What is the HRDF levy rate?

1% of levyable wages for employers in the mandatory category, or 0.5% for employers who register under the optional category. The levy is paid entirely by the employer and is never deducted from the employee.

Which employers must register with HRD Corp?

Employers in a covered industry with 10 or more Malaysian employees must register and pay the 1% levy. Employers with 5 to 9 Malaysian employees may register optionally and pay 0.5%.

Is there a wage ceiling for the HRD levy?

No. Unlike SOCSO and EIS, the HRD levy has no wage ceiling, so the rate applies to the full levyable wage.

What counts as levyable wages for HRDF?

Basic salary plus fixed monthly allowances. Variable pay such as overtime, bonuses and other irregular payments is excluded. Treatment of commissions and incentives varies, so confirm your own pay items against current HRD Corp guidance.

HRD Corp levy (HRDF) in Malaysia

The HRD Corp levy is the one statutory line an employee never sees. It is paid entirely by the employer, has no wage ceiling, and is calculated on a narrower pay base than the other schemes. Here is who owes it and how the monthly figure is worked out.

Figures verified June 2026 against KWSP, PERKESO, LHDN and HRD Corp guidance. General information, not tax or legal advice.

What the levy is

The Human Resources Development levy, still widely called HRDF and now administered by HRD Corp under the Pembangunan Sumber Manusia Berhad Act 2001, funds employee training. Employers pay into it monthly and draw back against it to fund approved training for their own staff.

Unlike EPF, SOCSO and EIS, it is employer-only. Nothing is deducted from the employee, and it never appears as a deduction on a payslip — though it is part of the employer's real cost of employment.

Which employers must register

Registration depends on the number of Malaysian employees, and only employers in covered industries fall within the scheme at all.

10 or more Malaysian employees — registration is mandatory, and the levy is 1%.
5 to 9 Malaysian employees — registration is optional, and employers who register pay 0.5%.

The headcount test counts Malaysian employees, so a workforce that is largely non-citizen can sit below the mandatory threshold on a much larger total headcount. Coverage by industry is set by the Act's schedules and has widened over time, so an employer who was outside the scheme in an earlier year is not necessarily outside it now.

The 1% and 0.5% rates

HRD Corp levy rates
Category	Rate	Paid by
Mandatory	1% of levyable wages	Employer
Optional	0.5% of levyable wages	Employer

Rates unchanged for 2026. Budget 2026 left the levy untouched.

There is no wage ceiling. Where SOCSO and EIS stop at RM6,000 of monthly wages, the levy applies to the whole levyable wage however high the salary, which makes it a meaningful cost on senior payroll.

What counts as levyable wages

The levy base is narrower than gross pay. It is built from basic salary plus fixed monthly allowances, with variable pay excluded.

Typical treatment of pay items in the HRD levy base
Pay item	Included in the levy base
Basic salary	Yes
Fixed monthly allowances	Yes
Overtime	No
Bonus	No
Other variable or one-off payments	No

Treatment of commissions and incentives is contested; confirm your own pay items against current HRD Corp guidance.

Commissions are the grey area

The exclusion of variable pay is clear for overtime and bonuses, but some HRD Corp guidance treats commissions and incentives as levyable. If a material part of your payroll is commission, settle the treatment explicitly rather than inheriting whatever your payroll system defaults to.

Unpaid leave reduces basic salary before the levy is applied, so the base follows the salary actually earned for the month.

A worked example

An employee on RM4,500 basic with a RM300 fixed travel allowance, who worked RM620 of overtime and received a RM2,000 bonus in the month, at the mandatory 1% rate:

HRD levy calculation for a single employee-month
Component	Amount	Levyable
Basic salary	RM 4,500.00	Yes
Fixed travel allowance	RM 300.00	Yes
Overtime	RM 620.00	No
Bonus	RM 2,000.00	No
Levyable wages	RM 4,800.00
Levy at 1%	RM 48.00

Note that gross pay for the month is RM7,420 but the levy base is RM4,800. Applying the rate to gross would overpay by more than half.

Paying and claiming back

The levy for a wage month is payable by the 15th of the following month.
The monthly levy carries sen and is not rounded to a whole ringgit. HRD Corp's whole-ringgit round-up applies to late-payment charges, not to the levy itself.
Contributions accumulate in the employer's levy account and are claimed back against approved training, so the levy is better treated as a restricted training budget than as a pure tax.

The levy sits outside the employee-facing statutory lines. For those, see the EPF, SOCSO and PCB guides.

Official sources

Frequently asked questions

What is the HRDF levy rate?: 1% of levyable wages for employers in the mandatory category, or 0.5% for employers who register under the optional category. The levy is paid entirely by the employer and is never deducted from the employee.
Which employers must register with HRD Corp?: Employers in a covered industry with 10 or more Malaysian employees must register and pay the 1% levy. Employers with 5 to 9 Malaysian employees may register optionally and pay 0.5%.
Is there a wage ceiling for the HRD levy?: No. Unlike SOCSO and EIS, the HRD levy has no wage ceiling, so the rate applies to the full levyable wage.
What counts as levyable wages for HRDF?: Basic salary plus fixed monthly allowances. Variable pay such as overtime, bonuses and other irregular payments is excluded. Treatment of commissions and incentives varies, so confirm your own pay items against current HRD Corp guidance.