1. Revised Employment Pass Salary Policy Effective 1 June 2026; Implementation of Succession Plan under the Revised Employment Pass Salary Policy Deferred to 1 January 2027
Background
Pursuant to the Ministry of Home Affairs (“MOHA”) press release dated 14 January 2026, and following Cabinet approval on 17 October 2025, Malaysia has implemented a revised Expatriate Salary and Employment Pass (“EP”) Policy with effect from 1 June 2026.
The revised framework forms part of the Government’s ongoing efforts to strengthen the expatriate employment regime in line with the objectives of the Thirteenth Malaysia Plan (“RMK-13”) and principles of Malaysia MADANI.
Revised employment pass salary threshold and duration framework
As a recap, under the revised framework, the minimum salary thresholds for EP Categories I, II, and III have been increased, and a structured employment duration framework has been introduced. These measures are intended to ensure that expatriate employment is limited to high-impact roles and do not displace opportunities for the local workforce.
| EP Categories | Current Minimum Salary | Revised Minimum Salary (Effective 1 June 2026) | Employment Pass Duration |
| Category I | RM10,000 and above | RM20,000 and above | Up to 10 years |
| Category II | RM5,000 – RM9,999 | RM10,000 – RM19,999 (with succession plan) | Up to 10 years |
| Category III | RM3,000 – RM4,999 | RM7,000 – RM9,999 (manufacturing & manufacturing-related services) RM5,000 – RM9,999 (general sectors) | Up to 5 years (with succession plan) |
All new and renewal EP applications submitted on or after 1 June 2026 must comply with the revised requirements.
Importantly, the calculation of an expatriate’s maximum employment period is premised on being in employment with the same employing company, position, and EP category. This limitation is intended to prevent prolonged reliance on expatriates and to encourage the progressive development of local talent.
Notwithstanding the maximum employment duration, the approval period for each EP remains subject to current practice:
- EP Category I: up to five years;
- EP Category II: up to two years; and
- EP Category III: up to one year.
Once an expatriate has reached the maximum employment duration for the relevant EP category, further renewals under the same category will not be permitted. However, where there is a change in EP category, the employment duration will be recalculated from the issuance date of the new category.
Succession plan requirements
As part of the revised framework, a mandatory succession plan requirement has been introduced as a supporting document for EP Category II and Category III applications (both new and renewal). This requirement is intended not to restrict the hiring of expatriates, but to ensure that such employment genuinely complements the development of local talent.
A succession (or replacement) plan refers to a structured and clearly defined framework by the employer to prepare local employees to assume the role of the expatriate within a specified timeframe. At the time of this alert, there is no official template published by the governing bodies for a succession plan. However, the plan should, at a minimum, encompass the following:
- Identification of positions and functions to be transferred to local employees;
- Training, mentoring, and knowledge transfer from expatriates to local workers;
- A reasonable timeframe to ensure local employees are ready in terms of skills and competencies; and
- Operational continuity planning to ensure that the transition does not affect productivity or organisational performance.
In respect of assessment and monitoring, the succession plans are monitored through documentation requirements and periodic reporting under the revised policy. Therefore, employers should maintain proper records to demonstrate that the succession plan is being implemented, such as training and mentoring records, knowledge transfer activities completed, competency development milestones, timeline updates etc.
In May 2026, the relevant authorities, including MyXpats Centre and the Malaysia Digital Economy Corporation (“MDEC”), announced that the implementation of the succession plan requirement would be deferred to 1 January 2027. This forms part of a phased implementation approach to allow organisations sufficient time to prepare and align with the new requirement.
Practical implications for companies
Notwithstanding the deferment, companies are strongly encouraged to begin preparing and documenting appropriate succession planning measures in anticipation of applications submitted on or after 1 January 2027.
Employers should consider:
- Identifying suitable Malaysian employees for knowledge transfer;
- Mapping key expatriate roles within the organisation; and
- Implementing structured training and handover frameworks to support compliance readiness.
Companies with ongoing reliance on expatriate personnel are further advised to review their workforce planning strategies early to ensure that succession arrangements can be substantiated with adequate internal documentation when required.
2. Transition from the Expatriate Services Division (“ESD”) to the MIDA Expatriate System (“MES”) for affected companies
The Malaysian Investment Development Authority (“MIDA”) has enhanced its digital platform, InvestMalaysia, by enhancing an expatriate module known as MES for companies under MIDA’s purview, to facilitate comprehensive expatriate applications.
Effective 1 June 2026, MES will replace ESD as the sole submission platform for all expatriate-related applications for the Manufacturing and Selected Services sectors under MIDA’s purview. These include the Global Services Hub (“GSH”), Representative/Regional Offices (“RE/RO”), R&D services, hotel and tourism projects, private higher education (science courses) and technical & vocational training institutions, oil & gas services, green technology (renewable energy, integrated waste management, EV charging stations, solar leasing), integrated logistics services (“ILS”), cold chain facilities (“CCF”), digital infrastructure, and smart logistics complexes (“SLC”).
Accordingly, all existing access to Xpats Gateway and ESD Online for affected companies had been deactivated, and submissions through ESD Online for MIDA-related applications will no longer be accepted or processed with effect from the aforementioned date. All new expatriate-related applications for the Manufacturing and Selected Services sectors under MIDA’s jurisdiction must be submitted exclusively through the MES platform via Single Sign-On (SSO) access on the XPATS Gateway.
Notwithstanding the above, companies are still required to obtain the Department of Labour, Peninsular Malaysia (“JTKSM”) approval under section 60K of the Employment Act 1955 (Act 265), as well as the MYFutureJobs Advertisement Acknowledgement Letter through the XPATS Gateway platform. This implementation is in line with the revised expatriate policy and forms part of the Government’s initiative towards a more streamlined and centralised expatriate management system.
Companies are encouraged to familiarise themselves with the MES platform, ensure their InvestMalaysia account access is updated, and review their internal processes to facilitate a smooth transition to the new system.
For further information, please contact:
Suganthi Singam, Partner, Shearn Delamore & Co.
suganthi@shearndelamore.com
References:
- EN FAQ – NEW EXPATRIATE EMPLOYMENT POLICY (EFFECTIVE 1 JUNE 2026).pdf.
- https://esd.imi.gov.my/portal/latest-news/announcement/announcement-266-ep-salary-policy-2026/.
- FAQ Booklet – Version 1.0 2026.pdf.
- www.mida.gov.my/media-release/announcement-full-rollout-of-the-mida-expatriate-system-mes/.
- www.mida.gov.my/wp-content/uploads/2026/03/User-Manual-MIDA-Expatriate-System-V1.2-29.12.25.pdf.
- www.mida.gov.my/wp-content/uploads/2026/06/FAQ-for-System-Transition_26May2026_Reviewed.pdf.
- www.mida.gov.my/forms-and-guidelines/mida-expatriate-system-mes/.
