Avoiding the
RM20,000 Penalty
Falling behind on your HRD Corp levy isn't just "late". Failing to pay the levy due is an offence under section 14(3) of the PSMB Act 2001. Here's what triggers it, and how to stay clear.
What the RM20,000 penalty actually is
The RM20,000 penalty is often mislabelled as the fine for not registering. It isn't. Under the PSMB Act 2001, the RM20,000 exposure comes from failing to pay the levy that's due.
An employer who fails to pay any levy due within the prescribed period commits an offence and, on conviction, is liable to a fine of up to RM20,000, imprisonment of up to two years, or both. The same applies to optional 0.5% employers (section 15(3)).
RM10,000 or RM20,000? It depends on the offence
Different failures carry different maximum penalties under the Act. This is where a lot of published guidance (and a lot of employers) get it wrong:
| Offence | Section | Maximum penalty |
|---|---|---|
| Failure to register | s.13(2) | RM10,000 · up to 1 year · or both |
| Failure to pay the levy | s.14(3) | RM20,000 · up to 2 years · or both |
| Incorrect or false declaration / return | s.40 | RM20,000 · up to 2 years · or both |
| Obtaining a benefit by false statement | s.41 | RM20,000 · up to 2 years · or both (plus repayment with 10% interest, s.42) |
The fine isn't the whole cost
A RM20,000 fine is the headline, but non-payment carries more than that:
- Interest keeps running — section 18 charges 10% per annum on the unpaid levy for every day of delay.
- You still owe the levy — on conviction under s.14(3), the court also orders you to pay the outstanding levy plus interest (s.47).
- Directors are personally on the hook — directors and partners are jointly and severally liable for unpaid levy (s.45), and officers can be deemed liable for the offence itself (s.44).
- Claims freeze — while you're in default you're disqualified from receiving grants or benefits until everything owing is paid (s.20(5)).
How to avoid it entirely
Register when you're liable
Every covered employer must register with HRD Corp within the prescribed time (s.13). Do it as soon as you cross the threshold.
Pay every month by the 15th
The levy for each month is due by the 15th of the following month. Paying on time is the single thing that keeps s.14(3) off the table.
Declare accurately, keep records
Keep employee and wage records for six years (s.21) and make sure every declaration is correct — false or incorrect returns are a separate RM20,000 offence (s.40).
Clear arrears fast
If you've missed payments, settle the outstanding levy plus 10% interest (via Form 3) before it escalates to enforcement.
Claim honestly
Only submit genuine training claims. Obtaining a benefit by false or misleading statement is its own RM20,000 offence, with repayment and interest on top (s.41–42).
There's usually a way back
Many offences under the Act can be compounded — settled without prosecution — for up to 50% of the maximum fine, with the Public Prosecutor's consent. The fraud-related offences (s.40 and s.41) can't be compounded. Either way, regularising early — registering, paying what's owed and clearing interest — is far cheaper than waiting for enforcement.
Altomate keeps your HRD Corp registration, monthly levy payments and claims clean and on time — so section 14(3) simply never applies to you.
Frequently Asked Questions
Stay on the Right Side of the PSMB Act.
We handle your registration, monthly levy payments and claims — accurately and on time — so a RM20,000 penalty is never on your radar.