# HRD Corp Levy: Who Must Register, and How to Claim It Back > Which employers must register with HRD Corp, how the 1% and 0.5% levy is calculated, and why unclaimed levy is forfeited after two years. - Category: employment - Language: en - Status: published - Updated: 2026-07-20 - Canonical: https://negaraku.md/en/employment/hrd-corp-levy-malaysia --- Two questions decide your HRD Corp position, and almost every guide online answers only the second. The first is *are we even in scope* — and since March 2021 the honest answer for most private employers is yes, whether or not anyone told you. The second is what you pay. The one nobody asks is what happens to the money afterwards, which is where most SMEs quietly lose it. ## Who must register Coverage is set by the First Schedule to the Pembangunan Sumber Manusia Berhad Act 2001, and that schedule was replaced wholesale by P.U.(A) 84/2021, in operation from **1 March 2021**. | Part | Class of employer | Effect | | --- | --- | --- | | Part I | Employers with **ten or more employees** in a listed industry | Registration mandatory, levy at 1% | | Part II, item 1 | Employers with **five to nine employees** in a listed industry | Registration optional, levy at 0.5% | | Part II, item 2 | NGOs with five or more employees in labour union, religious, political, nursing-care or non-residential social work activity | Registration optional, levy at 0.5% | The industry column in Part I runs to roughly forty entries: agriculture and farming, livestock and fisheries, forestry and logging, mining and quarrying, manufacturing and production, trading and wholesale, construction, supply, real estate, culture and arts, fashion, cosmetics, tourism and recreation, service, franchise, electricity, oil, gas and steam, water, sewerage, waste management, automotive, transportation, repair and maintenance, storage, delivery, food and beverages, information systems, communication and multimedia, broadcasting and film, banking and finance, insurance and takaful, investment, cooperative societies, professional, science and technology, research and development, administration and support services, education, medical and health facilities, social welfare, membership organisations, small and medium enterprises, household goods and services, sports, energy and natural resources, and personal services. That list is not a sector filter any more. It is a near-complete map of the private economy, and the older guidance that treats HRD Corp as a manufacturing and services scheme is describing a schedule that stopped existing in 2021. ## How the headcount is counted The threshold counts **Malaysian citizens employed for wages under a contract of service, in full-time employment whether contract or permanent**. Domestic servants are excluded. This trips up two kinds of employer in opposite directions. A logistics company with eight Malaysians and twelve foreign workers is *not* in the mandatory category — it has eight employees for this purpose. A design studio with eleven Malaysians on twelve-month contracts *is*, because contract staff count. Crossing the threshold is a recount event, not an annual review. Hiring your tenth Malaysian employee moves you from Part II to Part I, and the levy rate doubles from that point. ## What the levy is charged on The formula HRD Corp publishes is: > **Levy = [(basic salary − unpaid leave) + fixed allowance] × 1%** calculated to two decimal places, and at 0.5% for optional-category employers. **Included:** basic salary and fixed allowances or similar emoluments paid in cash by or on behalf of the employer, plus leave pay and arrears of wages. **Excluded:** bonuses, commissions, gratuities, contributions to pension, provident or welfare funds, travel allowances, apprenticeship payments, overtime, night-work allowance, shift allowance, and attendance allowances that vary from month to month. Note what this is *not*. It is not gross pay, and it is not the EPF or SOCSO wage definition. A company running a single wages field across all five statutory deductions is over-paying HRD Corp on every commission-heavy month and under-paying nothing — which is a cost, not a compliance failure, and therefore never gets caught. ## The deadline and what late costs Levy for a wage month is payable **by the 15th of the following month**, the same date as EPF, SOCSO, EIS and PCB. Late payment is treated as arrears, declared on Form 3, and carries interest at: > **arrears × 10% × days late ÷ 365**, subject to a minimum charge of RM5. HRD Corp separately states that failure to pay the levy is an offence carrying a fine of up to RM20,000 or imprisonment of up to two years, or both. An employer who ignores a registration letter for 30 days may be compounded up to RM2,000. ## The part most SMEs never act on: the levy is your money Every ringgit of levy sits in your own levy account. HRD Corp Claimable Courses lets you apply for a training grant, send staff on an approved programme, and have the course fee paid directly to the training provider out of that balance, with allowances reimbursed to you. The catch is time. HRD Corp **shortened the unutilised-levy period from five years to two, with effect from 1 January 2020**. Where no claim is made within 24 months, the balance is forfeited and only a threshold of **RM10,000** remains in the account. The clock runs from the most recent successful training claim; for an employer who has never claimed, it runs from the date the balance first reached RM10,000. Work the arithmetic on a modest employer. Twenty staff on an average RM4,000 of basic pay and fixed allowances generates RM800 of levy a month — RM9,600 a year, RM19,200 over the forfeiture window. Do nothing and roughly half of that disappears while the rest sits as the residual threshold. The grant must be approved **before** the training happens. Retrospective claims for a course your team already attended are the single most common rejection, and they are unrecoverable. ## Common mistakes - **Assuming your sector is outside the scheme.** The 2021 First Schedule covers around forty industry classes; the pre-2021 sector carve-outs are gone. - **Counting foreign workers or domestic servants towards the threshold.** Only Malaysian citizens under a contract of service count. - **Calculating levy on gross wages.** Overtime, commission and bonus are outside the base — using a single wages figure across all statutory schemes overstates the levy. - **Staying on 0.5% after hiring the tenth Malaysian employee.** The category changes on the headcount, not on an anniversary. - **Treating the levy as a tax.** It is a restricted training fund with a 24-month shelf life. - **Booking training first and applying for the grant afterwards.** Approval must precede the programme. ## What's next Pull your levy statement from the HRD Corp portal and check three things: the balance, the date of your last successful claim, and whether your category still matches your Malaysian headcount. If the last claim is more than 18 months old, you have a forfeiture problem with a deadline attached, not a training budget question. Then align the levy base in your payroll system so it reads basic salary plus fixed allowances only, and keep the 15th-of-the-month remittance on the same calendar entry as EPF, SOCSO, EIS and PCB. ## Sources - Pembangunan Sumber Manusia Berhad (Amendment of First Schedule) Order 2021 — P.U.(A) 84 — https://hrdcorp.gov.my/wp-content/uploads/2021/03/12.FEDERAL-GOVERMENT-GAZETTE-PEMBANGUNAN-SUMBER-MANUSIA-BERHAD-AMENDMENT-OF-FIRST-SCHEDULE-ORDER-2021.pdf (HRD Corp) - Employers FAQ — https://hrdcorp.gov.my/faq/ (HRD Corp) - Levy Calculation Guideline — https://supportcentre.hrdcorp.gov.my/portal/en/kb/articles/hrd-levy (HRD Corp) - Levy Payment — https://supportcentre.hrdcorp.gov.my/portal/en/kb/articles/hrd-levy-payment (HRD Corp) - Levy Forfeiture — https://supportcentre.hrdcorp.gov.my/portal/en/kb/articles/hrd-levy-forfeiture (HRD Corp) - New Employer Registration — FAQs — https://supportcentre.hrdcorp.gov.my/portal/en/kb/articles/frequently-ask-questions-new-employer-registration (HRD Corp) --- Source of truth: https://github.com/negaraku-md/NegaraKu.md License: CC BY-SA 4.0