Malaysia Raises the Labour-Market-Test Exemption to RM20,000, Catching Mid-Level Expat Roles

Malaysia has raised the salary level at which foreign hires skip the country's labour-market test. Under the change reported by immigration counsel this week, an expatriate role must now pay a base salary of at least RM20,000 a month (about USD 4,700) to be exempt from advertising on the government's MyFutureJobs portal — up from RM15,000. Any position offering less must be advertised to local jobseekers for at least seven days, and the employer must show no suitable Malaysian candidate was found, before an Employment Pass application can be submitted. The move closes the gap between the labour-market test and the Employment Pass salary framework that took effect on 1 June 2026, and it pulls a large band of mid-level professional roles — everything from RM15,000 to RM19,999 — into a slower, more scrutinized hiring process.

Background: the June salary overhaul

This is the second half of a reform Malaysia's Cabinet approved on 17 October 2025 and rolled out on 1 June 2026. That overhaul roughly doubled the salary floors for the Employment Pass: Category I now requires at least RM20,000 a month (previously RM10,000), Category II covers RM10,000–19,999, and Category III covers RM5,000–9,999. The Ministry of Home Affairs announced the framework in January, and the Expatriate Services Division has published it on its official portal. The labour-market-test threshold, however, initially stayed at the old RM15,000 mark, creating an odd seam: a Category II hire at RM16,000 needed no local advertising even though the government's new framework treats that band as one where local candidates should be considered first. In an online briefing reported by immigration counsel on 30 July, SOCSO's employment-services arm signalled that the threshold would rise to match, and immigration firms now confirm the increase as in effect.

What exactly changed

The mechanics of the labour-market test are unchanged; what moved is who is caught by it. The threshold applies to base monthly salary only — allowances, bonuses and benefits do not count toward the RM20,000. An employer hiring at RM18,000 base plus RM4,000 in allowances is therefore inside the test, not outside it. The standing exemption categories continue to apply regardless of salary: C-suite and other key posts, intra-company transfers within multinational groups, representative- and regional-office positions, investors and shareholders, roles at international organizations, the sports sector, and straightforward Employment Pass renewals. For everyone else below the new line, the sequence is: advertise the role on MyFutureJobs for at least seven days, document consideration of local applicants, then file the Employment Pass application.

Who it affects

The newly captured band is exactly where many experienced foreign professionals in Malaysia sit: senior engineers, finance managers, regional specialists — roles that pay well above the local median but below the executive tier. A company hiring a project manager at RM17,000 could previously file the Employment Pass immediately; now the same hire carries a mandatory advertising step of at least a week, interviews or documented consideration of local applicants, and documentation risk if suitable candidates surface. Candidates negotiating offers near the line have a new data point too: an offer restructured to RM20,000 base clears the test entirely, while one padded with allowances to reach the same total does not. Intra-company transferees and renewals are untouched, so existing expatriates renewing their passes should see no change.

What this means in practice

Employers should build the advertising window — at least 7 days on MyFutureJobs, plus interviews and the hiring-outcome report — into hiring timelines for any offer below RM20,000 base, and check with the Expatriate Services Division or their immigration counsel on how applications already in preparation are treated, since transition rules have not been published. Foreign professionals considering a move — our <a href="/country-guides/malaysia">Malaysia guide</a> covers the Employment Pass categories in detail — should note that the effective salary floor for a friction-free hire is now RM20,000, and that roles below it are still possible, just slower and less certain. The official MyFutureJobs portal and the ESD announcements page are the places to watch for the formal FAQ update.