If you’re hiring foreign talent in Malaysia, you’re responsible for securing the right work authorisation before your employee sets foot in the country. Malaysia’s work permit system is employer-driven, meaning the process runs through you, not your hire. This guide covers everything you need to know as a sponsoring employer, including the significant changes that took effect on June 1, 2026.
The employment pass: malaysia’s main work permit
The Employment Pass (EP) is the primary work permit for skilled foreign professionals working in Malaysia. It’s employer-sponsored, so your company initiates and manages the application on behalf of the worker. All applications go through the Expatriate Services Division (ESD) of the Immigration Department of Malaysia, and you’ll submit everything via the ESD Portal at esd.imi.gov.my.
There’s no separate “work visa” in the traditional sense. Once an EP is approved, the holder can enter and work in Malaysia for the duration of their permit.
2026 Salary thresholds
Malaysia raised its EP salary thresholds significantly on June 1, 2026. These new figures apply to all new applications and all renewals from that date onward. The increases are substantial compared to previous levels, and they reflect a deliberate policy shift toward attracting higher-skilled foreign professionals.
Category I and ii
| Category | Monthly salary | Maximum tenure |
|---|---|---|
| Category I | RM 20,000 and above | 10 years |
| Category II | RM 10,000 – RM 19,999 | 10 years |
Before June 2026, the Category I threshold was RM 10,000. It’s now doubled. Both Category I and Category II holders are eligible for EP tenure of up to 10 years, making them the longest-term permit options available.
Category iii
| Category | Monthly salary | Maximum tenure |
|---|---|---|
| Category III (general) | RM 5,000 – RM 9,999 | 5 years |
| Category III (manufacturing) | RM 7,000 – RM 9,999 | 5 years |
Category III covers most mid-level roles. The general threshold was previously as low as RM 3,000, so the jump to RM 5,000 is meaningful. If you’re hiring into manufacturing, the floor is higher still at RM 7,000. EP holders in Category III are limited to a maximum tenure of 5 years.
The succession planning requirement
From June 1, 2026, if you’re hiring Category II or Category III EP holders, you’re required to submit a local talent training and succession plan as part of your application. Category I is exempt from this requirement.
This rule comes from Malaysia’s Thirteenth Malaysia Plan, which sets out a national goal to reduce reliance on foreign labour over time. In practice, it means your company needs to demonstrate how you’ll develop Malaysian staff alongside the foreign hire, whether through mentorship arrangements, structured training, or knowledge transfer plans.
Don’t treat this as a box-ticking exercise. Applications that include vague or boilerplate succession plans are more likely to face scrutiny. Be specific about roles, timelines, and measurable outcomes.
How to apply
All EP applications are submitted through the ESD Portal (esd.imi.gov.my). Your company is the applicant, not the worker. The process involves creating a company account, providing supporting documentation about your organisation, and submitting the employee’s details and employment contract.
Key documents you’ll typically need include proof of company registration, the employment contract showing the agreed salary, the employee’s qualifications and professional credentials, and a job description that justifies the EP category. For Category II and III applications, you’ll also need to include your succession plan.
Processing times can vary. It’s worth submitting well in advance of the intended start date, particularly for Category I applications that may involve additional review.
Epf obligations for ep holders
Malaysia’s Employees Provident Fund (EPF) now covers non-Malaysian EP holders. From October 2025, both you and your EP-holding employee are each required to contribute 2% of monthly salary to the EPF. This applies to non-Malaysian nationals on an Employment Pass.
Non-Malaysian permanent residents and those who registered with the EPF before August 1, 1998, are subject to the standard contribution rates rather than the 2% rate.
Factor these contributions into your compensation modelling before you make an offer. The EPF obligation applies from day one of employment, so there’s no grace period to plan around.
Employer obligations after hiring
Your responsibilities don’t end when the EP is approved. As the sponsoring employer, you’re required to notify the ESD if your EP holder leaves your employment before their permit expires. This applies whether the departure is voluntary or not, and whether it’s a resignation, termination, or restructure.
Failing to notify the ESD is a compliance breach that can affect your ability to sponsor future EP applications. Keep track of permit expiry dates and set reminders well ahead of time to begin renewal applications, as processing takes time and a lapsed EP puts your employee out of status.
Permanent residence
EP holders who have lived continuously in Malaysia for around five years may be eligible to apply for permanent residence. This is subject to application, and approval isn’t guaranteed, but it’s a pathway worth knowing about if you’re building long-term teams in Malaysia.
Permanent residence applications are separate from the EP renewal process and go through a different review channel. Your employee would typically lead that process themselves.
Hiring foreign talent through an Employer of Record
Sponsoring an EP requires your company to have a registered legal entity in Malaysia. If you don’t have one, or if you’re not ready to set one up, an Employer of Record (EOR) can sponsor the EP on your behalf and employ the worker through their local entity.
This approach is common for companies entering Malaysia for the first time or testing the market before committing to full incorporation. You manage the day-to-day work relationship, while the EOR handles the legal employment, payroll, EPF contributions, and EP sponsorship.
If you’re comparing options, there are a range of EOR services available for Malaysia. Look for a provider with direct in-country experience and familiarity with the 2026 EP threshold changes.
Book a demo to see how RemotePass supports compliant hiring in Malaysia.
Frequently asked questions
Who sponsors the employment pass in malaysia?
The employer sponsors the EP, not the worker. Your company applies on behalf of the employee through the ESD Portal, provides supporting documentation, and takes on compliance obligations for the duration of the permit.
What are the new ep salary thresholds in 2026?
From June 1, 2026, the thresholds are: Category I at RM 20,000 or above, Category II at RM 10,000 to RM 19,999, and Category III at RM 5,000 to RM 9,999 (or RM 7,000 to RM 9,999 for manufacturing). These are increases from the previous thresholds.
What is the succession planning requirement?
If you’re hiring Category II or Category III EP holders from June 1, 2026 onward, you need to submit a local talent training and succession plan with your application. This is part of Malaysia’s Thirteenth Malaysia Plan to develop local talent over time. Category I applications are exempt.
Do employers have to contribute to epf for foreign workers?
Yes. From October 2025, employers and non-Malaysian EP holders are each required to contribute 2% of monthly salary to the EPF. Non-Malaysian permanent residents and those who registered before August 1, 1998 follow the standard contribution rates.
