Effective Date: 15 June 2026
From 15 June 2026, Employer Circular No. 2/2026 introduces stricter controls over levy-based training grants — reshaping how more than 100,000 registered employers and approximately 4.8 million employees across Malaysia access workforce development funding.
Under the Pembangunan Sumber Manusia Berhad Act 2001 (PSMB Act 2001), Malaysian employers contribute monthly levies to the Human Resource Development Corporation (HRD Corp). Employers with 10 or more Malaysian employees are generally required to contribute 1% of employees' wages and fixed allowances, while smaller employers may voluntarily participate at a lower rate.
Critically, the levy is not a tax. It is a training fund that employers can utilise to upskill and reskill employees through HRD Corp-approved programmes. Employers submit grant applications, conduct approved training, and claim eligible training costs — making it one of Malaysia's most significant workforce development mechanisms.
Employer Circular No. 2/2026 takes effect on 15 June 2026. Employers who are unprepared risk rejected applications, programme disruptions, and potential levy forfeiture.
The revised circular marks a decisive shift from reactive, flexible training arrangements to a structured, compliance-driven framework. Here is a direct comparison of the old and new rules.
HRD Corp's revised grant framework marks a major shift towards stricter compliance and earlier planning. Employers that act now will be far better positioned to maximise training opportunities, avoid claim rejections, and protect their accumulated levy balances.
The new requirements may also affect public training programmes. Many public courses depend on achieving minimum participant numbers before confirmation. Since employers must now commit earlier, training providers may need to close registrations sooner. Some programmes may be postponed or rescheduled if sufficient participants are not confirmed in advance.
A transition period is expected for July 2026 programmes, as many employers remain unaware of the new requirements. This may result in:
- Rejected grant applications due to late submission
- Delayed approvals causing missed training sessions
- Rescheduled or cancelled programmes with insufficient participants
- Confusion and compliance gaps during the initial implementation phase
HRD Corp's revised grant framework means employers that proactively plan training, utilise levy balances regularly, and submit accurate grant applications to avoide claim rejections, programme disruptions, and potential levy forfeiture.
