Corporate Immigration update—Malaysia: New Expatriate Employment Policy & Revised Employment Pass (EP) Salary Framework
Santa Fe publication date
19 January 2026
Overview
The Ministry of Home Affairs (MOHA) has announced the implementation of a New Expatriate Employment Policy, together with a Revised Employment Pass (EP) Salary Policy, effective 1 June 2026.
The policy introduces:
- Revised minimum salary thresholds for EP Categories I, II, and III
- Structured employment duration limits for expatriates
- A mandatory replacement (succession) plan for certain EP categories
- Stronger monitoring and governance of expatriate employment
The framework applies to all new and renewal Employment Pass applications submitted on or after 1 June 2026 and is positioned as a pro–high-quality investment policy, balancing business continuity with local talent development under Malaysia MADANI and RMK-13.
Who will be affected?
This policy affects:
- All employers hiring expatriates in Malaysia, across all sectors, including:
- Manufacturing
- Services
- Oil & Gas
- Digital / IT / Technology (including MDEC-facilitated companies)
- New Employment Pass applicants
- Existing EP holders at renewal stage on or after 1 June 2026
- Employers with expatriates earning:
- Below RM20,000 (potential reclassification to EP Category II or III)
- Employers required to implement replacement (succession) plans
- Dependant Pass holders (indirectly, as DP eligibility remains linked to EP status)
There are no blanket sector exemptions announced at this stage.
Background
The New Expatriate Employment Policy was approved by the Malaysian Cabinet on 17 October 2025 and formally announced by MOHA in January 2026.
Key policy drivers include:
- Reducing long-term reliance on foreign labour
- Strengthening local workforce capability and succession
- Ensuring expatriate hiring is strategic, needs-based, and value-driven
- Aligning immigration policy with:
- RMK-13 (13th Malaysia Plan)
- Malaysia MADANI principles (fairness, sustainability, inclusivity)
The Revised EP Salary Policy strengthens the existing 2016 framework and reflects consultations with industry stakeholders since 2022.
Impact
Key Impacts:
- EP category reclassification at renewal
Existing EP holders are not cancelled retrospectively, but renewals must meet the revised salary thresholds and policy conditions. Reclassification is administrative, not punitive. - Succession planning obligation
Employers hiring under EP Category II and III must submit a structured, time-bound replacement plan to demonstrate local talent development and knowledge transfer. - Employment duration limits
- EP Category I: Up to 10 years
- EP Category II: Up to 10 years (with replacement plan)
- EP Category III: Up to 5 years (with replacement plan)
Potential Risks if Not Prepared:
- EP renewal delays or refusals
- Requests for additional documentation from Immigration Authorities
- Business continuity challenges for key expatriate roles
- Increased scrutiny during audits or future applications
Date of implementation
1 June 2026
Santa Fe recommendation
Santa Fe strongly recommends that employers implement the following measures to ensure full compliance with the latest Immigration requirements:
Santa Fe Relocation Malaysia recommends that employers take early, proactive steps to prepare for implementation:
- Conduct an EP population review
- Map EP holders by expiry date, salary band, and EP category
- Identify high-risk renewals
- Focus on renewals falling on or after 1 June 2026
- Assess salary alignment
- Determine whether current salaries meet revised EP thresholds
- Prepare replacement (succession) plans
- Develop structured plans aligned with MOHA expectations
- Plan renewal strategies early
- Avoid last-minute submissions and compliance risks
** For further information, click here to view the Official Responses (Q&A) Issued By Ministry Of Home Affairs
Contact us
Please get in touch with us for further information or clarification:
Samson Poore
Immigration Manager — Malaysia
Santa Fe Relocation
samson.poore@santaferelo.com
Hema Jesani
Senior Manager Global Immigration
Santa Fe Relocation
hema.jesani@santaferelo.com
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