Employment pass salary, contract requirements to change

Employment pass salary, contract requirements to change

IMPACT – MEDIUM

What is the change? Malaysian authorities have announced changes to employment pass salary and contract requirements.

What does the change mean? Effective Sept. 1, the salary requirement for foreign nationals seeking Category 1 employment passes will double to 10,000 ringgits (about US$2,250) per month. Category II pass holders will have to be paid between 5,000 and 9,999 ringgits per month. Category III pass holders will have a salary requirement of 3,000 to 4,999 ringgits per month. Contract requirements will also change so that Category I permit holders will be allowed to apply for passes valid for up to five years. Category II permit holder will have to have a contract valid for up to two years.

  • Implementation time frame: Sept. 1.
  • Visas/permits affected: Employment Passes (categories I, II and III)
  • Who is affected: Employers submitting employment pass applications.
  • Impact on processing times: No impact expected.
  • Business impact: Employers may see increased costs to meet the new salary requirements.

Background: Malaysia’s MYXpats Centre announced Saturday that the following changes would be made to the Work Pass Program beginning Sept. 1:

Employment Pass Type Salary Requirement Requirement from Sept. 1 Contract Requirement Requirement from Sept. 1
Category I (Expatriate) RM 5,000 RM 10,0000 Minimum of two years Up to five years
Category II (Expatriate)  RM 5,000 RM 5,000 – RM 9,999 Less than two years Up to two years
Category III (Knowledge/
Skill Workers)		 RM 25,00 – 4,999 RM 3,000 – 4,999 Up to a year (renewable twice) Up to a year (renewable twice)

Companies that operate within a regulated sector must obtain an approval letter or support letter form the appropriate approving agencies or regulatory bodies. Final decision-making authority on employment pass applications rests with the Immigration Department of Malaysia.

BAL Analysis: The changes to the salary requirements for employment pass holders are fairly significant, especially in Category 1, where the salary will double to 10,000 ringgits per month. Employers should take note of the pending changes and budget accordingly.

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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