The Ministry of Home Affairs (MOHA) has recently issued an official FAQ providing further clarification on the new expatriate employment policy that accompanies Malaysia’s revised Employment Pass (EP) salary thresholds — effective June 1, 2026. The FAQ expands on the purpose of the replacement plan requirement, confirms maximum EP durations, outlines expectations for employers, and describes how the Government intends to implement and enforce the policy.
Key Clarifications from MOHA
Replacement Plan (Succession Plan)
MOHA confirms that the replacement plan requirement is intended to:
- Reduce long‑term reliance on foreign labor.
- Prioritize structured knowledge transfer, training, and upskilling of Malaysian workers.
- Support employers in managing workforce transitions without disrupting operations.
- Align expatriate hiring with Malaysia MADANI principles and the Thirteenth Malaysia Plan (RMK‑13).
The replacement plan should outline:
- The specific roles/functions to be transitioned to local staff.
- Training, mentoring, and knowledge transfer processes.
- A realistic timeline for preparing local employees.
- Measures to ensure business continuity during the transition.
Employment Duration
MOHA reiterates the introduction of maximum expatriate employment durations:
- EP I: Up to 10 years
- EP II: Up to 10 years (with a replacement plan)
- EP III: Up to 5 years (with a replacement plan)
Extensions beyond these durations may be considered case‑by‑case based on national interest.
Salary Thresholds
MOHA reaffirms the rationale for the revised salary bands:
- Higher thresholds ensure expatriate hiring is targeted toward high‑impact expertise and does not displace roles suited for Malaysians.
- The Manufacturing Related Services (MRS) sector receives a tailored threshold to reflect its technical demands and industry characteristics.
Dependents
The FAQ confirms that dependent eligibility now applies to all EP categories (EP I, EP II, and EP III).
Eligibility continues to depend on:
- Meeting minimum salary criteria
- Maintaining required insurance coverage
- Compliance with applicable immigration rules
Monitoring & Enforcement
The Government will:
- Issue detailed Standard Operating Procedures (SOPs)
- Conduct compliance audits and periodic reviews
- Take enforcement action against manipulation or non-compliance
Transition Measures
MOHA notes:
- The policy is not retrospective
- A transition period is provided until June 1, 2026
- Existing expatriates will fall under transitional arrangements yet to be announced
Implications for Employers
Employers should prepare by:
- Developing detailed replacement plans for EP II and EP III roles
- Evaluating workforce structures and future EP durations
- Ensuring salary bands, job roles, and succession timelines align with new requirements
- Planning for dependent eligibility and related compliance obligations
Erickson Insights & Analysis
Erickson Immigration Group will continue to monitor developments and share updates as more news is available. Please contact your employer or EIG attorney if you have questions about anything we’re reporting above or case-specific questions.