Malaysia’s Revised Expatriate Salary Requirements & Employment Pass Policy

On 14 January 2026, the Ministry of Home Affairs (MOHA) announced revisions to the Employment Pass (EP) Policy, effective 1 June 2026. The changes align with the Thirteenth Malaysia Plan (RMK-13), which seeks to reduce reliance on expatriates by progressively filling those roles with local talent.

The early notice gives employers time to restructure their workforce without disrupting operations, and to transfer knowledge, skills, and expertise from expatriates to local employees.

The revised policy rests on three pillars: higher salary thresholds, fixed maximum EP durations, and mandatory succession plans for certain categories to support local talent development.

The table below highlights the differences between the existing and revised policy:

Note: Whether the revised policy applies depends on the application’s submission date. Renewal applications can only be filed within the three (3) months before the current pass expires, not earlier. The illustrations below explain how this works in practice.

Illustration 1: EP expiring on 1 May 2026

• 3-month submission window: 2 February 2026 – 1 May 2026.
• Assessment: The entire submission window falls before 1 June 2026, so the application will be assessed under the pre June 2026 policy.

Illustration 2: EP expiring on 1 July 2026

• 3-month submission window: 2 April 2026 – 1 July 2026.
• Assessment: A renewal filed before 1 June 2026 falls under the pre June 2026 policy; one filed on or after that date falls under the revised policy.

Illustration 3: EP expiring on 1 December 2026

• 3-month submission window: 2 September 2026 – 1 December 2026.
• Assessment: The entire window falls after 1 June 2026, so the revised policy applies. Employers cannot pre-emptively renew earlier to avoid the new rules, because applications cannot be filed outside the three-month window.

Submitting a complete application within the three-month window is critical. If MDEC finds the original deficient and requires a fresh submission after 1 June 2026, the resubmission will be assessed under the revised policy — even if the first attempt was filed before the deadline.

By contrast, if a complete application is filed before 1 June 2026 but only approved afterwards, the existing policy still applies.

If an expatriate’s salary no longer meets the threshold for their current category (e.g., a Category I holder earning RM10,000), the employer must either raise the salary to RM20,000 to keep them in Category I, or cancel the existing EP and apply afresh under the appropriate category — here, Category II, which now covers RM10,000–RM19,999.

The revised policy also introduces mandatory Succession Plans for Categories II and III, designed to transfer knowledge, skills, and expertise to local employees so they can take over once the maximum EP duration ends. Category I is exempt, as the government recognises that highly specialised and leadership roles are harder to localise.

On a positive note, expatriates in all three categories — including Category III, previously excluded — may now bring their dependants to Malaysia, subject to prevailing immigration laws.

In short, the policy aims at gradual localisation of the workforce, making it timely for employers to hire and train local talent. Note that the maximum EP duration (10 years for Categories I and II; 5 years for Category III) cannot be granted upfront; passes must still be renewed periodically, typically every two or three years.

For Categories II and III in particular, MDEC will expect employers to show that a succession plan is in place (or at least clearly mapped out) so that local employees are ready to take over when the expatriate’s maximum EP duration ends.

***

This article was written by Donovan Cheah (Partner) with the assistance of Ishantiny (Pupil) from Donovan & Ho’s employment law practice.

Donovan & Ho is a law firm in Malaysia, and our employment practice group has built a reputation for providing strategic employment advice to local and global organisations. Our team of employment lawyers provide advice on employment law and industrial relations including review of employment contracts, policies and handbooks, advising on workforce reductions, and managing dismissals of employees for poor performance or misconduct. We also represent clients in unfair dismissal claims and employment-related litigation.

Have a question? Please contact us.