Redrawing the Talent Map: Revised Minimum Salary Requirements for Employment Pass for Expatriates
28 January 2026
The Ministry of Home Affairs issued a press release on 14 January 2026 announcing changes to the Employment Pass (EP) requirements. Significantly, there will be an increase in the minimum salary thresholds for expatriates applying for EPs to work in Malaysia - with effect from 1 June 2026, the minimum salary requirements across all EP categories will be increased by 60% to 100%, marking the first major update since 2016.
Revised EP Salary Thresholds
| EP Category |
Current Minimum Salary |
Revised Minimum Salary
(Effective 1 June 2026) |
EP Duration |
| Category I |
RM10,000 and above |
RM20,000 and above |
Up to 10 years |
| Category II |
RM5,000 – RM9,999 |
RM10,000 – RM19,999 |
Up to 10 years (with succession/ replacement plan) |
| Category III |
RM3,000 – RM4,999 |
RM5,000 – RM9,999
Except for the manufacturing and manufacturing-related services sector (RM7,000 – RM9,999) |
Up to 5 years (with succession/ replacement plan) |
Under the revised policy, in addition to the increase in minimum salary thresholds for EP, a structured employment duration framework has been introduced. Fixed validity periods of 5 to 10 years will be applied
1, replacing the existing system which does not prescribe specific employment durations. Under the current framework, EPs for Category I and Category II are renewable without limitation, while the EP for Category III is limited to a maximum of 2 renewals. The introduction of fixed validity periods indicates that expatriates will only be permitted to work in Malaysia for the prescribed fixed durations, possibly with no renewal of the EP available to extend their period of employment beyond the fixed validity period.
Another revision introduced under the revised policy is that the expatriates applying for EP under Category III will now be permitted to bring their dependents, which is currently limited to EPs in Categories I and II only.
With the introduction of a maximum employment duration for EP holders, employers intending to apply for EP under Category II and Category III are required to implement a replacement plan
2. This plan serves as a guide for employers to manage human resources sustainably, preparing local workforce to eventually replace the roles occupied by expatriates while ensuring that expatriates working in Malaysia provide tangible added value to the development of local talent. This plan includes, among others:
- Identification of positions and functions to be transferred to local employees;
- Training, mentoring, and knowledge transfer from expatriates to local workers;
- A reasonable timeframe to ensure local employees are ready in terms of skills and competencies; and
- Operational continuity planning to ensure that the transition does not affect productivity or organisational performance.
These measures aim to support sustainable economic growth while strengthening the development of local talents. The revised policy aligns with the objectives of the Thirteenth Malaysia Plan (
RMK-13), which seeks to reduce reliance on foreign labour and to prioritise the employment of suitably qualified local talent.
It has been made clear that this policy shift reflects the Malaysian Government’s intention to encourage companies operating in Malaysia to employ more local workers in place of expatriates. This position was articulated by the chief executive officer of Malaysian Investment Development Authority (
MIDA), Datuk Sikh Shamsul Ibrahim Sikh Abdul Majid.
3
Commentary
In light of the forthcoming tightening of requirements, early and proactive planning will be critical for employers to minimise business disruption, manage workforce transition risks, and ensure continued access to expatriate talent where genuinely required, while maintaining compliance with evolving regulatory expectations.
A criticism of this policy shift is that some companies which may require longer-term engagement of expatriates beyond the fixed 5 to 10 years EP validity may face constraints in continuity, effective knowledge transfer and long-term project planning, potentially impacting their operations and business planning.
Nevertheless, from a longer-term perspective, these measures may contribute to the development of a stronger and more sustainable local talent ecosystem. The Malaysian Government’s move to strengthen the local talent pool by reducing reliance on expatriates and creating greater employment opportunities for the local workforce reflects a balanced approach, accommodating employers’ need for foreign talent where necessary while uplifting local talent.
Alert by Sara Lau (Partner) and Agnes Teh Ying Ying (Associate) of the Employment Law Practice of Skrine.
1 FAQ14 of the FAQ: Revised Employment Pass Policy Effective 1 July 2026, states that any extension is subject to a case-by-case evaluation based on national interest.
2 According to the FAQ: Revised Employment Pass Policy Effective 1 July 2026, a “replacement plan” is a structured plan to transfer knowledge and expertise to local employees within the expatriate’s employment period (FAQ12) and the replacement plan will be monitored through documentation requirements, periodic reporting and assessments by the relevant agencies (FAQ13)..
This article/alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.