New expatriate salary framework in Malaysia to take effect on 1 June 2026

Summary

The Malaysian Government will implement a revamped expatriate employment framework from 1 June 2026. The changes raise minimum salary thresholds for Employment Pass Categories I, II and III and introduce defined employment periods and succession-plan requirements for certain categories. The overhaul builds on the 2016 framework and follows consultations with industry stakeholders since 2022. It aligns with the MADANI principles and the 13th Malaysia Plan, aiming to reduce reliance on foreign labour and prioritise qualified local talent.

Key Points

Category I salary floor doubles from RM10,000+ to RM20,000+ per month.
Category II salaries increase from RM5,000–RM9,999 to RM10,000–RM19,999 per month.
Category III salaries rise from RM3,000–RM4,999 to RM5,000–RM9,999 per month; manufacturing and MRS sectors set at RM7,000–RM9,999.
Employment periods: Category I – 10 years; Category II – 10 years with a succession plan; Category III – five years with a succession plan.
All Category I, II and III pass holders may bring dependents; KDN will hold stakeholder engagement sessions to manage phased implementation and protect business continuity.

Context and relevance

This policy is part of broader national efforts to strengthen local workforce participation while keeping Malaysia attractive to essential foreign talent. For employers and HR teams, the changes will affect compensation bands, recruitment strategies, workforce planning and budgets for expatriate hires. The succession-plan requirement increases emphasis on knowledge transfer and local upskilling, and the higher salary floors will narrow the pool of eligible expatriate candidates.

Why should I read this?

Short version: if you hire, manage or budget for expats in Malaysia, you need to know this now. It’s not just a pay tweak — it’s a rejig of who can be hired, for how long, and what employers must plan for when bringing in foreign talent. Saves you the surprise and gives you time to adjust hiring, compensation and succession plans.

Author style

Punchy: this is a major operational change for mobility and HR teams. If your business uses expatriates, treat the details as operational imperatives rather than optional reading.