HRD Corp levy: who pays, how much and when

Who must register with HRD Corp?

Only HRD Corp can decide whether an employer is liable, not the employer itself. Failing to register is an offence under Section 13(2) of the PSMB Act 2001, with a fine of up to RM10,000, imprisonment of up to one year, or both. An employer that does not respond to a registration letter from HRD Corp within 30 days can be compounded up to RM2,000.

• Employers with 10 or more Malaysian employees must register with HRD Corp.
• Employers with 5 to 9 Malaysian employees have the option to register.
• The Act covers employers in all sectors except the Federal and State Governments and statutory bodies, and NGOs carrying out activities such as labour unions, religious or political organisations, welfare services and social work without lodging.
• For the levy, an employee is a Malaysian citizen employed for wages under a full-time contract of service, whether permanent or on contract. Domestic servants are excluded.
• A director or owner who is paid a salary counts as an employee. A director who receives only director's fees does not.

What are the HRD Corp levy rates?

HRD Corp's calculation guideline gives the formula as levy = [(basic salary − unpaid leave) + fixed allowances] × 1%, rounded to two decimal places. Employers in the optional class apply the same formula at 0.5%.

• Mandatory registration (10 or more Malaysian employees): 1% of the monthly wages of each employee, under Section 14 of the Act.
• Optional registration (5 to 9 Malaysian employees): 0.5% of the monthly wages of each employee, under Section 15.
• The levy is paid by the employer. It cannot be deducted from employees' wages under any circumstances.

What counts as wages for the HRD Corp levy?

The levy is charged on basic salary and fixed allowances, including leave pay and arrears of wages. Payments that vary from month to month, or that are not wages, are left out.

• Included: basic salary, fixed allowances, leave pay and arrears of wages.
• Excluded: bonuses, commissions, overtime, and night work, shift or attendance allowances that change monthly.
• Excluded: production incentives, travelling, petrol and transport allowances, and special expenses.
• Excluded: gratuity on discharge or retirement, retrenchment payments, contributions to pension, benefit or welfare funds, and allowances paid under an apprenticeship contract.

When is the HRD Corp levy due and how do you pay it?

HRD Corp occasionally moves a month's deadline by circular, as it did for the August 2025 contribution. Check its circulars page rather than assuming an extension.

• The levy month follows the salary month. Levy on January wages paid on or before 15 February counts as current levy.
• To pay, generate a Form 2 e-slip in e-TRiS (Application, then Levy, then Form 2 eSlip Form), choose the payment type and month, and pay through biller code 500181 using the e-slip reference.
• There are three payment types: current levy, levy in arrears and interest on arrears.
• Levy paid after the deadline is treated as arrears. You must submit Form 3 to declare the actual amount and choose the ARREAR payment type.

What happens if you pay the levy late?

• Interest is charged at 10% a year on the late amount: arrears × 10% × number of days late ÷ 365. The minimum interest is RM5, paid separately under the INTEREST payment type.
• On conviction, an employer that fails to pay the levy on time faces a fine of up to RM20,000, imprisonment of up to two years, or both.
• Employers with outstanding levy or interest are not eligible to apply for grants under the HRD Corp Claimable Courses scheme, so arrears can hold up your training plans.

How does the levy balance fund training?

HRD Corp defines your levy balance as the levy you have contributed minus the reimbursements you have received. You draw on it by applying for a training grant in e-TRiS before the training starts and claiming after it ends. The amount reimbursed is the approved amount or the actual expense, whichever is lower.

How the money moves depends on the scheme. Under HRD Corp Claimable Courses, which is open to registered employers that have paid their first month's levy, you do not pay the training provider upfront: HRD Corp debits the course fee from your accumulated levy and pays the provider once it approves the claim. Under Skim Bantuan Latihan (SBL), used for internal trainers and other non-registered trainers, you pay the trainer first and claim the fee back.

Our guides to HRD Corp claimable courses, HRD Corp in-house training and the e-TRiS grant application cover each step in more detail.

Does unused HRD Corp levy expire?

Yes, above a threshold. Under HRD Corp Circular No. 7/2019, the period for unutilised levy was cut from five years to two years with effect from 1 January 2020. If no successful claim is made within two years, any levy balance above RM10,000 is forfeited, and RM10,000 stays in the account.

The two years are counted from your last successful claim date. If you have never claimed, they run from the date of the levy statement on which your balance first reached RM10,000. Making at least one successful claim within every two-year window keeps the balance from being forfeited.

What if your headcount falls or the business closes?

• Under Section 16 of the PSMB Act 2001, a registered employer stays registered unless its number of Malaysian employees falls below the minimum for three consecutive months. It may then apply to HRD Corp for deregistration with documents proving the decrease.
• If your company ceases operations, is wound up, becomes dormant, or is acquired or merged, you must notify HRD Corp within 30 days.
• Any levy balance left after deregistration is transferred to the HRD Corp General Reserve, so use it on training before you leave.

Planning finance training from your levy

Ogos Learning Resources Sdn. Bhd. is a registered training provider in HRD Corp's e-TRiS system. Ogos Learning has trained teams at more than 10 of Malaysia's licensed commercial banks. Email support@ogoslearning.com with the topic and number of participants to get a quotation and trainer profile for your grant application.