Malaysia Payroll: What is HRDF? How it is applicable in Deskera People?
What is the HRDF Levy?
The HRDF levy is a mandatory levy payment collected by the Human Resources Development Fund (PSMB). It is imposed on employers from certain industries.
The main purpose of HRDF levy is to enable employee training and skills upgrading of the Malaysian workforce.
Who is eligible to register with HRDF?
As per the HRDF Act 2001, Section 13(1) employers from these sectors are required to register with HRDF . Any employer who do not registered with HRDF will be fined up to RM10,000.00 and/or face imprisonment of up to a year as per (Section 13 (2)).
Companies with 10 or more local workers needs to mandatory register with HRDF, while companies with 5 to 9 local workers do not need to register.
How is the HRDF levy calculated?
HRDF levy for each Malaysian employee = HRDF Levy% x (Basic Salary + Fixed Allowances)
| Number of Malaysian employees | Imposed rate of HRDF Levy |
| 10 or more Malaysian employees | 1 % of the monthly wages of each of their Malaysian employees |
| 5 to 9 Malaysian employees | 0.5 % of the monthly wages of each of their Malaysian employees |
For more information on which allowances to include in the calculation, please read here.
Please note, as per HRDF regulations, once you reach 10 Malaysian employees you must continue contributing at 1% for the whole calendar year even if your headcount falls to fewer than 10 employees during the year.
Payment is due no later than the 15th of the following month.
Example of HRDF levy calculation
If you are contributing 1% and your employee earns RM3,000 plus a fixed allowance of RM250, the calculation for the HRDF levy for that employee is as follows:
(RM3,000 + RM250) * 1% = RM32.50
How is HRDF applicable on Deskera People?
With Deskera People, as an employer you can enter the relevant HRDF percentage of contribution, following the few simple steps.
- Under Tax Details Module>>Enter the HRDF contribution rate (1% or 0.5%) as per applicability.
2. This will auto-calculate the HRDF in the system.
Please note, as per HRDF regulations, once you reach 10 Malaysian employees you must continue contributing at 1% for the whole calendar year even if your headcount falls to fewer than 10 employees during the year.
Congratulations! You have successfully learned what is HRDF and, how it is applicable in Deskera People.