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MALAYSIA: Labor Market Testing Salary Threshold Raised for Employment Pass Applications

Malaysia’s Social Security Organization (SOCSO/PERKESO) announced during an online briefing on July 29, 2026, that the salary threshold requiring Labor Market Testing (LMT) has increased from MYR 14,999 to MYR 19,999, effective June 1, 2026. As a result, foreign nationals earning a base monthly salary below MYR 20,000 must complete the LMT process before an Employment Pass (EP) application can be submitted. Although PERKESO has not yet issued an official announcement or updated guidance, employers should begin preparing for the higher threshold and monitor for additional clarification, particularly regarding potential new situations where LMT may become mandatory.

Key Points

• Higher Salary Threshold Takes Effect: Effective June 1, 2026, the salary threshold triggering Labor Market Testing increased from MYR 14,999 to MYR 19,999 per month. Foreign nationals earning a base monthly salary below MYR 20,000 must generally complete the LMT process before an Employment Pass application can be filed, and the salary calculation excludes allowances. 
• Several Exemptions Continue to Apply: Labor Market Testing is generally not required for Employment Pass renewals, intra-company transfers, senior management positions, investors, certain shareholders, Representative or Regional Office positions, qualifying international organizations, and positions in the sports sector. Applicants holding at least 30% ownership in the sponsoring company also remain exempt under the current guidelines. 
• LMT Involves Multiple Recruitment Steps: The process typically requires employers to advertise the position on MYFutureJobs for at least 14 calendar days, interview qualified candidates where appropriate, complete a Hiring Outcome Report, and obtain a Recommendation Letter from SOCSO/PERKESO. The overall process generally requires three to four weeks before an Employment Pass application can proceed. 
• Official Guidance Is Still Pending: At the time of the announcement, PERKESO had not yet released updated FAQs or formal implementation guidance confirming the new threshold. Employers should continue monitoring official announcements for additional procedural details and implementation instructions.

What Employers Need to Know

• Review Compensation Before Filing: Employers planning to sponsor foreign nationals should carefully review the employee’s base monthly salary to determine whether Labor Market Testing will now be required. Because allowances are excluded from the salary calculation, compensation structures should be evaluated before beginning the Employment Pass process. 
• Expect Additional Processing Time: Where Labor Market Testing applies, employers should anticipate adding approximately three to four weeks to overall Employment Pass processing timelines. Early workforce planning will help reduce onboarding delays and minimize disruptions to business operations. 
• Watch for Additional Compliance Changes: During the online briefing, PERKESO briefly indicated that Labor Market Testing may eventually be required in additional situations, including certain Employment Pass renewals and changes of position. Although these changes have not yet been formally adopted, employers should monitor future guidance closely.

Looking Ahead

• Formal Implementation Guidance Is Expected: PERKESO is expected to publish updated FAQs and official guidance confirming the new salary threshold and any related procedural requirements. This guidance should clarify how the revised rules will be implemented and whether any transition measures will apply. 
• LMT Requirements May Expand: Comments made during the online briefing suggest that Labor Market Testing could eventually be extended to situations that are currently exempt, such as Employment Pass renewals and position changes. If implemented, these changes would significantly expand employer compliance obligations. 
• Employers Should Continue Monitoring Developments: Until official guidance is released, some aspects of the revised policy remain uncertain. Employers sponsoring foreign nationals should work closely with immigration counsel or local advisors to ensure continued compliance with Malaysia’s evolving Employment Pass requirements.

Malaysia’s increase in the Labor Market Testing salary threshold represents a significant compliance change for employers sponsoring foreign workers under the Employment Pass program. While many existing exemptions remain in place, more positions will now require employers to complete the LMT process before filing an Employment Pass application. Because official implementation guidance has not yet been issued and additional changes may be forthcoming, employers should closely monitor PERKESO announcements and incorporate the revised threshold into their workforce planning and immigration strategies.

The content of this article is intended only to provide a general guide to the subject matter. It should not be construed as legal advice. Please contact FGI at info@employmentimmigration.com or (+1) 248.643.4900 for guidance if you have specific questions.