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HRDF Scheme in 2024: Key Pointers and Benefits

  • July 15, 2023
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Meet the Author : Mr. Bharani Kumar

Bharani Kumar Depuru is a well known IT personality from Hyderabad. He is the Founder and Director of Innodatatics Pvt Ltd and 360DigiTMG. Bharani Kumar is an IIT and ISB alumni with more than 18+ years of experience, he held prominent positions in the IT elites like HSBC, ITC Infotech, Infosys, and Deloitte. He is a prevalent IT consultant specializing in Industrial Revolution 4.0 implementation, Data Analytics practice setup, Artificial Intelligence, Big Data Analytics, Industrial IoT, Business Intelligence and Business Management. Bharani Kumar is also the chief trainer at 360DigiTMG with more than Ten years of experience and has been making the IT transition journey easy for his students. 360DigiTMG is at the forefront of delivering quality education, thereby bridging the gap between academia and industry.

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

The Human Resource Development Fund is referred to as the HRDF. This is a collection of money from the numerous businesses and producers covered under the HRDF legislation. Employers in the industrial and service industries as well as registered businesses are required to pay the money in the form of taxes. The HRDF was established under the Human Resources Development Act of 1992.

The PSMB Act (2001), also known as the Pembangunan Sumber Manusia Berhad Act, is now in effect. According to the statute, employers included in the PSMB's first schedule are required to contribute to the creation of the HRDF. If other employers so choose, they can also register.

Building a better competent human workforce was the primary goal of Malaysia's HRDF development. The employees should have a high level of technical and intellectual expertise in their sector of employment. The fund was established to produce skilled labourers in Malaysia, but it currently serves as a source of trained labourers across the world.

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.

In 2017, there was a change made to the Act. Although there is a lot of technical language involved, the essential summary is as follows:

Each employer covered by the programme must enlist at least 10 of its employees. These businesses would pay a fee equal to one percent of the monthly salaries of their Malaysian employees.

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.

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HRDF Registered Training Provider

Training vendors for the HRDF are referred to as training providers. Employers who have enrolled with the HRDF may submit claims by taking training sessions offered 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?

You now have a fundamental knowledge of the HRDF and its advantages. The world we live in is changing more quickly than we can keep up with. Malaysian businesses are struggling to stay up and require a trained staff. However, this workforce must possess the necessary skills to complete tasks well. Because technology is developing quickly, it is necessary for workers to have the necessary skills to keep up with these changes. They must be experts in their field; otherwise, hiring more people will just result in higher costs.

It's noteworthy to notice that many businesses have created training cells to address the problem of an underskilled and untrained staff. For the purpose of retraining their staff to become skilled workers, these cells provide comprehensive training.

Here is where the HRDF helps.

Employers who participate in the programme are eligible to receive grants from the fund to finance their staff training initiatives. The grants provided by the HRDF are more than capable of covering the majority, if not all, of the costs associated with setting up such training. Additionally, it offers financial support to the employers that are in charge of 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.

Employers are responsible for covering the whole cost of the training courses. Once they provide sufficient explanation for the expenditures, the HRDF fund will be made available to them. So in a manner, it resembles a reimbursement programme for the employers' expenditures.

These are all the important details concerning the HRDF plan that you need to be aware of. You may now use the plan to your advantage.

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