Malaysia will introduce revised expatriate employment rules starting 1 June 2026, marking the first major update to Employment Pass requirements since 2016. The changes involve higher minimum salary thresholds, fixed employment durations, and expanded eligibility for dependents, according to announcements by the Malaysia Digital Economy Corporation (MDEC) and the Ministry of Home Affairs (MOHA).
Under the new framework, all Employment Pass applications and renewals submitted from 1 June 2026 onwards must comply with the updated criteria. Companies with foreign employees are advised to review their workforce planning early to avoid disruption to renewals or upcoming hiring needs.
New Rules for Expatriate Employment
The revised policy restructures salary thresholds across all three Employment Pass categories and introduces clear limits on how long expatriates may work in Malaysia. Previously, there were no formal caps on employment duration, and salary floors were significantly lower.
The updated requirements are as follows.
Category I
- Category I
- Minimum salary: RM20,000 and above (up from RM10,000)
- Maximum duration: 10 years
- Dependents: Allowed
- Minimum salary: RM20,000 and above (up from RM10,000)
- Category II
- Minimum salary: RM10,000–RM19,999 (up from RM5,000–RM9,999)
- Maximum duration: 10 years
- Mandatory succession plan to replace the expatriate with local talent
- Dependents: Allowed
- Minimum salary: RM10,000–RM19,999 (up from RM5,000–RM9,999)
- Category III
- Minimum salary: RM5,000–RM9,999
(RM7,000–RM9,999 for manufacturing and manufacturing-related services) - Maximum duration: 5 years
- Mandatory succession plan
- Dependents: Now allowed (previously not permitted)
- Minimum salary: RM5,000–RM9,999
Previously, some expatriate roles were renewed indefinitely, especially in mid-level professional positions.
Why the Policy Is Being Revised
According to MOHA, the updated policy is designed to prioritise qualified local talent while keeping Malaysia attractive for business and investment. The ministry said the changes are aligned with the 13th Malaysia Plan, which places emphasis on reducing dependence on foreign labour and strengthening long-term local human capital.
The introduction of fixed employment durations is intended to support more structured workforce planning. Employers are expected to treat expatriate appointments as time-bound roles, during which knowledge transfer and skills development for local employees can take place.
MOHA added that engagement sessions with industry players have been ongoing since 2022, and further briefings will be organised ahead of implementation to ensure a smooth and transparent transition.
What This Means for Employers
For employers, the revised salary thresholds raise the cost of hiring foreign professionals, particularly for mid-level roles. Companies that previously hired expatriates within the lower salary bands may now need to reassess compensation structures or accelerate localisation plans for key positions.
The mandatory succession plans for Categories II and III formalise expectations around skills transfer. Employers will need to identify and train local successors early, rather than relying on repeated renewals of expatriate passes.
Implications for Local Professionals
For local professionals, the policy may gradually reshape hiring practices and salary benchmarks, especially in sectors such as manufacturing, engineering, and specialised services.
By raising the minimum pay levels for expatriates, the government aims to ensure that foreign hires are brought in primarily for roles requiring specific expertise, rather than positions that Malaysians are able to fill.
Over time, this could translate into clearer career pathways, greater access to specialised roles, and stronger upward pressure on wages within certain industries.
Big Changes for Expatriate Hiring
The government has emphasised that the revised framework is not intended to shut out foreign expertise, but to ensure that expatriate hiring is more targeted and aligned with national development goals.
Senior and highly specialised professionals continue to have access to longer employment durations, while employers are given clearer guidance on succession planning.
With enforcement beginning in June 2026, the updated Employment Pass rules represent a measured shift in Malaysia’s workforce policy. How impactful the changes will be depends largely on how businesses adapt their hiring strategies and how effectively local talent development is carried out in the years ahead.
Source: 1| 2| 3
Related articles:
Hiring Expats? You’ll Need to Provide 3 Paid Internships for Locals
SMEs Can Get RM2,000 For Each Intern Hired Starting This March
Discussion about this post