Employment Pass (EP) in Malaysia

Employment Pass (EP) in Malaysia | Bestar

Malaysia Employment Pass Explained

The Employment Pass (EP) in Malaysia is a work permit that allows foreign nationals to be employed by a Malaysian organization. It is primarily for highly skilled professionals, managers, and executives, and is subject to the terms of an employment contract.

Here's a breakdown of key aspects:

1. Types of Employment Passes:

Malaysia's Employment Pass is categorized into three types based on salary and contract duration:

• Category I:

  
  

  • Monthly salary of RM10,000 or more.

  • Work contract of up to five years.

  • Renewable.

  • Allowed to hire a Foreign Domestic Helper and bring dependents (spouse, children under 21, and parents/parents-in-law via Dependent Pass or Long Term Social Visit Pass).

  • Typically for key leadership positions (e.g., CEOs, directors).

    
    

• Category II:

  
  

  • Monthly salary between RM5,000 and RM9,999.

  • Work contract of up to two years.

  • Renewable.

  • Allowed to hire a Foreign Domestic Helper and bring dependents (spouse, children under 21, and parents/parents-in-law via Dependent Pass or Long Term Social Visit Pass).

  • For managerial and professional positions (e.g., marketing managers, lecturers).

    
    

• Category III:

  
  

  • Monthly salary between RM3,000 and RM4,999.

  • Work contract of up to two years, but cannot be renewed more than two times.

  • Not allowed to hire a Foreign Domestic Helper or bring dependents.

  • For non-executive positions requiring significant work experience or specific technical/practical skills (e.g., designers, craftsmen). Companies applying for Category III EP often need to obtain approval from the Ministry of Home Affairs for an exemption from the RM5,000 minimum salary requirement.

2. Eligibility Criteria for Applicants:

To qualify for a Malaysia Employment Pass, applicants generally need to meet the following:

• Academic Qualifications and Work Experience:

  
  

  • Degree and above with at least 3 years of relevant experience.

  • Diploma with at least 5 years of relevant experience.

  • Technical Certificate or equivalent with at least 7 years of relevant experience.

  • Higher qualifications may reduce the required years of experience.

    
    

• Position Type: Must be in a managerial, executive, or technical position requiring specific skills.

  
  

• Salary Requirements: Must meet the minimum monthly salary for the respective EP category.

  
  

• Restricted Sectors: Must not take up work in a sector considered restricted by the Malaysian government.

  
  

• Job Offer: Must have a valid job offer from a Malaysian company that will sponsor the EP application.

3. Eligibility Criteria for Employers (Sponsoring Company):

The Malaysian company intending to hire foreign expatriates must also meet certain criteria:

• Registration: Must be registered with the Companies Commission of Malaysia (SSM) under the Companies Act 1965.

  
  

• Paid-Up Capital: Must meet minimum paid-up capital requirements:

  
  

  • 100% Local Owned: RM250,000

  • Joint Venture (minimum 30% Foreign Equity): RM350,000

  • 100% Foreign Owned: RM500,000

  • Foreign-owned companies (51% or more foreign equity) in Wholesale, Retail, and Trade (WRT) sectors: RM1,000,000 (with valid WRT license, if applicable).

    
    

• Expatriate Post Approval: The employer must first obtain approval to hire an expatriate (Expatriate Post) from the relevant authority body, such as the Expatriate Committee (EC) under the Immigration Department of Malaysia, or other approving agencies like MIDA (manufacturing/services), MDEC (technology), or BNM (finance/banking), depending on the industry.

  
  

• Job Advertising: Effective January 1, 2021, employers intending to hire expatriates for positions with a salary below RM15,000 per month are required to advertise job vacancies on a job portal under the Ministry of Human Resources for a minimum of 30 days.

4. Duration and Renewal:

• Duration: The validity of an EP can be up to 5 years (for Category I) or up to 2 years (for Category II and III).

  
  

• Renewal: EPs are generally renewable, with Category III having a limit of two renewals. Renewal applications should be submitted at least 30 days before expiry. For renewals in the same position with the same company, certain documents like educational certificates, resume, and job description may no longer be required.

Important Notes:

• Working in Malaysia without a valid Employment Pass is a serious offense with penalties including fines, imprisonment, and deportation.

  
  

• Employment Pass holders (Category I and II) can generally bring their legal spouse and children under 21 with a Dependent Pass. Parents and parents-in-law may be eligible for a Long Term Social Visit Pass.

  
  

• Conversion of a Visit Pass (Social) to an Employment Pass is generally not allowed; applicants must leave Malaysia and apply through their employer before re-entering.

  
  

• If an EP holder changes employers, the new employer must submit a fresh EP application.

  
  

• Employment Pass holders may become eligible for Permanent Residency (PR) after several years of continuous employment, usually with contributions to Malaysia's economy and society.

Restricted Sectors: Sectors Considered Restricted by the Malaysian Government

While Malaysia generally welcomes foreign investment and talent, the government implements policies to protect local employment and strategic interests. Therefore, certain sectors or specific job roles within broader sectors are considered "restricted" or "not encouraged" for foreign Employment Pass holders.

Here's a breakdown of common restricted areas and types of roles:

1. Distributive Trade Services (Wholesale, Retail, and Trade - WRT):

This is one of the most prominent areas with restrictions, particularly for smaller scale businesses. The aim is to ensure that basic retail and service jobs are primarily for Malaysians. Restricted businesses often include:

• Small Supermarkets and Mini Markets: Typically those with a sales floor area below a certain size (e.g., 3,000 sq ft).

• Provision Shops / General Vendors: Corner stores, sundry shops.

• Convenience Stores: Especially 24-hour outlets.

• Newsstands and Miscellaneous Goods Stores.

• Traditional Medicine Halls.

• Fuel Stations: With or without a convenience store.

• Permanent Market Stalls and Pavement Stores.

• Textile and Jewelry Shops.

• Non-exclusive Restaurants and Bistros: While exclusive or specialty restaurants might be allowed, general casual dining may be restricted.

• Hair Salons.

• Laundry Shops.

• Prepaid Card Businesses.

• Cyber Cafes.

• Car Glass and Aluminium Workshops.

• Herbal Product Businesses.

• Cleaning and Maintenance Services.

• Massage Parlours.

Important Note for WRT Sector: Foreign-owned companies (51% or more foreign equity) operating in the WRT sectors often require a valid WRT license from the Ministry of Domestic Trade and Consumer Affairs, and this license typically comes with stringent conditions regarding foreign employment.

2. Positions that can be filled by locals:

The Malaysian government generally prefers to fill roles with qualified Malaysian citizens. Therefore, if a role is deemed easily fillable by a local, it may be difficult to secure an Employment Pass for a foreigner. This can extend to various sectors and often requires the employer to demonstrate that they have attempted to recruit locally (e.g., through job advertising on portals under the Ministry of Human Resources).

3. Specific Roles within Industries (Examples):

Even within otherwise open sectors, some specific roles are often restricted for foreign workers, particularly those considered entry-level, operational, or easily performed by locals. Examples include:

• Construction Industry:

  • Electrical chargeman

  • Electrical Wireman

  • Telephone and Telegraph Fixing

  • Air conducting Fixing

  • Installation of lift and escalator

  • Excavator operator

  • Shovel operator

• Timber Industry:

  • Most categories of jobs in timber factories.

  • All machinery specialists in furniture factories.

  • Most categories of jobs in forest mills.

• Sports Ministry:

  • All management positions (except for trainers and sports consultants).

• Other Technical/Manual Roles: Certain lower-skilled technical or manual roles across various industries.

4. Industries of "National Strategic Interest":

While not always explicitly listed, the government may impose restrictions on foreign participation in industries deemed vital for national security or economic stability, or where local expertise is being developed. This can be more dynamic and less publicly defined.

Key Takeaway:

The underlying principle behind these restrictions is to prioritize Malaysian employment and promote local capabilities. While the general landscape for Employment Passes is open for highly skilled professionals, employers and foreign applicants need to be aware of these specific limitations, especially in the retail, service, and certain operational/technical segments.

It's crucial for employers to conduct due diligence and consult with the relevant approving agencies (like ESD, MIDA, MDEC, etc.) to understand the most current guidelines and restrictions for their specific industry and the position they intend to fill with an expatriate.

Application Process

The employer is responsible for applying for the Employment Pass on behalf of the foreign national. The process generally involves:

• Company Registration: The employer must first register with the Expatriate Services Division (ESD) online.

  
  

• Expatriate Post Approval: The employer applies for approval to hire for an Expatriate Post through the relevant authority.

  
  

• Employment Pass Application: Once the Expatriate Post is approved, the employer submits the Employment Pass application via the ESD portal.

  
  

• Document Submission: Required documents include:

  
  

  • Completed EP application form.

  • Passport-sized picture.

  • Copy of the applicant's passport (valid for at least 6 months).

  • Letter of approval for Expatriate Post.

  • Authorization from the company to submit the application.

  • Employment Contract or Offer and Acceptance Letter.

  • Applicant's CV and copies of diplomas/certificates (translated to English and certified/apostilled).

  • Company profile and supporting documents (registration, licenses, financial statements).

  • Latest payslips and income tax filing documents (for renewals).

    
    

• Processing and Approval: The processing time typically ranges from 5 to 10 working days once all required documents are complete.

  
  

• Issuance: Upon approval, the expatriate receives a confirmation letter. Upon arrival in Malaysia, they must appear in person at an Immigration Office to submit payment and their passport. The Immigration Officers will affix an Employment Pass sticker on the passport and issue an expatriate card. Malaysia also uses an ePASS system for approved applications to ease endorsement and reduce passport page usage.

How Bestar can Help

Navigating the Malaysia Employment Pass application process can be complex, involving multiple stages, specific documentation, and adherence to various regulations. This is where professional help, from Bestar, can be invaluable for both employers and foreign nationals.

Here's how Bestar can help:

1. Eligibility Assessment & Advisory:

• Pre-assessment: We can conduct a thorough pre-assessment of both the company's and the applicant's eligibility, identifying potential challenges or red flags early on.

• Pass Type Recommendation: We advise on the most suitable Employment Pass category (Category I, II, or III) or even alternative passes like the Professional Visit Pass (PVP), based on the job role, salary, and duration of stay.

• Compliance Checks: We ensure that the company meets all the necessary requirements (e.g., paid-up capital, registration with ESD, advertising requirements) and that the applicant's qualifications and experience align with the EP criteria.

• Justification Strategy: We can help formulate a strong justification for hiring a foreign national, especially for roles that might otherwise be considered suitable for locals, by highlighting specialized skills or contributions to the Malaysian economy.

2. End-to-End Application Management:

• Company Registration with ESD: We can handle the often-time-consuming process of registering the employer's company with the Expatriate Services Division (ESD) portal, which is a prerequisite for all EP applications.

• Document Preparation & Verification: This is a critical area. Bestar assists in:

  • Identifying all required documents (passport copies, academic certificates, employment contracts, company financials, etc.).

  • Ensuring documents are correctly translated (if necessary), certified, and apostilled/legalized according to Malaysian requirements.

  • Reviewing all documents for accuracy and completeness to minimize the risk of rejection or delays.

• Online Submission and Liaising:

  • We manage the online submission of the application through the ESD or relevant agency portal.

  • We act as a liaison between the company/applicant and the Malaysian immigration authorities (Expatriate Committee, Immigration Department, MIDA, MDEC, etc.).

  • We proactively follow up on the application status, respond to queries from the authorities, and address any additional information requests promptly.

• Post-Approval Assistance: This includes:

  • Guiding the applicant on obtaining a Visa with Reference (VDR) if required from their home country.

  • Facilitating the ePASS endorsement process upon the applicant's arrival in Malaysia, either at the Expatriate Satellite Centre (ESC) at KLIA or the MYXpats Centre.

  • Assisting with the issuance of the i-KAD (identity card for expatriates).

3. Expertise and Up-to-Date Knowledge:

• Navigating Complex Regulations: Immigration laws and policies can change. Bestar stays updated on the latest regulations, requirements, and processing procedures, ensuring that applications are compliant.

• Troubleshooting and Problem Solving: We have experience dealing with various scenarios, including complex cases, rejections, or specific industry-related challenges, and can devise strategies to overcome them.

• Risk Mitigation: By ensuring accuracy and compliance, we significantly reduce the risk of application rejection, delays, or even legal complications for both the employer and the foreign national.

4. Time and Resource Savings:

• Efficiency: The application process can be time-consuming and involve intricate administrative tasks. Outsourcing this to Bestar allows companies to focus on their core business operations.

• Reduced Stress: For individuals, the immigration process can be daunting. Professional help alleviates stress by handling the complexities and providing clear guidance.

5. Related Services: Bestar offers a comprehensive suite of services beyond just the Employment Pass, including:

• Dependent Pass (DP) applications for family members.

• Long Term Social Visit Pass (LTSVP) for parents/parents-in-law.

• Professional Visit Pass (PVP) applications for short-term engagements.

• Residence Pass-Talent (RP-T) applications for highly talented individuals.

• Company incorporation and business license applications in Malaysia.

• Consultation on tax implications for expatriates.

In summary, engaging professional help for a Malaysia Employment Pass application can provide peace of mind, streamline the process, ensure compliance, and ultimately increase the likelihood of a successful outcome.

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