Learning how to calculate HRDF contribution correctly helps keep payroll compliant with HRD Corp and gives you a clearer view of how much levy is available for employee training.
The amount depends on eligible monthly wages and your company’s registration category.
This article explains the calculation step by step, including the contribution formula, wage components, worked examples and a quick calculator table. It also shows how the levy can support future training plans once the balance starts to build.
What Is the HRD Corp Levy?
The HRD Corp levy is a monthly contribution paid by registered employers under the Pembangunan Sumber Manusia Berhad Act 2001 (Act 612). The levy is used through HRD Corp’s levy and grant system to fund approved employee training and development.
Registered employers can apply for training grants, and approved training costs are charged against their levy balance.
Your registration category determines the levy rate. Only Malaysian employees are counted for the registration threshold and levy calculation.
| Registration type | Malaysian employees | Levy rate |
|---|---|---|
| Mandatory | 10 or more | 1% of monthly wages |
| Optional (voluntary) | 5 to 9 | 0.5% of monthly wages |
Contact My Team Plan to turn your available HRD Corp levy into a claimable training programme for your team.
What Counts as Wages in Your HRDF Calculation?
Fixed monthly pay counts; variable pay does not. Most calculation errors come from adding overtime or commission to the wage base, which inflates the levy you pay.
| Included in the wage base | Excluded from the wage base |
|---|---|
| Basic salary | Overtime payments |
| Fixed monthly allowances (e.g. fixed housing or phone allowance) | Bonuses, commissions and incentives |
| Paid leave | Travel allowances and mileage claims |
| Wage arrears | Employer EPF and SOCSO contributions |
| Salary paid to a director under a contract of service | Gratuity, retrenchment and termination payments |
How to Calculate HRDF Contribution in 4 Steps
The formula is simple:
HRDF contribution = (basic salary − unpaid leave deduction + fixed allowances) × levy rate.
Run it per employee, then add the results together.
Step 1: List your Malaysian employees. Include full-time, contract and salaried directors on the month’s payroll.
Step 2: Work out eligible wages. Add basic salary and fixed allowances, then subtract any unpaid leave deductions.
Step 3: Apply your levy rate. Multiply eligible wages by 1% (mandatory) or 0.5% (optional).
Step 4: Total and round. Sum every employee’s figure and round to two decimal places before payment.
HRD Corp Levy Calculator: Worked Examples
Example 1: One Employee With Variable Pay
Aina earns a basic salary of RM4,000, plus several additional payments:
- Basic salary: RM4,000
- Fixed phone allowance: RM300
- Overtime: RM450
- Sales commission: RM800
- Eligible wages: RM4,300
- HRDF contribution at 1%: RM43.00
Only the basic salary and fixed allowance are included in this example, while overtime and sales commission are excluded from the levy calculation.
Example 2: A 12-Person Team at 1%
| Role group | Headcount | Eligible wages each | Group total |
|---|---|---|---|
| Executives | 5 | RM3,700 | RM18,500 |
| Senior executives | 4 | RM5,300 | RM21,200 |
| Managers | 2 | RM8,500 | RM17,000 |
| Salaried director | 1 | RM12,000 | RM12,000 |
| Total | 12 | RM68,700 |
That RM8,244 a year is training money already paid. Left unclaimed, it does nothing for your people.
Example 3: A 7-Person Team at 0.5%
A design studio has seven Malaysian employees and RM24,500 in total eligible monthly wages:
- Eligible monthly wages: RM24,500
- Levy rate: 0.5%
- Monthly HRDF contribution: RM122.50
- Annual HRDF contribution: RM1,470
Quick HRDF Levy Calculator Table
| Monthly eligible payroll | Levy at 1% | Levy at 0.5% | Yearly levy at 1% |
|---|---|---|---|
| RM20,000 | RM200 | RM100 | RM2,400 |
| RM50,000 | RM500 | RM250 | RM6,000 |
| RM100,000 | RM1,000 | RM500 | RM12,000 |
| RM250,000 | RM2,500 | RM1,250 | RM30,000 |
Curious what your yearly levy could fund? Speak to My Team Plan for a free plan matched to your balance.
Payment Deadlines, Penalties and Common Mistakes
Levy is due by the 15th of the following month, paid through HRD Corp’s e-TRiS employer portal by FPX, JomPAY or bank transfer.
Late or short payments become arrears with a 10% late payment interest on the outstanding amount. Failing to register or pay carries a fine of up to RM20,000, up to two years’ imprisonment, or both.
Watch out for these four errors:
- Adding overtime, bonuses or commission to the wage base
- Counting foreign workers in the headcount or levy
- Missing new joiners whose first month is pro-rated
- Paying every month but never applying for a training grant
Turn Your HRDF Levy Into Claimable Team Training
My Team Plan offers HRDF claimable training programs that combine practical skills development with hands-on team bonding, helping companies put their levy to better use.
- Bond to Win: a claimable team-building programme that builds trust and collaboration across departments.
- Speak with Impact: presentation training that helps staff pitch, report and lead meetings with confidence.
- Creative Problem Solving & Innovation: a design thinking workshop that turns team ideas into workable solutions.
With over 250 events delivered and 8+ years of experience, My Team Plan runs indoor, outdoor, virtual and hybrid sessions across Kuala Lumpur, Selangor and nationwide, and replies to every enquiry within 24 hours.
Plan your next HRDF claimable team building session.
Maximise Your HRD Corp Levy Through Training
Accurate HRDF contributions keep your company compliant, while using the levy for training helps turn that cost into practical team development.
My Team Plan offers HRD Corp-claimable programmes such as Bond to Win and Speak with Impact, backed by more than 250 events delivered across Malaysia.
Book a consultation with My Team Plan today.
Frequently Asked Questions on How to Calculate HRDF Contribution
1. Is the HRDF contribution 1% of gross salary?
No, the HRDF levy is calculated on eligible wages, and My Team Plan can help estimate how much levy may be available for claimable training.
2. Do foreign workers count in the HRDF calculation?
No, the levy applies to Malaysian employees, so My Team Plan checks your eligible headcount when planning HRD Corp claimable programmes.
3. Can I use my HRDF levy for team building?
Yes, eligible team building delivered as an HRD Corp claimable programme, such as My Team Plan’s Bond to Win, can be funded through your levy.
4. When is the HRDF levy due each month?
HRDF levy is generally due by the 15th of the following month, and My Team Plan recommends planning training early so grant approval can be secured before the programme starts.
5. How much levy does a 20-person company pay?
A company with 20 Malaysian employees earning RM4,000 in eligible wages each would contribute RM800 monthly, which My Team Plan can factor into annual training planning.
6. What happens if I underpay my HRDF levy?
Any shortfall may become arrears with late payment charges, so My Team Plan recommends checking your e-TRiS balance before applying for a training grant.