Malaysia: New Employment Pass Requirements Effective June 2026 – What employers need to know

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The relevant categories are:

• Category I: RM 20,000+ (previously RM 10,000+)
• Category II: RM 10,000–19,999 (previously RM 5,000–9,999)
• Category III: RM 5,000–9,999 (previously RM 3,000–4,999)

This is the first major revision since 2016. Employers relying on foreign talent should start preparing now.

Higher Salary Requirements & Fixed Employment Duration

Beyond revised salary thresholds, the government is also introducing a fixed employment duration framework. EPs will now come with predetermined validity periods of 5 to 10 years, replacing the current system where Category I and II Passes can be renewed indefinitely.

Under the new rules, expatriates may only work in Malaysia for the fixed duration stated, with no guarantee of renewal after that period. This signals a clear intent to limit long term reliance on foreign manpower.

Category III Pass holders can bring dependents

Another major improvement is that Category III EP holders will be allowed to bring dependents, a privilege currently limited to Category I and II. This update will make mid level roles more appealing to foreign talent and help employers attract a wider pool of candidates.

Replacement Plan required for Category II & III EPs

To support the shift toward developing Malaysian talent, companies applying for Category II and III EPs must prepare a replacement plan. This plan shows how the company will eventually transition the role to a local employee.

An effective replacement plan should include:

• Clear identification of which roles will be transitioned to Malaysians
• Training, mentoring, and knowledge transfer steps
• A realistic timeline for local upskilling
• A plan to ensure business continuity during the transition

This requirement reinforces a wider strategy under the Thirteenth Malaysia Plan (RMK 13), which aims to reduce dependence on foreign labor and grow a stronger local workforce.

What employers should do now

Review your expatriate workforce strategy immediately

Assess which foreign roles may be affected by higher salary thresholds or fixed term limits. Identify critical positions and evaluate whether you need to restructure roles, adjust compensation, or begin succession planning for positions that may not be renewable.

Start drawing your replacement plan

Do not wait until you submit an EP application, but begin mapping out now:

• Which Malaysian employees could be upskilled
• What training or mentoring they need
• What competencies the expatriate must transfer.

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