Lately, many employers have been getting emails from HRD Corp asking them to register their companies with HRD Corp. However, some employers are not sure if this registration is compulsory or not. The current rule says that only companies with 10 or more local employees need to pay the HRD Corp levy. To clear this confusion, we have contacted HRD Corp officers to get more information on this matter.
Here is what we learned from HRD Corp:
1. Do all employers need to declare/register with HRD Corp, even if they have only one employee (local employee only)?
Answer: Yes. Even though the rule is only for companies with 10 or more local employees to pay the HRD Corp levy, now all employers have to declare and register their company with HRD Corp, even if they have only one local employee.
“Section 13(1) of the PSMB Act 2001 states that every employer who is covered under the Act has to register with HRD Corp within the time and manner as prescribed.”
In this case, by the deadline mentioned in the HRD Corp email circular.
According to PSMB Act 2001, an employer is defined as “any person who has entered into a contract of service to employ any other person as an employee including an agent, manager or factor of such first-mentioned person.”
2. How do employers register with HRD Corp?
Answer: Employers have to fill up the “Form 1/Registration of Employer” (as attached) and send it together with the SSM registration and the latest EPF Form A. Please note, employers have to use their own company email and not a third party email, such as outsourced HR service provider.
3. How do companies check the status of their registration with HRD Corp?
Answer: The HRD Corp’s registration department will inform employers within 2 weeks by email or letter about the completion status of the submitted form. If employers have not received any confirmation, they have to contact the department HRD Corp.
4. How do companies know if they have to pay the HDR Corp training levy?
Answer: HRD Corp will send a letter or email to tell the company if the company has to start paying the levy of 1% (mandatory). Companies can choose to pay 0.5% (optional), even if they don’t have to. The company will get their user ID and password. The email address should be given by the employer and not by a third party.
5. How is the monthly levy contribution calculated?
Answer: The levy payment is calculated as follows:
Total Basic Salary + Fixed Allowance x 0.5% (optional) or 1% (mandatory) = Monthly Levy Payment
Point to note: Employers can deduct the levy contributed from their income tax.
6. Can the company be penalized for not registering with HRD Corp?
Answer: Yes, according to section 13(2) of PSMB Act 200, any employer who is guilty of not registering with HRD Corp can be fined up to RM10,000 or jailed for up to one year or both.
In summary, clients are advised to follow “Section 13(1) of the PSMB Act 2001 and register with HRD Corp, no matter how many employees they have, to meet the requirement of registering with HRD Corp. HRD Corp will decide if an employer has to pay the levy or not. The benefits of registering with HRD Corp include getting financial incentives and grants that can help reduce training and development costs. This proactive action not only ensures compliance with the law but also provides access to valuable support and resources to improve employee development in the business.
Hope this information is helpful and probides the needed clarity.
Please do not hesitate us at 03-22873500.
IHR CONSULTING SDN BHD
The HR Partner of Malaysian SMEs.