New Employment Pass (EP) Rules in Malaysia From 1 June 2026

Malaysia has officially introduced a revised Employment Pass (EP) policy that will take effect on 1 June 2026.

The new framework includes:

Higher minimum salary requirements
New Employment Pass duration limits
Mandatory succession plans for selected EP categories
Changes that apply to both new and renewal applications

The policy aims to encourage employers to prioritise local talent while continuing to attract highly skilled foreign professionals where specialised expertise is required.

If your company hires expatriates or plans to renew Employment Passes in 2026 and beyond, it is important to understand these changes and prepare early.

Employment Pass 2026: Key Changes at a Glance

Change	New Requirement
EP I Salary	RM20,000 and above
EP II Salary	RM10,000 – RM19,999
EP III Salary	RM5,000 – RM9,999
EP III (Manufacturing & Manufacturing-Related Services)	RM7,000 – RM9,999
EP I Duration	Up to 10 years
EP II Duration	Up to 10 years
EP III Duration	Up to 5 years
Succession Plan	Required for EP II & EP III
Effective Date	1 June 2026

What Is an Employment Pass (EP)?

An Employment Pass (EP) is a work permit that allows foreign professionals to work legally in Malaysia.

It is commonly issued to expatriates holding managerial, executive, technical, or specialised professional positions.

Employment Passes are categorised based on salary levels and are managed through Malaysia's Expatriate Services Division (ESD).

New Employment Pass Salary Requirements From 1 June 2026

The government has significantly increased the minimum salary thresholds for Employment Pass holders.

Employment Pass Category	New Monthly Salary Requirement
EP I	RM20,000 and above
EP II	RM10,000 – RM19,999
EP III	RM5,000 – RM9,999
EP III (Manufacturing & Manufacturing-Related Services)	RM7,000 – RM9,999

The revised thresholds apply to both new applications and renewal applications submitted on or after 1 June 2026.

For many employers, this means reviewing expatriate salaries and workforce budgets before future Employment Pass submissions.

New Employment Pass Duration Limits

Malaysia has also introduced a structured duration framework for Employment Pass holders.

Employment Pass Category	Maximum Duration
EP I	Up to 10 years
EP II	Up to 10 years
EP III	Up to 5 years

Previously, Employment Pass durations varied by category and renewal arrangements. The new framework provides clearer long-term planning for both employers and expatriates.

Succession Plan Requirement for EP II and EP III

One of the most significant changes is the introduction of a succession plan requirement.

Under the revised policy:

EP II requires a succession plan
EP III requires a succession plan

According to the government, this requirement aims to strengthen local talent development and facilitate knowledge transfer from expatriates to Malaysian employees.

In practice, employers may need to demonstrate how local employees will be trained and prepared to eventually assume certain expatriate-held positions.

Why Is Malaysia Updating Its Employment Pass Policy?

According to Kementerian Dalam Negeri (KDN) dan Bahagian Perkhidmatan Ekspatriat (ESD), the revised framework aligns with the objectives of the Thirteenth Malaysia Plan (RMK-13).

The goals include:

Reducing reliance on foreign labour
Prioritising qualified local talent
Supporting knowledge transfer
Strengthening workforce sustainability
Maintaining Malaysia's competitiveness for high-skilled foreign professionals

The policy is intended to balance business needs while promoting long-term local workforce development.

Will Existing Employment Pass Holders Be Affected?

Yes, employers should pay close attention to upcoming Employment Pass renewals.

Although existing Employment Pass holders can continue working under their currently approved passes, any new or renewal application submitted on or after 1 June 2026 must comply with the revised requirements.

For example:

A foreign employee earning RM8,500 per month under EP II may need a salary adjustment to meet the new minimum requirement of RM10,000 during renewal.

This makes early workforce planning especially important for employers with expatriate employees whose passes are due for renewal after June 2026.

How Will This Affect Employers?

Higher Hiring Costs

Companies may need to increase salary budgets to meet the revised Employment Pass requirements.

This may particularly affect employers that rely on expatriates in technical, engineering, manufacturing, or specialised professional roles.

Greater Workforce Planning Requirements

Employers should review:

Existing expatriate salaries
Upcoming Employment Pass renewals
Future hiring plans
Succession planning requirements
Long-term workforce budgets

Early preparation can help avoid delays or compliance issues.

Stronger Focus on Local Talent Development

The succession plan requirement encourages employers to invest more in:

Employee training
Leadership development
Knowledge transfer initiatives
Internal promotion pathways

These efforts can support compliance while helping businesses build sustainable talent pipelines.

How Will This Affect Foreign Employees?

Higher Salary Thresholds

Foreign professionals must now meet higher salary requirements to qualify for an Employment Pass.

More Structured Career Planning

With maximum duration limits now in place, expatriates should consider long-term career and renewal planning.

Greater Demand for Specialised Skills

Employers may become more selective when hiring foreign talent due to higher salary commitments and additional compliance requirements.

Candidates with specialised expertise, leadership experience, or niche technical skills may have stronger prospects.

Employment Pass Compliance Checklist for Employers

Before submitting a new or renewal Employment Pass application, employers should:

Review expatriate salaries
Identify employees below the revised salary thresholds
Check upcoming Employment Pass expiry dates
Prepare succession plans for EP II and EP III holders
Review workforce budgets for 2026 and beyond
Strengthen local talent development programmes
Plan early for future Employment Pass renewals

Final Thoughts

Malaysia's revised Employment Pass policy marks one of the country's most significant expatriate employment updates in recent years.

While the higher salary thresholds may increase hiring costs for some employers, the changes are designed to strengthen local workforce development while ensuring foreign professionals continue to fill specialised and high-value roles.

Employers should begin reviewing their expatriate workforce and renewal plans now to ensure a smooth transition when the new Employment Pass requirements take effect on 1 June 2026.

FAQs

When will the new Employment Pass rules take effect?

The revised Employment Pass policy takes effect on 1 June 2026.

Do the new rules apply to Employment Pass renewals?

Yes. All new and renewal applications submitted on or after 1 June 2026 must comply with the updated requirements.

What is the minimum salary for EP I?

EP I requires a minimum monthly salary of RM20,000.

What is the minimum salary for EP II?

EP II requires a monthly salary between RM10,000 and RM19,999.

What is the minimum salary for EP III?

EP III requires a monthly salary between RM5,000 and RM9,999.

Is there a different salary requirement for the manufacturing sector?

Yes. For certain manufacturing and manufacturing-related services sectors, EP III requires a monthly salary between RM7,000 and RM9,999.

Which Employment Pass categories require a succession plan?

EP II and EP III require employers to implement succession plans.

Will SMEs be affected?

SMEs that rely on expatriate employees may face higher hiring costs and increased workforce planning requirements under the revised framework.

Need Help Hiring Local Talent?

With the new Employment Pass requirements taking effect, many employers may need to strengthen their local hiring strategy and succession planning efforts.

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