Who pays, and at what rate
The levy exists under the Pembangunan Sumber Manusia Berhad Act 2001. Specified employers in the Services, Manufacturing, and Mining and Quarrying sectors are liable, and the category you fall into is decided by headcount.
- Mandatory category: 10 or more Malaysian employees. The levy is 1%.
- Optional category: 5 to 9 Malaysian employees, registration by choice. The levy is 0.5%.
The formula
Levy = [ (basic salary − unpaid leave) + fixed allowance ] × rate
The calculation covers full-time employees only. Two lists decide the number you multiply.
Counts as wages
- Basic salary
- Fixed allowances, and similar emoluments paid in cash
Does not count
- Bonuses, commissions and gratuity
- Travel and transport allowances
- Overtime, night work and shift allowances
- Attendance and production incentives
- Contributions to employee benefit or welfare funds
Getting the exclusions wrong in either direction is common. Over-declaring means paying levy you do not owe. Under-declaring leaves you in arrears without realising it.
A worked example
A services company with 12 full-time Malaysian employees, so the mandatory 1% rate applies. In a given month the payroll is RM60,000 in basic salary and RM6,000 in fixed allowances, and one employee took unpaid leave worth RM500.
(60,000 − 500 + 6,000) × 1% = RM655 per month
That is RM7,860 a year, and RM15,720 over two years.
Hold on to that two-year figure. It matters below.
When payment is due
The levy must be paid on or before the 15th of the following month, which is a grace period of 15 days from the end of the wage month. Anything paid after that is treated as levy in arrears.
The rule most employers miss: two-year forfeiture
Effective 1 January 2020, levy left unutilised for two years is forfeited. A threshold balance of RM10,000 stays in your account. Everything above that is taken back if no training claim was made during the window.
Return to the worked example. That company accumulated RM15,720 over two years. If it never claimed, RM10,000 remains and RM5,720 is forfeited. Not spent, not refunded. Gone, from money already deducted through payroll.
What prevents it: at least one training claim inside the two-year window. One claim keeps the balance alive. Doing nothing is the only way to lose it.
What to do with the balance
The levy is not a tax that vanishes into a general fund. It is a training budget your company has already paid for, held in your name. The question is not whether to spend it but on what.
Before you plan anything, read the HRDC claimable training guide, which covers eligibility, the e-TRiS application and the four deadlines that decide whether a claim is paid. Disoft has delivered over 300 hands-on team training sessions in Malaysia, and our programmes are HRD Corp claimable, up to 100% of the fee*. See the Marketing Training curriculum or compare Packages.
If you are not sure what your current balance is or when your two-year window closes, ask us and we will help you check before you commit to anything.