Malaysia expat employment policy 2026 took effect on 1 June 2026, and it changes how companies hire and retain foreign talent. The Immigration Department raised minimum basic salary thresholds across all Employment Pass categories. It also extended pass durations and added a new succession plan requirement. In this post, SunFish HR by DataOn explains what changed, who it affects, and how HR teams can stay compliant.
Why the Malaysia Expat Employment Policy 2026 Changed
The Immigration Department introduced the revised policy to strengthen how Malaysia manages expatriate employment. The aim is to build a balanced workforce that complements local hiring rather than replacing it. The policy also pushes companies to develop Malaysian talent and reserve expatriate roles for high value positions that bring specialised expertise into the country.
Malaysia Expat Employment Policy 2026: Revised Salary Thresholds
The most immediate change affects minimum basic salary. Note that the threshold counts basic monthly salary only, taxable in Malaysia. It excludes allowances, incentives, bonuses, and any salary paid outside Malaysia.
| EP Category | Previous Minimum | Revised Minimum (from 1 June 2026) |
|---|---|---|
| Category I | RM10,000 and above | RM20,000 and above |
| Category II | RM5,000 to RM9,999 | RM10,000 to RM19,999 |
| Category III | RM3,000 to RM4,999 | RM5,000 to RM9,999 (RM7,000 to RM9,999 for manufacturing and manufacturing related services) |
Longer Pass Durations Under the Malaysia Expat Employment Policy 2026
Pass durations also increased significantly. Category I moved from up to 5 years per application to up to 10 years. For Category II, the duration moved from up to 2 years to up to 10 years, subject to a succession plan. Category III previously capped at 12 months per application, but it now allows up to 5 years, also subject to a succession plan. Note that the manufacturing and manufacturing related services sector faces a higher Category III threshold of RM7,000 to RM9,999, instead of the standard RM5,000 to RM9,999 range.
Dependant Eligibility Under the Malaysia Expat Employment Policy 2026
Category III holders previously could not bring dependants to Malaysia. Under the revised policy, applications submitted on or after 1 June 2026 are eligible. This covers Dependant Passes for spouses and children below 18. It also covers Long Term Social Visit Passes for parents, parents in law, children aged 18 to 25, and common law spouses.
The Succession Plan Requirement in the Malaysia Expat Employment Policy 2026
From 1 January 2027, companies applying under Category II or Category III must submit a succession plan. The plan must show how the company will upskill local employees during the expatriate’s tenure. This requirement sits at the heart of the policy’s intent, which is making sure expatriate hires transfer knowledge rather than occupy roles indefinitely.
How the Malaysia Expat Employment Policy 2026 Affects Existing Passes
Existing passes remain valid until their expiry date, and companies need take no action. Existing category conditions continue to apply, and the pass category stays unchanged. Employment duration now ties to the employing company rather than the first EP approval. If an expatriate changes employer, the duration starts fresh from the date of employment with the new company. For a change of pass category, duration starts from the issuance date of that category.
What the Malaysia Expat Employment Policy 2026 Means for HR Planning
The revised thresholds affect workforce budgeting more than most companies expect. A Category II hire that previously cost RM6,000 in basic salary now requires at least RM10,000. This changes headcount planning, compensation benchmarking, and how companies weigh expatriate hires against developing local talent.
Longer pass durations also shift how HR teams think about retention. A 10 year Category II pass means a much longer planning horizon for succession, training, and knowledge transfer. Companies now need to document development plans for local staff well before the January 2027 deadline arrives.
Tracking Malaysia Expat Employment Policy 2026 Compliance Alongside Local Payroll
Managing expatriate employees adds a compliance layer that spreadsheets handle poorly. HR teams must track pass expiry dates, salary thresholds, dependant statuses, and succession plan commitments. They must do this while running regular payroll for local staff.
SunFish HR by DataOn keeps both in one place. HR Core stores employee records, contracts, and pass documentation in a single system, so nothing sits on a separate tracker. Enterprise Payroll handles basic salary and statutory calculations accurately, which matters when basic salary alone determines EP category eligibility.
For the succession plan requirement, SunFish HR’s Talent Management module helps HR teams document local employee development, track training progress, and show evidence of upskilling when applications come up for renewal.
Why Choose SunFish HR by DataOn for Malaysia Expat Employment Policy 2026 Compliance
Malaysia expat employment policy 2026 adds new documentation and planning demands on top of existing payroll and statutory work. SunFish HR by DataOn brings payroll, employee records, and talent development into one platform, built for Malaysian compliance requirements. Instead of tracking expatriate obligations separately from everything else, HR teams get one auditable source of truth.
Media Contact: Akmal Razman, Marketing Executive at SunFish HR Malaysia by DataOn
Email: sunfish.malaysia@dataon.com
FAQs on the Malaysia Expat Employment Policy 2026
- When did the revised expatriate salary policy take effect?
The policy took effect on 1 June 2026. It applies to all new and renewal Employment Pass applications submitted on or after that date.
- What is the new minimum salary for Employment Pass Category I?
Category I now requires a minimum basic salary of RM20,000 and above, raised from the previous RM10,000 threshold.
- Does the new salary threshold include allowances and bonuses?
No. The threshold counts basic monthly salary only, taxable in Malaysia. It excludes allowances, incentives, bonuses, and salary paid outside Malaysia.
- Are existing Employment Passes affected by the new policy?
No. Existing passes remain valid until expiry, and existing category conditions continue to apply. Companies need take no action.
- When does the succession plan requirement start?
From 1 January 2027. It applies to Employment Pass Category II and Category III applications, and must show how the company will upskill local employees.
