HRDF Scheme in 2023: Key Pointers and Benefits

Who Needs to Register with the HRDF According to the PMSB?

The HRDF is an abbreviation of the term Human Resource Development Fund. This is a pool of funds collected from the various companies and manufacturers that come under the HRDF act. The funds are collected as levies from the employers of the manufacturing and service sectors, and the registered companies. The Human Resources Development Act of 1992 enacted the establishment of the HRDF.

The act is presently called PSMB or Pembangunan Sumber Manusia Berhad Act (2001). As per the act, the employers under the first schedule of the PSMB have to pay a levy to develop the HRDF. Other employers can also register themselves if they wish to.

The main aim behind developing the HRDF in Malaysia was the building of a more skilled human workforce. The workforce is aimed to be highly skilled, both technically and academically, in their field of work. The fund was started to create skilled workers in Malaysia, but now it operates as a global supply of skilled workers.

Why Choose HRDF as your Training Provider?

As you have already noted, the companies and employers under the first schedule of the PMSB need to enlist their employees under the HRDF. There are various sectors in the list, like the mining and quarrying sector, the manufacturing sector, and the service sectors. If you are an employer under any of these categories and have failed to register with the PMSB, you are liable to RM 10,000 penalty and even a jail term of one year.

There was an amendment to the Act in 2017. There is much technical jargon involved, but the basic summary comes up to this:

All the employers under the program need to enrol at least 10 of their employees in the program. The levy paid by these companies would be equal to the one percent of their Malaysian employees' monthly wages.

All the employers under the first schedule who were employing five to nine local workforce were eligible for voluntary registration instead of compulsory. They need to pay the levy at a rate of 0.5% of each Malaysian employees' total monthly wage.

HRDF Registered Training Provider

HRDF training providers denote the organization that works as the training vendor. The registered HRDF employers can make claims by participating in training conducted by HRDF training providers.

What is the Levy for at HRDF, and How is it Calculated?

As you have already read, the companies under the PMSB act need to pay a levy for the HRDF. These levies collected from the employers and the manufacturers are for training the employees and their skill development. Presently, the rate of levy is 1.0% of the local employees' monthly wages. This levy amount needs to be paid compulsorily by the employers under the PMSB and those who have registered.

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The calculation of the HRDF levy is pretty straightforward. It is:

HRDF levy= Levy% x (allowances + monthly wages)

The monthly wages have been mentioned earlier. The fixed allowances is an amount of money that is paid by the employers. It is fixed and does not change every month.

What is the Benefit of HRDF?

So far, you have gained a basic understanding of the HRDF; what is its benefit. We are living in a world that is developing at a faster pace than we can keep up with. Companies in Malaysia are trying hard to keep up and need a skilled workforce. But this workforce needs to be skilled in getting effective work done. The technology is advancing rapidly, and to work in synchronization with these developments, the workers need to be skilled. They need to be proficient at what they do, and an increased workforce will simply mean increased expenses and nothing else.

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It may be interesting to note that to address this issue of the unskilled and untrained workforce, many companies have developed their training cells. These cells offer full-scale training to their workers for retraining them into skilled employees.

Here comes the benefit of the HRDF.

The employers under the scheme are eligible for receiving a grant from the fund to spend on their employee training program. The grants offered by the HRDF are quite capable of handling a major portion of the expenses incurred in organizing such training, if not all. It also provides financial aid to employers who are organizing this training.

How to Claim the HRDF Benefits?

As you have seen, employers can get financial aid from the HRDF for conducting their training programs. For getting the benefits, however, there is a procedure. The SBL is the primary scheme under the HRDF, and it encourages employers to conduct their training programs and train their employees.

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All the payments for the training programs need to be made by the employers themselves. The HRDF fund will be given to them once they offer ample justification for the expenses. So in a way, it is like a reimbursement scheme for repaying the expenses of the employers.

These are all the vital points that you need to know about the HRDF scheme. Now you can make use of the scheme for your benefit.