Malaysia Employment Pass Salary Increase 2026 Takes Effect on 1 June

Malaysia will implement a major revision to its foreign workforce policy starting 1 June 2026, with the government set to double the minimum salary requirement for foreign professionals under the Employment Pass (EP) programme.

The revised policy will apply to both new Employment Pass applications and renewals, and is expected to significantly affect employers that rely on expatriates and skilled foreign talent.

The move forms part of Malaysia’s broader labour market strategy to strengthen local workforce participation while ensuring foreign professionals are hired only for roles requiring specialised expertise.

New Minimum Salary Requirements for Employment Pass

Under the updated framework, minimum monthly salaries for Employment Pass holders will increase across all categories.

Source: The Economic Times

Previously, minimum salary thresholds were RM10,000 for Category I, RM5,000 for Category II and RM3,000 for Category III.

The revision represents an increase of up to 100% for certain Employment Pass categories.

Applies to New and Renewal Applications

The revised salary requirements will apply to:

• New Employment Pass applications

• Employment Pass renewals submitted from 1 June 2026 onwards

Existing Employment Pass holders whose salaries fall below the updated thresholds may require salary adjustments to remain eligible for renewal approval.

EP Salary Calculator for Employers: Eligibility Check

To help employers assess Employment Pass eligibility before submission, HR teams can perform a simple internal salary check.

Step 1: Identify the EP category

Based on job scope and seniority:

• Category I → Senior leadership or highly specialised roles

• Category II → Managers, professionals and specialists

• Category III → Skilled or technical positions

Step 2: Check the employee’s basic monthly salary

Only basic salary is considered for Employment Pass eligibility.

The following items are not counted:

• Allowances

• Overtime

• Bonuses

• Commissions

• Incentives

Step 3: Compare with minimum salary requirement

If the salary is even RM1 below the required amount, the Employment Pass application may be rejected.

Step 4: Calculate adjustment if required

Formula commonly used by HR:

Required increase = EP minimum salary – current basic salary

Example: RM10,000 – RM8,700 = RM1,300 increase required

Step 5: Review cost impact

To estimate payroll impact: Monthly increase × 12 months

This allows HR and finance teams to assess annual cost before approving salary revisions or EP renewals.

Government’s Policy Direction

According to official statements, the increase in minimum salary requirements aims to:

• Encourage hiring of Malaysians where suitable talent is available

• Ensure foreign professionals are engaged only for genuine skills gaps

• Support wage growth in the local labour market

• Reduce long-term reliance on lower-paid foreign labour

• Promote skills transfer to Malaysian employees

The policy reflects Malaysia’s transition towards a high-value, skills-based foreign workforce model.

Impact on Employers

The revised Employment Pass requirements are expected to affect employers across sectors such as:

• Technology and digital services

• Manufacturing and engineering

• Finance and shared services

• Oil and gas

• Regional headquarters operations

Apart from higher base salaries, employers may also experience increased costs related to taxation, expatriate benefits and relocation support.

HR teams are encouraged to review foreign workforce structures early to minimise renewal risks and business disruption.

FAQs

What is the minimum salary for Employment Pass in Malaysia in 2026?

From 1 June 2026, the minimum monthly salary is:

• RM20,000 and above for Category I

• RM10,000 to RM19,999 for Category II

• RM5,000 to RM9,999 for Category III

Does the new EP salary requirement apply to existing foreign workers?

Yes. The revised salary threshold applies to Employment Pass renewals submitted from 1 June 2026 onwards.

When will the new Employment Pass salary rule take effect?

The new minimum salary requirement takes effect on 1 June 2026.

Can employers hire foreign workers earning below RM5,000?

No. From June 2026, RM5,000 is the lowest salary eligible for an Employment Pass under Category III.

Why did Malaysia increase the Employment Pass minimum salary?

The government aims to protect local employment, encourage fair wages, attract higher-skilled foreign talent and support long-term workforce sustainability.

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