HRD Corp Levy Malaysia: What Employers Are Required to Pay in 2026
The HRD Corp levy Malaysia obligation applies to every employer with 10 or more Malaysian employees, and yet it remains one of the most frequently miscalculated and misunderstood payroll items in the country. Some employers don’t realize they’ve crossed the threshold and become liable; others register correctly but let thousands of ringgit sit unclaimed in their eTRiS account every year, simply because nobody on the team knows how the claims process actually works.
Here’s what the levy actually requires, how it’s calculated, and just as importantly how to get that money back through training grants rather than treating it as a pure cost.
In This Article
- Who’s required to register and pay
- How the levy is calculated
- A worked example
- How to claim training funds back
- What happens if you don’t register
- Common employer mistakes
- Frequently asked questions
Quick Answer Employers with 10 or more Malaysian employees must register with HRD Corp and pay a monthly levy of 1% of wages. Employers with 5 to 9 Malaysian employees can register voluntarily at 0.5%. Only Malaysian citizens and permanent residents count toward the threshold foreign workers, interns, and part-timers don’t. The levy funds a training account you can claim back against approved courses.
Who’s Required to Register and Pay
Under the Pembangunan Sumber Manusia Berhad (PSMB) Act 2001, registration becomes compulsory the moment your company employs 10 or more Malaysian employees in a sector covered by the Act. Employers with 5 to 9 Malaysian employees may register voluntarily to access the same training grant system, just at a reduced contribution rate.
The headcount that matters here is specifically Malaysian citizens and permanent residents foreign workers, interns, and part-timers are excluded from the count. A company with 8 Malaysian staff and 5 foreign workers, for example, still falls below the mandatory threshold, even though its total headcount is 13.
Once you cross the threshold, registration should happen promptly most guidance points to registering within 30 days of reaching 10 Malaysian employees, rather than waiting until it becomes an issue.
Does Your Industry Actually Fall Under the PSMB Act?
Crossing the headcount threshold only triggers registration if your company’s business activities are covered under the PSMB Act 2001 in the first place. Coverage has expanded over the years manufacturing and larger service-sector categories have been covered for some time, and the Act’s schedule has been amended to bring in additional service industries that may not have been liable in the past.
Because coverage is defined by a gazetted schedule rather than a simple list you can guess at, the safest approach if you’re unsure is to check your specific business activity against HRD Corp’s published schedule or confirm directly with them, rather than assuming your sector is or isn’t included based on what a similar business down the road does.
How the Levy Is Calculated
Mandatory Rate: 1%
Employers with 10 or more Malaysian employees pay a monthly levy of 1% of each employee’s monthly wages, calculated on gross wages including basic salary and fixed allowances.
Optional Rate: 0.5%
Employers with 5 to 9 Malaysian employees who choose to register voluntarily pay a reduced rate of 0.5% still enough to unlock the full training grant system, just at half the contribution.
Payment is due monthly, by the 15th of the following month, submitted through HRD Corp’s e-TRiS portal, the same rhythm most employers are already used to from EPF and SOCSO submissions.
A Worked Example
Say your company has 15 Malaysian employees with a combined monthly wage bill (basic salary plus fixed allowances) of RM75,000. As a mandatory registrant, your monthly HRD Corp levy would be RM75,000 × 1% = RM750.
Over a full year, that’s RM9,000 sitting in your HRD Corp training account money that’s already been paid and is available to claim back the moment you send staff for an approved training course. Left unused, it’s simply a sunk cost with nothing to show for it.
How to Claim Your Training Funds Back
This is the step most SME employers skip. Once registered, you can apply for a training grant before a course begins, then submit a claim afterward to recover the cost from your levy balance. According to HRD Corp’s own claim guidance, grant applications should generally be submitted at least 14 days before training starts with most guidance recommending closer to 21 days to allow time for review.
- Apply for the training grant before the course starts not after
- Choose a course from an HRD Corp-registered training provider so it qualifies for claims
- Submit your claim within roughly 6 months of the training completion date
- Track your levy balance through the e-TRiS portal so unused funds don’t go unnoticed
A useful target: aim to use a meaningful share of your annual levy contribution on actual training each year. Unused levy doesn’t roll over indefinitely as free money it’s simply the value your company paid in and never got back.
What Happens If You Don’t Register
Failing to register when required is an offense under the PSMB Act, carrying penalties of up to RM10,000, imprisonment of up to one year, or both. Late or unpaid levy contributions after registration also attract consequences, so the safest approach is registering as soon as your Malaysian headcount crosses the threshold, rather than waiting to see if it gets noticed.
Common Employer Mistakes
- Miscounting headcount including foreign workers or interns when calculating whether the 10-employee threshold has been crossed
- Registering late, after already operating above the threshold for months
- Letting levy contributions accumulate without ever claiming training grants against them
- Missing the 14-21 day lead time needed to apply for a grant before training starts
- Assuming a temporary dip below 10 employees ends the mandatory 1% rate it doesn’t; the rate applies for the full calendar year regardless of headcount fluctuations
Frequently Asked Questions
Do foreign workers count toward the 10-employee threshold?
No. Only Malaysian citizens and permanent residents count. Foreign workers, interns, and part-timers are excluded from the headcount used to determine mandatory registration.
What if our Malaysian headcount temporarily drops below 10 during the year?
You must continue contributing at the 1% mandatory rate for the remainder of that calendar year. Only after remaining below the threshold for three consecutive months can you apply to deregister or reduce your rate.
Can unclaimed HRD Corp levy funds be lost?
Unused levy doesn’t disappear immediately, but it also isn’t doing your business any good sitting unclaimed it represents money already paid with no training benefit received. Regularly checking your e-TRiS balance and planning training around it is the only way to actually capture that value.
Does the levy rate differ by industry?
The rate itself (1% mandatory, 0.5% optional) is fixed under the PSMB Act regardless of industry what varies by sector is whether your company’s activities are covered under the Act at all, which determines whether registration applies to you in the first place.
How do I check if my industry is covered under the PSMB Act?
HRD Corp publishes the gazetted list of covered industries and business activities. Because this schedule has been amended and expanded over time, it’s worth checking your specific classification directly with HRD Corp rather than assuming coverage based on a similar business’s status.
Not Sure If You’re Registered or Using Your Levy? Book a free HR compliance consultation with inTalent. We’ll check your registration status, review your levy calculations, and help you put a plan in place to actually claim back what you’re already paying.