PSMB Act 2001 stipulates that all employers with nature of business covered under the First Schedule of the Act will need to register as HRDF employers and are responsible to pay a monthly Human Resource Development (HRD) levy from the company’s monthly wages plus fixed allowances to HRDF.
Mandated by the Malaysian Government in 11th Malaysia Plan (11MP), the access to Human Resource Development Fund (HRDF) is now expanded to all industries, effective 1st March 2021.
If your company employs a minimum of ten (10) Malaysian employees, it is compulsory for your company to register. If your company only employs five (5) to nine (9) Malaysians, you are given an option to register with HRDF. Registration can be performed online.
Regulation 4(1) of the Pembangunan Sumber Manusia Berhad (Registration of Employers and Payment of Levy) Regulations 2001 states that an employer to whom the Act applies on the date of coming into operation of these regulations shall submit Form 1 to HRDF not later than 30 days.
Based on our understanding of this regulation and our correspondence with HRDF, this means that employers are required to submit Form 1 to register as a HRDF employer by 31st March 2021.
The monthly levy will be calculated as 1% of the employee’s basic salary plus fixed allowances for mandatory contributions or 0.5% for optional contributions.
New employers that are now eligible to contribute are given an exemption of HRD levy for three (3) months from 1 March to 31 May 2021. Therefore there is still time for employers to prepare for the monthly contribution. However we advise to complete the employer registration by 31 March 2021 to avoid any possible penalties.
Link: HRDF announcement on the expansion
Visit HRDF website to find out more about the benefits and value proposition of becoming a HRDF registered employer.
Contact us to enquire about payroll outsourcing services to ensure your payroll process is compliant to the changing Malaysia regulations. Focus your time on running the business.
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