IMPACT – MEDIUM
What is the change? As a follow-up to last week’s announcement, the Malaysian Digital Economy Corp. (MDEC) has released an additional requirement calling for Category III Employment Pass holders to fulfill a three-month cooling-off period outside of Malaysia.
What does the change mean? Foreign employees applying for a fourth year of a Category III Employment Pass, either as a renewal or as a change of jobs, must exit Malaysia and serve a three-month cooling-off period.
Background: Employment Pass Category III covers foreign nationals working in Malaysia for up to one year who are paid below the normal minimum salary of 5,000 ringgits (about US$1,240) per month. This pass is initially valid for one year and may be renewed twice. According to the new rule, at the end of the third year, employers who wish to sponsor the Category III worker for a fourth year must wait until the worker has exited Malaysia and satisfied a 90-day cooling-off period before they may apply.
BAL Analysis: Employers should be aware of the additional change and its impact on business schedules. MDEC authorities are expected to release a circular with further details on all the changes before the Sept. 1 implementation date.
This alert has been provided by the BAL Global Practice group and our network provider located in Malaysia. For additional information, please contact your BAL attorney.
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Source: Berry Appleman & Leiden LLP
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