Malaysia Raises Employment Pass Salary Thresholds from June 2026

Feb 5
3 min read

Updated: 22 hours ago

Malaysia will significantly raise the minimum salary requirements for expatriates working in the country beginning 1 June 2026, marking one of the most substantial adjustments to the Employment Pass (EP) framework in nearly a decade.

Announced by the Ministry of Home Affairs (MOHA) through the Expatriate Services Division (ESD), the revised policy is part of the government’s broader strategy under the Thirteenth Malaysia Plan (RMK-13) to strengthen the local workforce while ensuring that foreign expertise continues to contribute to Malaysia’s economic development.

The new framework introduces higher salary thresholds, structured employment duration limits, and mandatory workforce localisation planning for certain expatriate roles.

Higher Salary Thresholds Across All EP Categories

Under the revised policy, the minimum salary requirements for expatriates will increase significantly across all Employment Pass categories.

EP Category	Current Minimum Salary	New Minimum Salary (Effective 1 June 2026)	Maximum Employment Duration
Category I	RM10,000 and above	RM20,000 and above	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*

*Category II and III positions require employers to implement a replacement plan for local talent development.

The changes apply to new Employment Pass applications and renewals submitted from 1 June 2026 onwards. For certain sectors such as Manufacturing-Related Services, specific salary thresholds may apply based on industry requirements.

Focus on High-Value Expatriate Roles

The government has stated that the revised salary thresholds are intended to ensure that expatriate hiring focuses on high-impact expertise and strategic roles, rather than positions that could be filled by local professionals.

This reflects a broader policy direction to gradually reduce reliance on foreign labour while strengthening the capabilities of Malaysia’s domestic workforce.

According to the official policy explanation, expatriate employment should act as a catalyst for technology transfer, skills development, and industry advancement, rather than serving as a long-term substitute for local talent.

Mandatory Workforce Replacement Plans

A key feature of the new policy is the requirement for employers to implement a replacement plan when hiring expatriates under Category II and Category III Employment Passes.

The replacement plan requires companies to prepare local employees to eventually assume expatriate roles. This may include:

structured training and mentoring programmes
knowledge transfer from expatriate specialists
identification of Malaysian employees who will be developed for the role
a clear timeline for workforce localisation

Authorities may review these plans as part of immigration compliance, and future expatriate applications could be affected if companies fail to demonstrate meaningful implementation.

Impact on Existing Expatriates

The revised policy is not retrospective, meaning existing Employment Pass holders will not be immediately affected.

However, companies should note that:

the new requirements will apply to renewals submitted from 1 June 2026 onwards
transitional guidelines for existing expatriates may be introduced
future renewals may need to comply with the revised salary thresholds and workforce transition requirements

Employers with expatriate employees whose passes expire after mid-2026 may therefore need to review compensation structures and workforce planning in advance.

Implications for Businesses and Investors

The policy is likely to have several implications for businesses operating in Malaysia.

For multinational companies, the higher salary thresholds may increase the cost of hiring expatriates for mid-level roles. This could encourage firms to localise more operational positions while reserving expatriate appointments for senior leadership, specialised technical roles, and strategic functions.

For the Malaysian labour market, the policy is expected to support higher wages, greater career mobility, and stronger skill development among local professionals.

At the same time, the government has emphasised that the policy is not intended to discourage foreign investment. Instead, it aims to attract high-value investments and advanced expertise that contribute to long-term economic growth.

Companies with expatriate employees should consider:

reviewing expatriate compensation structures
identifying roles that may transition to local employees
implementing knowledge transfer programmes
evaluating upcoming Employment Pass renewals

Early planning will help companies avoid potential disruptions when the revised framework comes into effect.