From 1 June 2026, Malaysia is rolling out updates to its Employment Pass (EP) framework. These changes introduce higher salary thresholds and clearer limits on how long expatriates can stay in their roles. Announced by the Ministry of Home Affairs and reflected across official government channels, the update is part of a broader effort to strengthen the local workforce while still allowing access to specialised international talent where it is needed.
Overall, the aim is not to restrict foreign hires, but to ensure expatriate roles add real value — particularly through knowledge transfer and supporting longer-term workforce development.
New Salary Thresholds
One of the key changes is the increase in minimum salary levels across all EP categories. Category I now requires RM20,000 and above, Category II ranges from RM10,000 to RM19,999, and Category III sits between RM5,000 and RM9,999. For manufacturing roles, the minimum for Category III has been raised to RM7,000.
This is a noticeable increase from previous requirements and reflects a shift towards attracting higher-skilled, higher-value roles into Malaysia.
Tenure Limits and Structure
The updated policy also introduces clearer limits on how long expatriates can remain in Malaysia under an Employment Pass. Categories I and II allow for stays of up to 10 years, while Category III is capped at five years.
This adds more structure and reinforces the idea that expatriate roles should be purposeful and time-bound, rather than open-ended.
Mandatory Succession Planning
Another important element is the requirement for succession planning for Category II and Category III positions. Employers will need to show how knowledge and skills will be passed on to Malaysian staff over time.
In practice, this means putting formal plans in place — such as training programmes, identifying potential local successors, and setting timelines for when roles can transition to local hires. It moves succession planning from an informal expectation to a clear requirement.
What This Means in Practice
Taken together, these changes show a more focused approach to managing expatriate employment in Malaysia. Some roles that previously met mid-range salary requirements may no longer qualify, meaning businesses will need to review both remuneration and overall workforce planning.
Importantly, the policy does not discourage hiring international talent. Instead, it raises the bar — ensuring expatriate hires bring clear expertise, leadership, or specialist skills that contribute to developing the local workforce.
How Leap29 Can Help
Leap29’s Malaysia EOR Services can help simplify the process of navigating these new requirements. With higher salary thresholds, tighter timelines, and added expectations around succession planning, compliance can become more complex.
Our Malaysian expansion services can support businesses by managing the compliance process — from aligning applications with the updated criteria to assisting with workforce planning — allowing companies to focus on securing the right talent without getting tied up in administration.
Simon Duff Director shares his perspective.
“There is no doubt this policy raises the bar, but it also raises a few practical questions. Increasing salary thresholds so sharply could make it harder to justify certain roles, particularly at that mid‑level where expatriates have often sat. That said, the focus on succession planning is difficult to argue with — it puts responsibility where it belongs and makes the whole model feel a bit more intentional.”
