What is HRDF (Human Resources Development Fund) in Malaysia

Since its founding, HRDF has developed from maintaining a sizable fund to being a one-stop shop for offering innovative human capital development solutions to its registered employers and Malaysia’s critical mass of Small and Medium Enterprises. Our blog below covers all the information relating to HRDF in Malaysia.

What Exactly Is The Human Resources Development Fund (HRDF)?

The acronym HRDF stands for Human Resource Development Fund. This is a collection of funds gathered from the various enterprises and manufacturers covered under the HRDF act. The funds are raised by charges levied on employers in the industrial and service industries, as well as registered businesses. The HRDF was established under the Human Resources Development Act of 1992.

The act is now known as the PSMB Act, “Pembangunan Sumber Manusia Berhad Act (2001)”. According to the act, employers in the first schedule of the PSMB must pay a levy to construct the HRDF. Other employers may also register if they so want.

What Are The Objectives Of The HRDF?

• The prime objective of constructing the HRDF in Malaysia was to create a better-skilled human workforce. The laborers are expected to be highly skilled in their field of employment, both technically and academically.
• The fund was established to develop talented employees in Malaysia, but it is now a worldwide source of qualified people.

What Are The Benefits Of HRDF?

The main benefits of HRDF are as follows –

• HRDF offers free training and analysis.
• HRDF has a provision for levy payments to be taxed as allowable expenses under the Income Tax Act 1967.
• HRDF provides financial aid to employees who perform training per their business operations.
• HRDF counsels the National Human Resource Centre (NHRC) on human resource issues.
• HRDF helps employees to stay up to speed on important and relevant trends in job skills.
• HRDF is a platform for systematic worker training.
• HRDF is a claimable, upfront training that does not require payment.

Is HRDF compulsory in Malaysia?

HRDF registration with PSMB is mandatory for the following Malaysia Companies. 

1. Employers with 10 or more Malaysian employees are required to register with HRDF. The rate of levy is 1% of each of their Malaysian employees’ monthly income.
2. Employers with 5-9 Malaysian employees are given a choice to register with HRDF. Should they register with HRDF, the rate of levy is 0.5% of the employee’s monthly wages.

Section 13 of the act states that any employer who fails to register with PSMB may be fined up to RM10,000 or imprisoned for up to a year.

How Can You Apply For HRDF?

A company can easily register with HRDF by following the four simple steps below. 

1. Log into the HRDF website.
2. Select application.
3. Select ‘SBL’ from the menu.
4. Fill out the form provided.

What Are Some Of The Industries That Are Required By The Act Mandatorily Register For HRDF?

There are a lot of industries that must opt for mandatory registration with HRDF, the main ones are listed below.

• Personal services
• Recreation
• Investment
• Household services and goods
• Insurance
• Cosmetic
• Technology
• Science
• HRDF schemes

Are There Any Grant Schemes Available For Employers Under HRDF?

Employers that are registered with HRDF can obtain the following grant schemes.

Skim Bantuan Latihan (SBL).

This is to encourage employers to retrain and enhance their employees’ skills following their operational and commercial needs. Employers can establish their own training needs and implement the training program in phases under SBL.

Skim Bantuan Latihan Khas (SBL-Khas).

Skim Bantuan Latihan-Khas (SBL-Khas) is one of HRDF’s primary initiatives. Training grants may be considered for all sorts of training programs that are suited to the needs of registered employers.

Industrial Training Schemes (ITS).

Industrial Training is for trainees (students) who are undertaking practical training at the employer’s workplace before graduation.

Future Workers Training (FWT).

To prepare future employees for employment by providing them with the necessary skills and competencies.

On-Job Training (OJT).

To motivate a skilled worker or supervisor to train another unskilled or new worker for them to gain skills while working alongside the competent worker or supervisor.

Computer-Based Training.

To help employees in self-paced learning as well as flexible learning hours, training location, and atmosphere by utilizing training software packages.

Information Technology (IT).

To encourage employers to educate their employees in information technology, financial aid will be offered to them to acquire a desktop or laptop computer, a camera, and an internet connection (for the first year only).

Recognition of Prior Experiential Learning (RPEL).

To recognize employees who lack formal certification but have acquired the necessary knowledge, experience, and abilities in the workplace based on their competency levels.

Training Facilities and Renovation (ALAT).

Promote more in-house retraining and skill upgrading of their employees by obtaining training aids to establish, restore, or improve training rooms.

What Is The Claiming Process Of HRDF?

1. Log in to the HRDF site and launch the E-TRIS.
2. Select the ‘Application’ icon.
3. Pick between submission of claims with grants or submission of other claims.
4. Ensure you complete the online submission with the supporting documentation and click the ‘Submit’ button.

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