In Malaysia, expatriates and multinationals are getting ready for a major change in the regulatory landscape. The Ministry of Home Affairs is taking action on the Cabinet’s latest directives, which are congruent with the country’s Thirteenth Malaysia Plan, to introduce a new set of rules for the New Malaysia Employment Pass, beginning on June 1, 2026. This is an extensive overhaul of the local immigration system that fundamentally changes the local picture.
The policy change focuses on developing local talent and reforming the way people can enter the country as workers from abroad. From a purely practical standpoint, knowing the new salary tier adjustment rates and what to expect for new validation requirements is crucial for preventing rejections on work visa applications—and it matters just as much for HR professionals responsible for auditing corporate compliance.
The 5 Major Changes for Expats Under the Revised Policy
The 2026 expatriate employment policy introduces five foundational shifts that alter how foreign talent is hired, managed, and retained in Malaysia.
1. Mandatory Local Succession Plans
For the first time, companies applying for lower-tier work visas must present a legally binding succession plan. According to official Expatriate Services Division (ESD) guidelines, employers must explicitly document how they intend to transfer knowledge, mentor local workers, and eventually localize the role.
2. Implementation of a 10-Year Cumulative Tenure Cap
Long-term residency on a standard work permit is coming to an end. Under the revised framework, a strict cumulative maximum duration now applies to all visa holders:
- Categories I and II: Capped at a maximum stay of 10 years total with the same employer.
- Category III: Restricted to a maximum duration of 5 years.
3. Structural Revisions to the Employment Pass Salary Tier
The financial commitment to sponsorship of global workers has more than doubled. The new salary tier system resets all three tiers of the Employment Pass (EP). In the future, immigration authorities will definitely only take the basic salary into account in calculating the immigration threshold, and any bonuses, allowances or benefits-in-kind will not be included.
4. Elimination of the EP Category III Minimum Salary Exemption
Traditionally, businesses were allowed to pay lower minimum wages for certain technical jobs at the middle level. The minimum salary exemption for Category III passes has been eliminated throughout the State of Alaska and will not be reinstated. Each application should be applied to the new structural floor.
5. Strict Alignment with Pre-Approval Registrations (Section 60K)
All applications for the Employment Pass for primary (PIN) must be made to the Department of Labour, Peninsular Malaysia (JTKSM) in accordance with Section 60K of the Employment Act prior to the application to the ESD system. This dual-check guarantees that all available local personnel have been tested before the foreign candidate’s approval.
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Detailed Breakdown of the New Salary Tier Framework
The most immediate impact on corporate operational budgets is the sharp increase in the minimum basic monthly salary.
| EP Category | Previous Minimum Salary | New Minimum Salary (June 1, 2026) | Maximum Pass Duration | Dependency Benefits |
| Category I (Executives/C-Suite) | RM 10,000 | RM 20,000 and above | Up to 10 Years | Eligible for Dependant Passes |
| Category II (Managers/Specialists) | RM 5,000 | RM 10,000 to RM 19,999 | Up to 10 Years * (Requires Succession Plan) | Eligible for Dependant Passes |
| Category III (Technical/Skilled Workers) | RM 3,000 | RM 5,000 to RM 9,999 | Up to 5 Years * (Requires Succession Plan) | Eligible for Dependants (New Policy Upgrade) |
Conclusion
Multinationals must make a structural plan now if they wish to adapt to the New Malaysia Employment Pass Rules for June 1. Your organization can achieve smooth compliance and continuous regional development by auditing existing staff to the new salary tiers and establishing structured succession plans in various areas.
FAQs
Are current Employment Pass holders affected immediately?
No, the policy is not retrospective. Existing visa holders can remain in Malaysia under their current terms. However, any renewal application submitted on or after June 1, 2026, must fully comply with the new salary thresholds and duration rules.
Can allowances be used to meet the new minimum salary tiers?
No. The immigration department calculates eligibility based entirely on the fixed basic monthly salary explicitly stated in the employment contract. Fixed or variable allowances, housing stipends, and commissions are omitted from the calculation.
Are there any sector-specific exemptions to these rules?
According to operational insights from advisory bodies like KPMG International, a temporary transitional exemption applies to Category III language-intensive roles within the Global Business Services (GBS) sector, which may follow old thresholds until June 1, 2027, subject to verification.
