The Human Resource Development Fund, managed by HRD Corp, is a compulsory levy that supports employee training and skill development. Here is what many Malaysian employers miss: if you do not use your levy within two years, part of it can be forfeited. This guide explains the forfeiture rule, shows the formula with worked examples, and how to make sure you never lose money you have already paid.
Understanding the HRD Corp levy
Under HRD Corp (Human Resource Development Corporation, Malaysia), employers contribute a levy to support employee training and development. For companies with 10 or more Malaysian employees, the contribution is mandatory: 1% of each employee's monthly wages (basic pay plus fixed allowances). Only Malaysian citizens count toward the threshold — foreign workers, permanent residents, interns and part-timers are not counted.
This levy is not a tax. It is your money, set aside for training — but it comes with a condition: use it, or risk losing part of it.
If no claims are made over a two-year period, the unused levy is forfeited down to a minimum retained balance of RM10,000. Balances already below RM10,000 are exempt. The way to avoid it is simple: use your levy for training.
The HRD levy forfeiture formula
The forfeiture calculation tracks your remaining balance after a two-year period, so you can see where you stand:
Starting Balance (2 years ago) − Claims Made + Contributions (last 2 years) − Forfeiture Amount = Available Balance
- Starting Balance — the levy in your account at the start of the two-year period.
- Claims Made — total funds claimed for employee training during the two years.
- Contributions — total levy payments made over the two-year period.
- Forfeiture Amount — if no claims are made, the amount forfeited, leaving a minimum balance of RM10,000.
Forfeiture in practice: three examples
Forfeiture occurs — no claims made
Starting balance Jan 2021: RM100,000. No claims over 2021–2023. Contributions: RM20,000. Because nothing was claimed, RM90,000 is forfeited (retaining the RM10,000 minimum). Final balance: RM30,000 (100,000 − 90,000 + 20,000). Money lost simply by not using it.
No forfeiture — a claim was made
Starting balance Jan 2021: RM100,000. The employer claims just RM5,000 and contributes RM20,000. Because a claim was made, forfeiture is RM0. Final balance: RM115,000 (100,000 − 5,000 + 20,000). A single claim protected the whole balance.
Small balance — exempt from forfeiture
Balances below RM10,000 are exempt. Starting balance RM9,900, no claims, contributions RM5,000. Forfeiture is RM0. Final balance: RM14,900 (9,900 + 5,000). No penalty, because the balance was under the threshold.
The lesson across all three: making even one timely HRD Corp claim, and keeping an eye on your balance, is what protects the value of everything you have contributed.
Why the HRD Corp levy matters
The levy lets businesses invest in workforce development, keeping employees competitive and adaptable in a fast-changing economy. Used well, it turns a mandatory cost into funded, ongoing training for your team. Left unused, it quietly drains away.
How can you avoid forfeiture?
Avoiding forfeiture comes down to actively managing your levy rather than forgetting about it:
- Regularly audit your levy balance in the eTRiS portal.
- Identify training needs across your team before the two-year window closes.
- Use your levy for both public sessions and in-house programmes.
- Book with an HRD Corp registered training provider so claims are straightforward.
If you are not sure where to start, our guide on how to claim your HRD Corp levy walks through the full process step by step. For the official rules, see the HRD Corp levy knowledge base.
Don't let your levy expire
GOFLEX EVENTS is an HRD Corp Registered Training Provider in Kuala Lumpur. Booking claimable training is the simplest way to use your levy before it is forfeited.
