New Employment Pass Rules in Malaysia (1 June 2026): What Employers Must Change

The new salary thresholds

The biggest change is the minimum basic salary for each Employment Pass category. Compared with the previous thresholds (RM10,000 / RM5,000 / RM3,000), the new minimums are roughly double across every category.

• Category I: RM20,000 and above (previously RM10,000+)
• Category II: RM10,000 – RM19,999 (previously RM5,000 – RM9,999)
• Category III: RM5,000 – RM9,999 (previously RM3,000 – RM4,999)
• Category III for manufacturing and manufacturing-related services (MRS): RM7,000 – RM9,999

Only basic salary counts

The thresholds are assessed on basic salary alone. Housing allowances, transport allowances, bonuses, commissions and benefits-in-kind do not count. If an offer letter relies on allowances to reach a threshold, the package needs to be restructured before submission — otherwise the application will be assessed under a lower category, or rejected.

Maximum total duration per category

Each category now has a cap on how long the foreign employee can stay on an Employment Pass in total. The clock for existing holders started on 1 June 2026, not from their original start date. Changing employer, or moving up a category, resets the count from the new pass issuance date.

• Category I: up to 10 years
• Category II: up to 10 years
• Category III: up to 5 years

Succession plans for Category II and III

Employers sponsoring Category II and III passes must now submit a succession plan showing how the role will eventually transfer to a Malaysian employee. A credible plan typically identifies the local understudy, the training and knowledge-transfer activities, and a realistic timeline for local readiness.

What happens to existing Employment Passes?

Passes approved before 1 June 2026 remain valid until they expire — there is no forced reapplication. However, any renewal submitted on or after 1 June 2026 must meet the new thresholds. If your employee's current basic salary is below the new minimum for their category, plan the salary review before the renewal window opens, not after.

What employers should do now

• List every foreign employee's EP category, basic salary and expiry date
• Flag anyone whose basic salary falls below the new threshold for their current category
• Decide whether to adjust salary, accept a lower category, or plan a local replacement
• Prepare succession plans for Category II and III roles before renewal
• Start renewals up to 3 months before expiry to leave room for queries