Balance on Feb 2024 |
| RM 150,000 | RM 10,000 | RM 20,000 | RM 0 | RM 160,000 |
Example of HRD Corp levy that will not be forfeited (If less than RM10,000):
| Levy Balance on Jan 31, 2022 | Approved Claim within 2022 – 2024 | Levy Contributed within 2022 -2024 | Forfeited Amount | Available Balance on Feb 2024 |
| RM 9,900 | RM 0 | RM 5,000 | RM 0 | RM 14,900 |
Don’t let your levy go to waste—claim it now and avoid losing your money!
HOLD ON ! SOMETHING COMING ONLY IN 2024 😯
HRD Corp Levy Deduction of Program Latihan Madani
There’s one more crucial detail you need to be aware of for 2024. You’ll need to familiarize yourself with the 15% HRD Corp Levy Deduction on Program Latihan Madani (PLM). The grace period is from 1 January 2024 to 30 June 2024. It is intended to give employers ample time to utilize their unused levy before the 15% deduction takes effect.
PLM is a program designed to support Malaysia’s micro-SMEs and disadvantaged communities through training opportunities. Announced by Prime Minister Dato’ Seri Anwar Ibrahim in the 2024 Budget, it aims to enhance training access for employees of micro-SMEs, people with disabilities, senior citizens, retirees, current and former inmates, and the B40 communities.
Credits: HRDC
What are the criteria for deductions towards funding the Program Latihan Madani (PLM)?
Employers who fulfill these two criteria will have a 15% deduction applied to their unused 2023 HRD Corp levy:
- A levy balance exceeding RM 50,000 for the year 2023;
- A levy utilization rate below 50% of the employer’s contributions from January 1, 2023, to December 31, 2023
The employer will not be subject to the 15 percent PLM deduction if at least one of the criteria is not met.
The calculation of 15% PLM
The formula to determine the deduction is:
(2023 Levy Collection – 2023 Levy Utilization) x 15%
Now, let’s look at some examples to enhance your understanding:
Example 1:
01/01/2023 – 31/12/2023
| Levy Collection | Levy Utilisation | Levy Balance |
| RM 200,000 | RM 90,000 | RM 110,000 |
PLM Criteria
| Levy Balance of RM50,000 or more | RM 110,000 | ✔ |
| Levy utilisation of less than 50% | 45% | ✔ |
The employer that falls under Example 1 fulfils both the criteria and is affected by the PLM Deduction as follows: RM 110,000 x 15% = RM 16,500.
Example 2:
01/01/2023 – 31/12/2023
| Levy Collection | Levy Utilisation | Levy Balance |
| RM 200,000 | RM 120,000 | RM 80,000 |
PLM Criteria
| Levy Balance of RM50,000 or more | RM 80,000 | ✔ |
| Levy utilisation of less than 50% | 60% | ✖ |
The employer that falls under Example 2 does not fulfil one of the criteria and is not affected by the PLM Deduction.
Example 3:
01/01/2023 – 31/12/2023
| Levy Collection | Levy Utilisation | Levy Balance |
| RM 50,000 | RM 10,000 | RM 40,000 |
PLM Criteria
| Levy Balance of RM50,000 or more | RM 40,000 | ✖ |
| Levy utilisation of less than 50% | 20% | ✔ |
The employer that falls under Example 3 does not fulfil one of the criteria and is not affected by the PLM Deduction.
Example 4:
01/01/2023 – 30/06/2023
| Levy Collection 2023 | Levy Collection 2024 | Total Collection |
| RM 1,000,000 | RM 522,000 | RM 1,522,000 |
| Levy Utilisation 2023 | Levy Utilisation 2024 | Total Utilisation |
| RM 400,000 | RM 406,000 | RM 806,000 |
PLM Criteria
| Levy Balance of RM50,000 or more | Not Applicable | |
| Levy utilisation of less than 50% | 52.96% | ✖ |
The employer that falls under Example 4 does not fulfil one of the criteria and is not affected by the PLM Deduction.
Don’t let your HRD Corp levy go unused—claim it by June 30, 2024, to ensure you don’t miss out on your funds! Explore all our courses or consult with us to find the best training options for your company.
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To ensure you make the most informed decision for your company’s specific needs, feel free to consult with us. Our team is here to assist you in selecting the best courses that align with your organizational goals and requirements.
