Hiring a Foreign Worker in Malaysia: 2026 Compliance Guidelines

Hiring foreign workers in Malaysia has never been simple, but in 2026 it has become noticeably less forgiving.

Foreign workers remain critical to many Malaysian industries, yet government policy continues to prioritise local employment, tighter documentation controls, and stronger enforcement. For employers, this means the margin for error is smaller than it used to be.

This guide explains how hiring foreign workers in Malaysia actually works in 2026, including the legal framework, approval process, compliance obligations, realistic timelines, and common pitfalls employers encounter.

Who This Guide Is For

This guide is intended for:

• Malaysian business owners hiring or planning to hire foreign workers
• Employers operating in approved foreign-worker sectors
• HR, operations, and finance teams handling regulatory compliance
• Companies navigating quota approvals, renewals, or EP planning for 2026

2026 Snapshot: Foreign Labour in Malaysia

As at 30 September 2024, Malaysia had about 2.47 million documented foreign workers, with a policy target to keep them at around 15% of the total workforce. Most low-skilled foreign workers are concentrated in manufacturing, construction, and services, making these sectors the focus for quota management and enforcement.

(Source: Ministry of Human Resources / Parliamentary replies)

What Counts as a Foreign Worker in Malaysia

A foreign worker is any non-Malaysian citizen employed under a valid work pass issued by the Immigration Department, including:

• Workers under Visit Pass (Temporary Employment) / VP(TE) with PLKS
• Skilled and professional employees under various Employment Pass (EP) categories
• Short-term foreign professionals under Professional Visit Passes (PVP)

From a legal standpoint, pass type and conditions matter more than job title.

(Sources: Immigration Department; Ministry of Human Resources)

Sectors Allowed to Hire Foreign Workers

Foreign-worker hiring is limited to approved sectors, broadly:

• Manufacturing
• Construction
• Services (approved sub-sectors)
• Plantations / farming and agriculture
• Domestic work
• Mining and quarrying (small numbers)

Each sector has its own quota limits, levy rates, and scrutiny level, and approvals are tied to sector classification and dependency, not how urgently you need workers.

(Sources: Ministry of Home Affairs; Ministry of Human Resources)

The Legal Framework Employers Must Understand

Foreign-worker compliance sits on four pillars: employment law, immigration law, social security, and retirement savings.

Core laws at a glance

Employment Act 1955 (including Section 60K)

• Sets minimum employment standards and, from 1 January 2023, requires prior approval from the Director-General of Labour (Section 60K) before employing any non-citizen in Peninsular Malaysia and Labuan.

Immigration Act 1959/63

• Requires every foreign worker to hold the correct, valid pass, with Section 55B allowing fines of RM10,000–RM50,000 per undocumented worker and/or up to 12 months’ jail, with harsher penalties when more than five undocumented workers are involved.

SOCSO (PERKESO)

• Legal foreign workers must be covered under the Employment Injury Scheme, and from 1 July 2024 under the Invalidity Scheme and survivors’ benefits.

EPF

• From October 2025, non-Malaysian employees must be registered with EPF, with 2% employer + 2% employee contributions as the minimum.

(Sources: Employment Act 1955; Immigration Act 1959/63; SOCSO and EPF circulars)

Read More: Why Every SME Needs an Employee Handbook (And What to Include)

Local Hiring Requirement and Section 60K

The basic rule: you must show genuine local-hiring efforts and secure Section 60K approval before employing non-citizens.

Section 60K overview

• Applies to all non-citizen employees in Peninsular Malaysia and Labuan
• Effective 1 January 2023 and implemented via ePPAx
• Approval is typically time-limited (often up to 12 months), so workforce plans must fit within that window

Local hiring expectation

Employers should be able to show that they:

• Tried to hire Malaysians first (e.g. job ads, interviews, rejection notes)
• Could not fill roles locally on reasonable terms
• Kept basic records of who applied, who was interviewed, and why they were not hired

Extra layer for EP roles – MYFutureJobs

For most EP / expatriate roles, employers are expected to:

• Advertise on MYFutureJobs for at least 30 days,
• Consider Malaysian applicants, and
• Obtain a SOCSO recommendation before submitting EP applications via ESD / Xpats Gateway, unless officially exempt.

For PLKS / VP(TE) workers, the principle is similar: JTKSM wants proof that local candidates were considered before approving Section 60K and quotas.

(Sources: JTKSM Section 60K guidelines; MYFutureJobs and SOCSO employer manuals; ESD / Xpats Gateway announcements)

Foreign Worker Quota System Explained

A quota gives you permission to recruit foreign workers, not to employ them yet.

Quota approval:

• States how many workers you may bring in
• Is tied to sector, location, company profile and dependency
• May lapse if not used within its validity period
• Does not guarantee VDR approval or PLKS issuance

Quota availability is influenced by labour policy, sector dependency, and the Multi-Tier Levy Mechanism (MTLM) expected from 2026, which will link levies more closely to foreign-labour dependence.

(Sources: Ministry of Home Affairs; Budget and MTLM policy statements)

Step-By-Step Hiring Process Overview

In practice, the process usually looks like this:

1. Plan and document local hiring efforts
2. Apply for Section 60K approval via ePPAx
3. Apply for quota based on sector and location
4. Recruit in approved source countries via approved agents
5. Apply for Visa With Reference (VDR) and complete source-country formalities
6. Arrange worker arrival and FOMEMA medical screening
7. Obtain work permit (e.g. PLKS) and complete reporting / onboarding

Each step involves different agencies (JTKSM, Immigration, sector regulators, FOMEMA), which is why missing documentation in one stage can cause weeks of delay down the line.

(Sources: Immigration Department; JTKSM; FOMEMA; ESD / Xpats Gateway process guides)

Read More: What Is Unfair Dismissal in Malaysia? Employee & Employer Guide

Realistic Hiring Timelines by Sector (2026)

Treat these as planning baselines, not guarantees:

For low- and semi-skilled workers, the full journey (Section 60K, quota, recruitment, VDR, medical, PLKS) often stretches beyond the minimum range, especially during quota pauses or policy changes.

(Sources: Immigration Department; Human Resources and Home Ministry statements; employer feedback)

Types of Work Passes Employers Commonly Confuse

Applying for the wrong pass is a frequent cause of rejection.

From 1 June 2026, EP minimum salary thresholds double across all categories, so employers should budget for higher salary floors and plan EP renewals with these thresholds in mind.

(Sources: ESD announcements; salary policy circulars; professional firm alerts)

Costs Employers Commonly Underestimate

Foreign worker planning should look at total cost, not just wages:

• Levy and security bond, with levies expected to become more differentiated under the MTLM
• Medical and insurance, including FOMEMA and compulsory medical coverage
• Recruitment and agency fees, including source-country processing and travel
• Accommodation and employee welfare, such as compliant worker housing, utilities and transport
• Renewals and exits, including renewal fees, potential overstay fines and repatriation tickets

(Sources: Immigration fee schedules; FOMEMA; worker accommodation guidelines; Budget and MTLM announcements)

Foreign Worker Compliance Checklist (2026)

Use this as a quick, high-level checklist.

Before Applying

• Confirm sector eligibility and current quota/levy rules.
• Advertise roles locally (e.g. MYFutureJobs for EP roles) and keep simple records of applicants and outcomes.
• Make sure company registrations, licences, tax and HR records are in order, then schedule Section 60K and quota applications.

During Application

• Secure Section 60K approval via ePPAx and submit quota applications with accurate data.
• Use approved source countries and licensed agents only.
• Submit complete documents, monitor status, and track approval and expiry dates centrally.

After Arrival & Ongoing

• Complete FOMEMA medicals on time and issue compliant employment contracts.
• Register foreign workers with SOCSO and set up EPF contributions (2% + 2% from October 2025), plus mandatory medical insurance.
• Monitor permit and approval expiries, maintain clear HR/payroll records, and be ready for inspections by JTKSM, SOCSO, EPF, Immigration and local councils.

(Sources: JTKSM; Immigration Department; FOMEMA; PERKESO; EPF)

Common Obstacles Employers Face in 2026

Even well-prepared employers encounter quota pauses, shifting documentation standards, policy changes and inconsistent interpretations between offices, which can add months to end-to-end timelines. Rising levies, higher EP salary thresholds and expanded SOCSO/EPF coverage also increase costs, so underestimating both time and budget is still a major risk.

(Sources: Malaysian Employers Federation; business chamber feedback)

Employer Responsibilities After Hiring

Once foreign workers are in Malaysia and on your payroll, the main responsibilities are about staying compliant:

• Pay wages on time and follow Employment Act rules on hours, rest days and overtime.
• Keep workers properly registered with SOCSO (Employment Injury and, from July 2024, Invalidity/Survivors) and EPF (2% employer + 2% employee from October 2025).
• Provide safe, compliant housing and welfare where required, and maintain accurate HR, payroll and pass records to support any audit or inspection.

(Sources: Department of Labour; PERKESO; EPF; Immigration Department)

Penalties and Risks of Non-Compliance

Non-compliance can lead to:

• Fines and jail, including RM10,000–RM50,000 per undocumented worker and up to 12 months’ imprisonment under the Immigration Act
• Blacklisting of employers and key personnel from future approvals
• Permit cancellation and repatriation of workers, causing sudden manpower loss
• Reputational damage with regulators, banks and customers, often outlasting the monetary penalty

(Sources: Immigration Act 1959/63; Immigration Department enforcement information)

Follow the Right Procedures for Hiring Foreign Workers

Hiring foreign workers in Malaysia in 2026 requires structure, patience and compliance discipline. Employers who start early with Section 60K planning, credible local-hiring evidence and the right pass and quota strategy are far less likely to face surprises, rejected applications or disruptive audits.

Before pressing “submit”, ask: have we fairly tried to hire Malaysians, can we live with a multi-month delay, are our agents properly licensed, and are our documents tidy enough to withstand an audit? If you can answer “yes” to those, you are already ahead of many applicants.

For businesses in regulated or high-visibility environments, PRESS PR Agency supports organisations through SEO services and digital PR strategies that clarify compliance narratives and strengthen authority. Clear, accurate communication helps protect both visibility and trust, especially when rules are evolving and enforcement is tightening. Work with PRESS today, to ensure your business thrives and gets seen.

Disclaimer: This article is for general information only and does not constitute legal, immigration, or professional advice. Regulations change frequently, so employers should verify requirements with official Malaysian authorities or qualified advisors before making decisions.