If you’re contributing to the HRD Corp levy as a Malaysian employer, you may wonder: what happens to your HRD Corp levy unused after 2 years? Many businesses miss out on thousands of ringgit in training funds simply because they don’t fully understand the rules. In this article, we’ll explain what happens if you don’t use your HRD Corp levy on time, the consequences of inaction, and how to make the most of your levy before it’s too late.
What is the HRD Corp Levy?
The HRD Corp levy is a mandatory contribution imposed under the Pembangunan Sumber Manusia Berhad (PSMB) Act 2001. Eligible employers are required to contribute 1% of their employees’ monthly wages to HRD Corp. In return, they are given access to financial assistance for employee training and upskilling programs.
Sounds great, right? But there’s a catch.
The 2-Year Rule: Use It or Lose It
As per Employer Circular No. 7/2019, any HRD Corp levy unused after 2 years (24 months) is subject to forfeiture.
Here’s a breakdown:
| Levy Usage Duration | Levy Balance Outcome |
|---|---|
| Within 24 months | Safe – you can still submit training claims |
| Over 24 months & > RM10,000 | Amount exceeding RM10,000 is forfeited |
| Over 24 months & ≤ RM10,000 | No forfeiture – the RM10,000 is retained |
There is no refund mechanism. Once the levy expires, the funds are written off.
Why Does HRD Corp Do This?
It all ties back to Section 25 of the PSMB Act 2001, which states that employers lose eligibility to claim financial assistance if they don’t submit training claims within the specified timeframe. The rationale? To ensure employers are consistently investing in talent development and not just contributing passively.
The Impact of Unused Levy
Not using your levy funds within the stipulated timeframe means:
-
Wasted money: You’ve contributed 1% of payroll monthly, but you gain no return on that investment.
-
Missed upskilling opportunities: Your employees lose access to valuable training programs.
-
Reduced productivity & competitiveness: Without proper training, your workforce might fall behind.
This isn’t just a lost opportunity, it’s a potential long-term disadvantage for your company.
How to Avoid Losing Your Levy
Here’s how to protect your HRD Corp levy:
1. Plan early: Create an annual training calendar for your team.
2. Monitor levy balance: Regularly check your levy status through the HRD Corp e-TRiS portal.
3. Submit claims promptly: Don’t wait too long after training ends—submit claims immediately.
4. Use HRD Corp-approved programs: Take advantage of SBL, SBL-Khas, or other registered schemes.
5. Join national initiatives: Leverage special programs like the MADANI Training Initiative, especially if your levy balance is high.
💡 Did you know? HRD Corp encourages employers with levy balances over RM50,000 to utilise at least 50% annually, or face an additional 15% deduction for MADANI contributions.
Conclusion
Your HRD Corp levy unused after 2 years can be a costly oversight. Instead of letting your contributions expire, take proactive steps to invest in training and claim what’s rightfully available to you. Plan ahead, stay informed, and make your levy work for you not against you.
References
-
HRD Corp Employer Circular No. 7/2019:
https://hrdcorp.gov.my/wp-content/uploads/2020/07/Pekeliling-Majikan-Bil_7_2019_Levy-Utilisation.pdf -
PSMB Act 2001 (Section 25):
https://hrdcorp.gov.my/psmb-act-2001/ -
HRD Corp MADANI Training Initiative:
https://hrdcorp.gov.my/employers/program-latihan-madani/