The Human Resource Development Fund (HRDF) serves as a pivotal mechanism to foster skill enhancement and professional growth within Malaysia’s workforce. HRDF promotes continuous improvement and enhances competitiveness across various industries by providing financial support for employee training.
This guide aims to demystify HRDF, outlining its benefits, registration process, contribution details, and claim procedures to help businesses and HR professionals leverage this resource effectively.
What is HRDF?
The HRDF, established under the Pembangunan Sumber Manusia Berhad (PSMB) Act 2001, promotes systematic employee training and skill development in Malaysia. By channelling financial resources into structured training programmes, the HRDF ensures that Malaysian employees continuously improve their skills to meet industry demands.
What is the purpose of HRDF?
The primary purpose of HRDF is to encourage employers to strategically invest in their employees’ training and development. The programme does this by providing financial assistance and support to create a culture of continuous learning and upskilling within Malaysian industries.
Generally, this focus on championing adaptable human capital development is critical to maintaining a competitive edge in today’s continually evolving global marketplace.
Industries covered
HRDF covers a wide range of industries, including, but not limited to:
- Manufacturing
- Services
- Mining and quarrying
- Construction
- Agriculture
- Information technology and communications
- Hospitality and tourism
- Healthcare
- Education
- Retail and wholesale trade
It’s important to note that the list of covered industries may be updated periodically. So, it’s advisable to check the official HRDF website for the most current information.
What is the benefit of HRDF?
Operated by HRD Corp under the Malaysian Ministry of Human Resources, HRDF offers multiple advantages that extend beyond mere financial incentives. The broader benefits include:
- Fostering business growth and expansion: By investing in employee training and development, businesses can improve their productivity, efficiency, and innovation capabilities.This, in turn, leads to enhanced competitiveness and potential for growth and expansion. HRDF support allows companies to access high-quality training programmes that might otherwise be cost-prohibitive.
- Opportunities for professional advancement and skill enhancement: HRDF provides employees with access to a wide range of training programmes and courses.These opportunities allow them to acquire new skills, keep abreast of industry trends, and enhance their professional capabilities. This continuous learning process is mission-critical in today’s rapidly changing work environment.
- Increased job satisfaction: When employees feel that their company is investing in their growth and development, they often report increased job satisfaction.This may result in higher employee retention rates, reduced turnover costs, and a more positive work environment overall.
- Career development and improved employability: The skills and knowledge gained through HRDF-supported training programmes contribute significantly to an employee’s career development.These enhanced capabilities make employees more valuable to their current employers and improve their overall employability in the job market.
HRDF registration process
To benefit from HRDF, eligible employers must undergo a registration process, ensuring they meet specific criteria and comply with statutory requirements. The HRDF registration process is relatively simple and can be done online. Here are the steps they can follow:
- Prepare the necessary documents
- Registration license: Registration of Business (ROB) or Registration of Company (ROC) or other relevant documents (e.g., Form B, Form 8, Form 9).
- Financial documents: Company’s audited financial reports, company profile, or annual report.
- Employee records: Latest SOCSO or EPF statements.
- Visit HRD Corporation’s website: Access the HRD Corp portal and download the registration checklist to ensure all requirements are met.
- Start the registration: Click on the ‘Register Here’ button to begin the registration process.
- Choose ‘Employer Registration’: Select ‘Employer’ and then click on ‘Form 1’ to access the registration form.
- Fill in the Registration Form: Complete the form with accurate company details, including structure and employee numbers.
- Upload supporting documents: Attach all necessary documents prepared in Step 1.
- Submit the application: After filling in all required information and uploading documents, select the ‘Submit’ button to complete the registration process.
After approval, employers must maintain accurate records of all training activities. This should include participant lists, training schedules, and proof of expenses.
HRDF will conduct periodic audits to assess compliance with its regulations. Therefore, it’s imperative to always keep documentation up-to-date and accessible.
For more details and to view onboarding courses, visit the HRD Corporation website.
Who needs to register for HRDF?
All businesses that have ten or more Malaysian employees are required to register with the HRDF as of March 1, 2021. Besides penalties, according to the PSMB Act 2001, specifically Section 13(2), an employer may be convicted for not registering and face a fine of up to RM10,000 or imprisonment.
On the other hand, business owners who have five to nine Malaysian employees can register with the HRDF—only if they wish to do so.
Furthermore, there are a number of organisations that are exempt from HRDF registration. These include federal statutory bodies, local councils, non-governmental organisations (NGOs) associated with welfare activities, and state governments.
HRDF grant schemes for employers
HRDF offers various grant schemes to support different types of training and development initiatives. Here’s a brief overview of some key schemes:
- Skim Bantuan Latihan: This scheme provides financial assistance for employers to send their employees to training programmes conducted by external training providers.
- Skim Bantuan Latihan Khas: SBL-Khas offers support for in-house training programmes conducted by the employer’s internal trainers or invited external trainers.
- Industrial Training Schemes: These schemes focus on industry-specific training to augment the skills and knowledge of employees in particular sectors.
- Future Workers Training: This initiative aims to prepare the workforce for future industry needs by supporting training in emerging technologies and skills.
- On-Job Training: This scheme supports structured on-the-job training programmes designed to enhance employees’ skills in their current roles.
- Training Facilities and Renovation (ALAT): ALAT provides financial assistance for employers to set up or upgrade their training facilities, ensuring a conducive learning environment.
HRDF contributions
HRDF contributions are mandatory financial obligations for eligible employers, calculated based on the payroll of Malaysian employees. Understanding how HRDF contributions are calculated is, therefore, essential for employers to comply with the fund’s requirements.
How is HRDF contribution calculated?
HRDF contributions are levied at a rate of 1 percent of the monthly wages (inclusive of total wages or basic salaries plus fixed allowances) for each Malaysian employee.
Employers with 5 to 9 Malaysian employees can register with HRDF (optional) to access its programmes. Furthermore, they are subject to a levy of 0.5 percent of the monthly wages (inclusive of total wages or basic salaries plus fixed allowances) for each Malaysian employee.
The formula for calculating the HRDF levy is generally straightforward. In practice, it’s determined by multiplying the applicable levy percentage by the sum of the employee’s basic salary and fixed allowances.
Additionally, employers must ensure timely payment of these contributions, which are due by the 15th of the following month. This adherence can help them avoid penalties.
How to claim HRDF?
Claiming HRDF for training expenses is a straightforward process, but it requires attention to detail. Here are the basic steps:
- Approval and training completion: Ensure that the training grant is approved and the training is completed. Claims must be submitted within six months after the training’s completion.
- Login to eTRiS: Access HRD Corp’s eTRiS system by logging into your employer account.
- Submit claim with grant:
- Navigate to the “Application” section.
- Click on “Claim”.
- Select “Submit Claim with Grant”.
- Select Grant ID:
- Search for the Grant ID related to your training.
- Click the “Claim” button next to the relevant grant.
- Attach supporting documents: Attach all required documents for the claim, including:
- Official receipts and tax invoices for course fees, transportation charges, flight tickets, and hotel rentals.
- System-generated attendance reports for remote online training.
- Cost-sharing letters for SLB courses.
- Other supporting documents as specified in the HRD Corp guidelines.
- Complete the claim form: Fill out the claim form with all necessary details, including contact information for the officer to be contacted.
- Save and submit: After filling in the required details and attaching all necessary documents, click “Save & Submit” to finalise the claim.
- Claim processing: The submitted claims will be reviewed by HRD Corp. If additional information is needed, the application status will be updated, and the employer will be notified via email and the eTRiS inbox.
It’s crucial to familiarise yourself with the specific claim guidelines for each grant scheme, as requirements may vary. For more specific guidelines regarding other schemes like SLB, SBL, Training Facilities & Renovation, etc., please refer to the detailed user guidelines available on the HRD Corp support centre and official portal.
FAQs
Is HRDF an expense?
Yes, HRDF contributions are considered a business expense because they represent a strategic investment in the development of the workforce.
How much can a company claim from HRDF?
The amount a company can claim varies depending on the approved training programme and the company’s HRDF levy balance.
Is HRDF taxable?
HRDF contributions are tax-deductible for employers. Training grants received are not considered taxable income.
What is the HRDF service fee?
HRDF does not impose a service fee for processing claims or contributions.
How do I claim HRDF for my employer?
You cannot directly claim HRDF as an employee. Your employer must submit claims for training programmes you attend.
How do I check my HRDF levy balance?
Employers can check their HRDF levy balance via the eTRiS HRDF portal.
What is the deadline for HRDF submission?
HRDF contributions must be submitted by the last day of the following month after the payroll is processed.
Is the 1% being deducted directly from the employee’s salary?
No, the HRDF contribution is paid by the employer and isn’t deducted from the employee’s salary.
Will the HRDF levy expire?
HRDF levies do not expire, but employers are encouraged to utilise their contributions for training purposes.
What is the age limit for HRDF contributions?
There is no specific age limit for HRDF contributions. All eligible employees, regardless of age, are covered.
Conclusion
Understanding and leveraging HRDF effectively can significantly enhance a company’s workforce capabilities and overall competitiveness. Remember, investing in your workforce through HRDF not only complies with legal requirements but also appreciably contributes to your company’s long-term success.
Embrace the opportunities HRDF offers, and you’ll be well-positioned to build a skilled, adaptable, and competitive workforce ready to face the challenges of tomorrow’s business landscape.
