Malaysia is undergoing a major strategic shift in its approach to international talent as part of the Thirteenth Malaysia Plan (RMK-13). Following Cabinet approval in late 2025, the Ministry of Home Affairs (MOHA) and the Expatriate Services Division (ESD) announced Announcement 266, which details the Revised Expatriate Salary Policy. This policy, effective June 1, 2026, represents the first major overhaul of expatriate salary requirements since 2016 and aims to prioritize the employment of qualified Malaysian professionals in line with the Malaysia MADANI principles.
The objective is clear: to ensure that expatriate employment genuinely catalyzes local capacity development rather than serving as a permanent substitute for local talent. By raising entry barriers for lower-tier roles and enforcing strict tenure limits, the government aims to strengthen the local workforce while remaining open to high-value global expertise.
Breaking down the 2026 Employment Pass (EP) categories
The revised framework introduces substantial changes to salary floors and maximum stay durations across all three EP categories. Employers must also review applicable employment laws to ensure contracts, benefits, and hiring practices remain fully compliant.
Revised salary thresholds and durations
Starting June 1, 2026, applications will be assessed under these new criteria:
EP Category | Current Min. Salary | Revised Min. Salary | Max. Duration | Key Requirements |
Category I | RM 10,000+ | RM 20,000+ | 10 Years | Executive/C-Suite roles |
Category II | RM 5,000–9,999 | RM 10,000–19,999 | 10 Years | Mandatory Succession Plan |
Category III | RM 3,000–4,999 | RM 5,000–9,999* | 5 Years | Mandatory Succession Plan |
*For Manufacturing and Manufacturing-Related Services (MRS), the Category III threshold is RM 7,000–RM 9,999.
The 10-year rule and tenure caps
Unlike the previous system, where certain passes could be renewed indefinitely, the new policy imposes a strict cumulative cap. The 10-year clock for Categories I and II begins on June 1, 2026, or from the issuance of a new pass. The tenure resets only if the expatriate changes employers, changes job positions, or moves to a different EP category.
What this means for skilled workers in Malaysia
For existing and prospective expatriates, the 2026 policy brings both opportunities and new limitations.
- Enhanced Family Rights: Category III holders will finally be allowed to bring spouses and children via Dependent’s Passes, a privilege previously reserved for higher tiers.
- Salary Adjustments: Current EP holders whose salaries fall below the new thresholds will need their compensation adjusted during their next renewal after June 1, 2026, to maintain their current category status. This modernization of payroll in Malaysia ensures that expatriate compensation remains competitive and legally compliant.
- Path to Localization: Expatriates in Category II and III roles will be expected to actively participate in mentoring local successors, as their long-term stay is now explicitly linked to a knowledge transfer timeline.
What it means for employers
Employers must immediately begin auditing their expatriate workforce strategy to prepare for the June 2026 implementation. The most significant administrative hurdle is the Mandatory Succession Plan, which must identify specific Malaysian roles for localization and outline training and mentorship steps. Knowing how to hire in Malaysia now requires a long-term view of talent development and strict adherence to the new salary floors.
How Multiplier can help: Navigating these changes while you expand your global workforce in Malaysia requires precise compliance management.
- Streamlined Hiring: Multiplier’s platform stays updated with the latest ESD mandates, ensuring your employment contracts for Category II and III hires explicitly meet the new RM 10,000 and RM 5,000 minimums.
- Compliance Management: We handle the statutory deduction requirements – including EPF and SOCSO contributions – which will naturally increase alongside the elevated salary floors.
- Strategic Support: Our experts can assist in documenting the necessary training frameworks required for the new local succession plans, ensuring your business continuity isn’t disrupted by pass rejections.
Transitioning to the New Expatriate Employment Policy
The Malaysian government is providing a preparation window until mid-2026 to allow for orderly workforce restructuring. However, any renewal or new application submitted on or after June 1, 2026, will be subject to the new rules without exception. For businesses, this means budgets must be adjusted now to account for the doubling of executive-level salary floors and the added costs of local upskilling programs. Whether you are managing your team via Multiplier’s Employer of Record Service or utilizing our Global Payroll solution, staying ahead of these RMK-13 driven reforms is essential for maintaining a compliant and successful presence in the region.
FAQs
What is the official effective date for the revised EP salary policy?
The new salary thresholds and employment duration frameworks will take effect on June 1, 2026. Any application submitted before this date will still be assessed under the current criteria.
What must be included in the mandatory Local Succession Plan?
The plan must identify which roles will be localized, provide a timeline for skills readiness, and detail training or mentorship programs designed to prepare Malaysian employees to eventually take over the expatriate's role.
Will current Employment Pass holders be affected immediately?
Not immediately, the new rules apply to renewals submitted on or after June 1, 2026. If your current pass expires after this date, you must meet the new salary and duration requirements at the time of renewal.
How is the 10-year maximum employment duration calculated?
The 10-year cap for Category I and II passes is tied to the employer. The calculation begins either from June 1, 2026, or from the date a new pass is issued under that employer.
Are there different salary requirements for the manufacturing sector?
Yes. For the manufacturing and manufacturing-related services (MRS) sectors, the minimum salary for Category III is higher than the general requirement, set at RM 7,000–RM 9,999.
Can Category III pass holders now bring their families to Malaysia?
Yes. Under the revised policy, Category III holders with applications submitted on or after June 1, 2026, are eligible to apply for Dependent’s Passes for their family members.
