What Is Malaysia’s New Employment Policy for Expatriates Starting June 2026?

Malaysia will introduce a revised employment policy for expatriate workers effective 1 June 2026. The policy aims to reduce reliance on foreign labour, prioritise qualified Malaysian talent, and strengthen workforce localisation through updated salary thresholds and employment duration rules.

This article explains what the new policy includes, who is affected, and what employers should prepare for ahead of implementation.

What Has Changed Under the New Policy

The revised policy introduces new salary thresholds and employment duration limits across expatriate categories.

Category I Expatriates

• Minimum salary increases to RM20,000 and above
• Employment duration capped at 10 years

Category II Expatriates

• Salary range adjusted to RM10,000 to RM19,999
• Employment duration capped at 10 years
• Subject to a succession planning requirement

Category III Expatriates

• Salary range increased to RM5,000 to RM9,999
• Manufacturing and manufacturing related services set at RM7,000 to RM9,999
• Employment duration capped at 5 years
• Subject to succession planning

These changes significantly raise the cost and planning requirements for employing expatriates in Malaysia.

Who Is Affected by This Policy

The revised policy affects:

• Employers hiring or renewing expatriate employment passes
• Companies relying on mid level and technical expatriate roles
• Manufacturing and manufacturing related services
• HR and mobility teams managing long term expatriate assignments

Both new applications and renewals are expected to be impacted once the policy takes effect.

Why This Matters for Employers

The policy increases:

• Salary compliance risk
• Workforce localisation pressure
• Succession planning obligations
• Long term manpower planning complexity

Employers who do not align early may face application delays, rejections, or higher operational costs.

What Employers Should Do Now

Before June 2026, employers should:

• Review current expatriate headcount by category
• Assess salary alignment with new thresholds
• Identify roles requiring succession plans
• Revisit long term workforce and localisation strategies
• Monitor official implementation guidelines and circulars

Early preparation reduces disruption when the policy becomes effective.

Current Status of the Policy

The policy has been announced by the authorities. Further implementation details and operational guidelines are expected to be issued through official channels.

Employers should monitor updates closely.

Frequently Asked Questions - FAQ

When does Malaysia’s new expatriate employment policy take effect?

The policy is scheduled to take effect from 1 June 2026.

Will existing expatriates be affected?

Existing expatriates may be affected at renewal, depending on transitional rules and implementation guidelines.

Are all industries affected?

Yes, with specific salary thresholds applying to manufacturing and manufacturing related services.

What is a succession plan requirement?

It generally requires employers to plan for the transfer of roles from expatriates to local talent over time.

Where can employers find official confirmation?

Employers should refer to official ministry announcements, gazette publications, and department guidelines.

Prepare for Malaysia’s Changing Expat Employment Rules

Malaysia’s expatriate employment rules are tightening in 2026. HR Forte helps employers manage workforce planning, compliance tracking, and HR readiness across Asia.

Learn how HR Forte supports compliant HR and payroll management in Malaysia 

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