Malaysia Expatriate Salary Policy 2026: New Employment Pass Rules and Salary Requirements

Malaysia has introduced significant changes to its expatriate employment rules, with revised salary requirements for Employment Pass (EP) holders taking effect from 1 June 2026. The updated policy affects new applications as well as renewal applications submitted from the effective date.

Malaysia Expatriate Salary Policy 2026

The changes are part of Malaysia’s broader effort to strengthen the local workforce, encourage the development of Malaysian talent and reduce long-term dependence on foreign workers. At the same time, the government says the policy is intended to support businesses and maintain Malaysia’s position as an attractive destination for foreign investment.

According to Malaysia’s Expatriate Services Division (ESD), the revised policy increases the minimum salary levels for Employment Pass Categories I, II and III.

When Did the New Policy Take Effect?

The revised expatriate salary policy became effective on 1 June 2026.

Applications received on or after this date are assessed according to the new requirements. Complete applications submitted before 1 June 2026 continue to be assessed under the previous policy, subject to the applicable requirements.

The changes are particularly important for foreign professionals who are planning to work in Malaysia and for companies that employ expatriate workers.

New Employment Pass Salary Requirements

One of the biggest changes is the increase in the minimum salary thresholds for the three Employment Pass categories.

Employment Pass Category	Previous Minimum Salary	New Minimum Salary	Employment Duration
Category I	RM10,000+	RM20,000+	Up to 10 years
Category II	RM5,000–RM9,999	RM10,000–RM19,999	Up to 10 years
Category III	RM3,000–RM4,999	RM5,000–RM9,999	Up to 5 years

The revised thresholds represent a substantial increase, particularly for Category I and Category II positions. Category III also has a higher minimum salary requirement under the new framework.

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Salary Is Based on Basic Pay

Another important point for employers and expatriate workers is how salary is calculated.

Under the revised framework, the minimum salary requirement is based on the employee’s basic salary. Allowances, bonuses and other additional payments are not included when determining whether the salary threshold has been met.

This means employers should carefully review employment contracts and compensation structures before submitting Employment Pass applications.

For example, an employee cannot simply rely on bonuses or allowances to bring total compensation up to the required threshold if the basic salary itself does not meet the applicable minimum.

Changes Affect Employment Pass Renewals

The revised policy is not limited to people applying for a Malaysian Employment Pass for the first time.

Renewal applications submitted from 1 June 2026 must also satisfy the new salary requirements. This means existing expatriate employees may be affected when their current Employment Pass comes up for renewal.

Companies employing foreign professionals should therefore review upcoming renewal dates and salary arrangements well in advance.

The updated rules apply even when an existing pass was originally approved under the previous salary framework.

Employment Duration Rules

Malaysia has also introduced a more structured approach to the duration of expatriate employment.

Category I and Category II Employment Passes can generally be granted for periods of up to 10 years, while Category III positions can have employment periods of up to five years under the revised framework.

The policy also connects the employment duration calculation to the employing company. If an expatriate changes employers, the duration calculation can restart with the new employer. Companies may apply for employment periods of up to 60 months at a time, according to the latest implementation information.

Succession and Replacement Planning

The new policy places greater emphasis on developing local employees.

For certain Employment Pass categories, employers are expected to have a succession or replacement plan. The purpose is to encourage companies to transfer knowledge and skills from expatriate workers to Malaysian employees over time.

Malaysia’s official FAQ explains that the replacement-plan requirement is designed to support local talent development and reduce long-term dependence on foreign labour.

However, the implementation of the succession-plan requirement has been phased. Malaysia’s Expatriate Services Division announced that this requirement would take effect from 1 January 2027, giving employers additional time to prepare.

What Has Changed for Category III Workers?

Employment Pass Category III has also received several notable changes.

The minimum salary has increased from the previous RM3,000–RM4,999 range to RM5,000–RM9,999. Certain manufacturing sectors may have a higher applicable threshold.

At the same time, the process has been adjusted in other areas. Applications for a minimum-salary exemption for Category III are no longer required, and the previous cooling-off period for Category III applications has been removed.

These changes could make some administrative processes simpler while increasing the financial requirements for eligible expatriate positions.

Why Is Malaysia Changing the Expatriate Salary Policy?

The Malaysian government has linked the revised policy to its broader workforce and economic development objectives.

One major objective is to encourage employers to give greater consideration to qualified Malaysian workers for available positions. The policy is also intended to promote the transfer of knowledge and expertise from foreign professionals to local employees.

Malaysia has stated that the policy is aligned with the objectives of the Thirteenth Malaysia Plan (RMK-13), including strengthening local human capital and reducing excessive reliance on foreign labour.

At the same time, authorities have indicated that the policy is intended to be implemented in a balanced manner so that Malaysia can continue to attract foreign investment and international expertise.

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What Employers Should Do

Businesses that employ expatriate workers should review their workforce plans following the new rules.

Employers may want to:

• Check the basic salaries of existing expatriate employees.
• Review upcoming Employment Pass renewal dates.
• Ensure new job offers meet the applicable salary threshold.
• Review employment contracts and compensation structures.
• Prepare for succession or replacement planning requirements.
• Identify positions that genuinely require international expertise.
• Keep updated with guidance from Malaysian immigration authorities.
• Allow additional time for Employment Pass applications and renewals.

Companies should also ensure that their immigration and human resources teams are working together because salary compliance is now an important part of the Employment Pass process.

What This Means for Foreign Workers

For expatriates considering employment in Malaysia, the new salary thresholds mean that some lower-paid positions may no longer qualify for an Employment Pass under the revised framework.

Professionals with specialized skills, senior-level experience or higher-paying roles may continue to find opportunities, particularly where their expertise is difficult to source locally.

Foreign workers should check the applicable Employment Pass category, salary requirement and other eligibility conditions before accepting a position.

It is also important to remember that meeting the salary requirement alone does not necessarily guarantee Employment Pass approval. Other immigration and employment requirements may apply.

Impact on Malaysia’s Job Market

The new rules could influence how multinational companies and Malaysian businesses approach international recruitment.

Employers may increasingly focus on hiring expatriates for senior, specialist and highly skilled roles while investing more heavily in local workforce development.

For Malaysian workers, this could create additional opportunities as businesses are encouraged to develop local talent and prepare employees to take on positions previously occupied by expatriates.

For international professionals, however, the higher salary requirements could make Malaysia a more selective market for foreign employment.

Malaysia Employment Pass Policy: Key Points

The most important points of the revised policy include:

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Effective date: 1 June 2026

Category I: Minimum basic salary of RM20,000

Category II: Minimum basic salary of RM10,000

Category III: Minimum basic salary of RM5,000

Category I and II duration: Up to 10 years, subject to applicable requirements

Category III duration: Up to 5 years

Renewals: New salary requirements apply to renewal applications submitted from 1 June 2026

Salary calculation: Based on basic salary rather than allowances or bonuses

Succession planning: Phased implementation, with the requirement taking effect from 1 January 2027

These changes make it important for both employers and foreign professionals to understand the latest Employment Pass rules before submitting an application or renewal.

Final Thoughts

Malaysia’s revised expatriate salary policy represents a significant change to the country’s Employment Pass system. The higher salary thresholds are expected to encourage businesses to focus on highly skilled expatriate recruitment while strengthening opportunities for Malaysian talent.

Employers should review their expatriate workforce, salary structures and future hiring plans to ensure compliance with the updated requirements. Foreign professionals planning to work in Malaysia should also verify that their proposed position and salary meet the relevant Employment Pass criteria.

As immigration policies can change and individual applications may have different circumstances, applicants and employers should rely on the latest information published by Malaysia’s immigration authorities before making important decisions.

Disclaimer: This article is provided for general informational and educational purposes only. It is based on publicly available information from Malaysia’s Expatriate Services Division, MIDA and other published sources available at the time of writing. Immigration rules, salary requirements, eligibility conditions and application procedures may change without prior notice.

This article should not be considered legal, immigration, employment or professional advice and does not guarantee Employment Pass approval. Employers and expatriate workers should verify the latest requirements with the relevant Malaysian government authorities or consult a qualified immigration professional before making decisions based on this information.

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