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Foreign Professionals: Your Ultimate Guide to Employment Law Malaysia

Foreign Professionals: Your Ultimate Guide to Employment Law Malaysia

Malaysia is fast becoming a top choice for global professionals, rivalling established centres like Hong Kong and Singapore. Many see Malaysia as the next big economic success story in Asia, offering a chance to be part of its growth from the start. As the likes of Singapore and Hong Kong struggle with the cost of living, Malaysia makes a strong case for talented professionals looking to get in on the ground floor.

Recent data tells a compelling story. Malaysia’s GDP grew by 5.9% year-on-year in the second quarter of 2024, exceeding expectations. The influx of foreign investment, especially in technology, further strengthens Malaysia’s appeal. By mid-2024, tech leaders Google, Microsoft, and ByteDance had invested US$2 billion, US$2.2 billion, and US$2.1 billion respectively in the country. These investments are bound to create well-paid jobs in a location where living costs remain comparatively low.

For professionals seeking career growth abroad, these factors, combined with its cultural richness, make Malaysia an incredibly appealing destination. Yet, working in a new country comes with its own set of rules, particularly regarding employment laws.

This guide examines Malaysian employment regulations for foreign professionals. We cover relevant industries, visa requirements, employee rights, and other key information. With this knowledge, you can make informed decisions and follow local laws as you pursue your career in Malaysia.

Overview of Malaysian Employment Policy for Foreign Workers

Key Regulatory Bodies

When applying for employment as a foreign worker, you will likely encounter the following regulatory bodies:

  • Ministry of Human Resources (MOHR): This ministry oversees labour-related matters, including the employment of foreign workers. The Department of Labour under MOHR is responsible for enforcing labour laws and ensuring the welfare of workers.
  • Immigration Department of Malaysia: This department handles the entry and stay of foreign nationals, including issuing work visas and permits. They ensure that foreign workers meet legal entry requirements and comply with immigration regulations.
  • Ministry of Home Affairs (MOHA): While MOHR handles employment, MOHA is involved in the broader policies and regulations concerning the recruitment of foreign workers. They work in conjunction with MOHR to manage the overall framework.
  • FOMEMA Sdn. Bhd.: This organisation is responsible for the medical screening of foreign workers to ensure they meet health standards before employment.
  • Director-General of Labour: This authority has the power to investigate and enforce labour laws, ensuring that foreign workers’ rights are protected and that employers comply with legal standards

 

General Principles of Foreign Employment in Malaysia

  • Sector-specific employment: Foreign workers are allowed only in approved sectors, including:
    • Manufacturing
    • Construction
    • Plantation
    • Agriculture
    • Mining and quarrying
  • Quota system: Employers must obtain quota approval from the Ministry of Home Affairs before hiring foreign workers.
  • Age restrictions: Foreign workers should be between 18 and 45 years old.
  • Health and security checks: Workers must undergo medical screening and immigration security clearance.
  • Source countries: Malaysia only allows hires from 15 approved countries:
    • Indonesia
    • Nepal (Can work in all sectors and males in the security sector as a security guard)
    • Myanmar
    • India (Can work in the service sector (sub-sectors of Indian community business, laundry/cleaning, and cargo) construction, agriculture farming, and manufacturing)
    • Viet Nam
    • Philippines (Male workers can work in all sectors, while female workers are allowed as Domestic Helpers)
    • Pakistan
    • Thailand
    • Cambodia
    • Sri Lanka
    • Lao PDR
    • Turkmenistan
    • Uzbekistan
    • Kazakhstan
    • Bangladesh

Recent Changes and Updates to Employment Law Malaysia

The Employment (Amendment) Act 2022, effective January 1, 2023, introduced a crucial change for foreign worker employment in Malaysia. Section 60K now requires employers to obtain prior approval from the Director General of Labour before hiring any foreign employee, regardless of wages. This applies to both foreign workers and expatriates and is designed to further protect the rights of foreign workers.

Approval is subject to three conditions:

  1. The employer has no outstanding issues related to decisions, orders, or directives under the Employment Act.
  2. The employer has no unresolved matters regarding convictions under social security, minimum wages, or minimum housing laws.
  3. The employer has not been convicted of human trafficking or forced labour offences.

The Labour Department has also established specific application processes for different categories of foreign workers, including those in permitted sectors, domestic workers, expatriates, and specialised roles like “tom yam” chefs.

employment law malaysia

Types of Work Permits and Visas in Malaysia

Malaysia offers several types of work permits and visas for foreign professionals:

Employment Pass (EP)

  • For skilled foreign workers earning above a specified monthly salary threshold
  • Valid for up to 24 months, renewable
  • Three categories based on salary and contract duration:
EP Category 1 EP Category 2 EP Category 3
Key Posts Managerial/Professional Posts Non-Executive Posts
CEOs, Technical/Managing Directors, Project Managers or Executives etc. Marketing/Investment Managers, Directors, Architects etc. Manufacturing, Food Technologists, Designers etc.
  • Min. monthly salary of RM10,000
  • Work contract of up to 5 years
  • EP renewable
  • Min. monthly salary between RM5,000-RM9,999
  • Work contract of up to 2 years
  • EP renewable
  • Min. monthly salary between RM3,000-RM4,999
  • Work contract of up to 2 years
  • EP cannot be renewed more than 2 times

Professional Visit Pass (PVP)

  • For short-term assignments or specialised technical work
  • Valid for up to 12 months
  • Non-renewable – must exit Malaysia upon expiry

Dependent Pass

Certain expatriates employed or pursuing higher education in Malaysia have the option to sponsor their dependents to join them in the country through a Dependent Pass (DP). The following categories of individuals are eligible to make such an application:

  • Holders of EP Category 1 (occupying key positions with a minimum monthly salary of RM10,000)
  • Holders of EP Category 2 (occupying managerial positions with a monthly salary ranging from RM5,000 to RM9,999)
  • Holders of a Student Pass enrolled in Master’s or PhD programs at a Malaysian educational institution.

Foreign workers must apply for the appropriate permit or visa based on their job type, skill level, and intended duration of stay. Employers play a crucial role in the application process, particularly for Employment Passes and Temporary Employment Passes.

The specific requirements and application procedures for each type of permit or visa may vary. It’s recommended that foreign professionals and their employers consult a trusted local partner like InCorp to ensure they are following the latest guidelines from the Malaysian Immigration Department.

Read more: Expatriate Immigration Services in Malaysia

Foreign Professionals in Malaysia’s Key Sectors

Malaysia’s economy offers diverse opportunities for skilled foreign professionals across six main sectors:

1. Manufacturing

In manufacturing, foreign experts often take on roles in research and development, quality control, and process optimisation. Industries like electronics and automotive value international experience in cutting-edge technologies and lean manufacturing practices.

2. Construction

The construction sector seeks foreign professionals for project management, engineering, and sustainable building design. Expertise in green technologies and smart city planning is increasingly valuable.

3. Plantation

Foreign professionals in the plantation sector, particularly in palm oil, often work in agronomic research, sustainability practices, and supply chain management. Skills in precision agriculture and sustainable farming are in high demand.

4. Agriculture

In agriculture, foreign experts contribute to areas like biotechnology, crop genetics, and advanced farming techniques. Roles in food security, agricultural economics, and agri-tech startups are growing.

5. Mining & Quarrying

This sector values foreign professionals with expertise in geological surveying, environmental impact assessment, and advanced extraction technologies. Skills in data analytics for resource management are increasingly sought after.

6. Services

The service sector offers a wide range of opportunities for foreign professionals. This includes roles in fintech, healthcare innovation, e-commerce, digital marketing, and hospitality management. Expertise in artificial intelligence, data science, and customer experience design is highly prized.

Read more: E-commerce in Malaysia: An Expert Expansion Guide

Recommendations for Foreign Professionals Considering Malaysia

Cultural Adaptation

We recommend immersing yourself in Malaysia’s diverse culture. Attend local events, try various cuisines, and engage with colleagues from different backgrounds. Our clients find that showing respect for local customs and religious practices significantly enhances their professional relationships.

Language Considerations

While English proficiency is sufficient in most business settings, we’ve observed that professionals who make an effort to learn basic Bahasa Malaysia often build stronger connections with local colleagues and clients. Consider enrolling in language classes or using language learning apps.

Financial Planning

We advise foreign professionals to carefully budget for Malaysia’s varied cost of living. Our tax experts can help you understand Malaysia’s tax system, ensuring compliance and optimising your financial situation. We often assist clients in understanding their tax residency status and applicable double taxation agreements.

InCorp’s local knowledge and professional network can provide valuable support in these areas, helping you smoothly transition into your new role in Malaysia.

Where to Next With InCorp Global

It’s clear that Malaysia’s growing economy creates potentially lucrative long-term opportunities for foreign professionals. Working through employment laws and visa rules, however, can be complex. InCorp’s on-the-ground knowledge of Malaysian employment law and visa processes can ease your path to working in Malaysia.

Our specialists can help with each part, from visa applications to explaining your rights and duties as a foreign professional in Malaysia. Reach out to InCorp today to make your move into Malaysia’s growing business scene as smooth and fast as possible.

FAQs for Employment Law Malaysia

  • Malaysia provides the Employment Pass for skilled workers, Professional Visit Pass for short-term work, and Resident Pass-Talent for high-skill expatriates.
  • Foreign professionals with valid work visas can apply for Dependent Passes for their spouse and under-18 children. You'll need to prove your relationship and ability to support your family.
  • For a Malaysian work visa, you need a job offer from a registered Malaysian company, relevant qualifications and experience, and to meet the salary minimum for your visa category.

Talk to our consultants today!

Learn more about employment law Malaysia

About the Author

Thirosha

As a content development manager, Thirosha oversees the creation and publishing of content for InCorp Global Malaysia. Her writing and business analysis background brings a unique perspective when developing content strategies that resonate with audiences.

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