What are Malaysia's new Employment Pass salary rules for 2026?

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Every employer with an expatriate on payroll, or a foreign hire in a broader recruitment plan, now has a new number to plan around. Malaysia's Ministry of Home Affairs announced a revised Expatriate Employment Policy on 14 January 2026, following Cabinet approval on 17 October 2025, and it takes effect on 1 June 2026. The headline change is simple to state and expensive to absorb: the minimum salary for every Employment Pass category goes up, in most cases by close to double, with a couple of sector-specific exceptions. Here is exactly what the new figures are, who they apply to, and what to do before your next application or renewal.

Malaysia's revised Employment Pass salary requirements raise the minimum monthly salary for every category, effective 1 June 2026: Category I to RM20,000 and above, Category II to RM10,000–RM19,999, and Category III to RM5,000–RM9,999 (RM7,000–RM9,999 in manufacturing), alongside new maximum durations and a replacement-plan requirement for two of the three categories.

Both the Immigration Department's Expatriate Services Division and the Malaysian Investment Development Authority (MIDA) confirm the same figures. The table below sets out the full comparison.

Source: Expatriate Services Division, Immigration Department of Malaysia and MIDA for the general figures; the manufacturing band is per Shearn Delamore & Co and Baker McKenzie.

Do allowances and bonuses count toward the minimum?

No. Every threshold is calculated on basic salary only — allowances, bonuses, commissions and benefits-in-kind do not count toward the minimum, per InCorp Malaysia, a detail that catches out payroll teams used to structuring expatriate pay with a heavier allowance component.

Yes — two exceptions to the salary thresholds themselves, plus one related eligibility change. GBS-sector Category III roles needing native or near-native language skills keep the OLD, lower thresholds until 1 June 2027, and Category III roles in manufacturing face a higher RM7,000–RM9,999 floor instead of the general RM5,000–RM9,999 band.

The GBS carve-out is subject to MDEC assessment and verification, per Fragomen; the manufacturing band is per Shearn Delamore & Co and Baker McKenzie.

Separately — not a threshold exception, but a related change worth flagging alongside them — Dependent Pass eligibility now extends to Category III holders for the first time. From 1 June 2026, a Category III Employment Pass holder can bring a spouse, children under 21, and parents into Malaysia through Long Term Social Visit Pass applications, subject to salary, insurance and immigration conditions, per Shearn Delamore & Co's account of the policy.

The new thresholds apply to every new and renewal Employment Pass application submitted on or after 1 June 2026, across every sector, aside from the two carve-outs above: GBS native-language roles and the manufacturing Category III band. Outside those two, no employer can simply wait the policy out.

That scope matters for timing as much as for the number itself. An Employment Pass approved before 1 June 2026 under the old thresholds is not retroactively cancelled, but the ESD is explicit that the revised policy covers renewal applications too — so a Category II expatriate on RM6,000 a month today will need to be regraded to at least RM10,000 the next time that pass comes up for renewal, not just on a brand-new hire — alongside the wider Employment Act obligations every Malaysian employer already carries.

The government frames the change as a push toward local hiring: MIDA states the policy is meant to encourage companies to prioritise Malaysian talent for temporary and permanent roles alike, while trying not to discourage the foreign investment that expatriate expertise often supports in the first place.

The scale of the gap this creates is notable. Malaysian citizens' median monthly salary was RM2,793 in 2024, up from RM2,602 in 2023, according to the Department of Statistics Malaysia's Salaries & Wages Survey Report 2024. Even the new Category III floor of RM5,000 sits well above that national median — a gap that turns the “prioritise local talent” goal quoted above into a real financial incentive, not just a policy statement.

Employers applying for a Category II or III Employment Pass must now submit what MIDA calls a “replacement plan” — also referred to as a succession plan — alongside the application: evidence of a pathway to eventually filling the role with a Malaysian employee, rather than renewing the same expatriate hire indefinitely.

Per InCorp Malaysia's account of the requirement, a compliant plan identifies the specific role to be localised, sets out a structured training, mentoring and knowledge-transfer programme, and gives a clear timeline for the local hire's capability development. Category I carries no such requirement — likely, in our reading, because it covers the most senior and highest-paid positions, where a like-for-like local replacement is a harder ask in the short term. For Category II and III, the fixed 10-year and 5-year duration caps reinforce the same intent — these are no longer open-ended arrangements.

Before 1 June 2026, employers should audit every Employment Pass on their books against the new floor, budget for renewals that fall after that date, start any required replacement plan early, and benchmark expensive roles against the local market before assuming an Employment Pass renewal is still the right call.

A five-step readiness checklist

1. Audit every Employment Pass on your books. List each expatriate's category, current salary and renewal date, and flag anyone below the new floor — checking first whether the GBS native-language carve-out or the RM7,000–RM9,999 manufacturing band applies to that role.
2. Budget for the increase on any renewal due after 1 June 2026. A Category II salary of RM7,000 today needs to rise to at least RM10,000 to clear the new threshold at renewal — RM120,000 a year at the new floor, RM36,000 more than before, before EP-specific costs like the annual levy and visa fees are added.
3. Start the replacement plan early for Category II and III renewals. This is a new document requirement, not a formality — identifying the role to localise and building a real training/mentoring timeline takes longer than a last-minute form.
4. Benchmark the role against the local market. If keeping a position as an Employment Pass hire now costs RM10,000–RM20,000 or more, compare that against what a qualified Malaysian candidate for the same seniority would cost, or run the numbers through our recruitment cost calculator.
5. Do not wait until the deadline. Employment Pass processing already takes weeks; a renewal caught between the old and new thresholds at the last minute is the most avoidable version of this problem.

Sources: revised Employment Pass salary thresholds, effective date and scope, per the Expatriate Services Division, Immigration Department of Malaysia; policy rationale, duration caps and the replacement-plan requirement per the Malaysian Investment Development Authority (MIDA); the manufacturing Category III band and the Dependent Pass extension per Shearn Delamore & Co and, for the manufacturing band, also Baker McKenzie; the GBS native-language carve-out to 1 June 2027 per Fragomen; the basic-salary-only calculation and the succession-plan content requirements per InCorp Malaysia; median Malaysian salary (RM2,793, 2024) per the Department of Statistics Malaysia, Salaries & Wages Survey Report 2024. Verified 2 July 2026; always confirm current requirements against the official ESD announcement, as implementation guidance may be updated. This article is general information, not immigration or legal advice.