New rules impact employment passes, professional visit passes

IMPACT – MEDIUM

What is the change? Starting Aug. 1, authorities will start implementing new policies and reinforcing existing regulations for work passes, including all categories of employment passes and professional visit passes.

What does the change mean? Notably, employers will no longer be able to include allowances when calculating the minimum salary for work permit eligibility. In the past, this was allowed on a discretionary basis. The rules also add stricter requirements for certain nationalities applying under the new employment permit category III.

• Implementation time frame: Aug. 1.
• Visas/permits affected: Employment passes , professional visit passes.
• Who is affected: Foreign nationals applying for employment passes and professional visit passes..
• Business impact: Employers and applicants should be aware of the new regulations and make sure to comply with all policies related to work authorization for applications filed on and after Aug. 1.

Background: The new rules affect foreign workers applying for regular employment passes (category I), employment passes for a contract term of less than two years and meeting the minimum salary (category II), and employment passes for foreign nationals hired for a limited duration and earning less than the normal wage (category III, created last year).

The summary of new regulations is as follows:

Categories I & II

• Category I employment passes are valid for a minimum of two years (based on an employment contract of the same duration). Category II employments passes are valid for less than two years (based on the duration of the employment contract).
• The minimum salary of 5,000 ringgits (about US$1,245) per month cannot include allowances.
• The foreign national must show a copy of the approval letter when entering the country.

Category III

• This category is only appropriate for employment contracts with a maximum term of 12 months.
• The minimum salary of 2,500 to 4,999.99 ringgits per month cannot include allowances.
• Foreign nationals in this category are not eligible to bring their dependents.
• Certain nationalities who are subject to entry visa requirements must apply for a “visa with reference,” to be filed with the employment pass application before traveling to Malaysia.
• Nationals of the following countries working in construction, manufacturing and mining industries must undergo a medical examination as part of their employment pass application.

Professional Visit Pass

• Foreign employees must show a copy of the approval letter upon entering Malaysia.

BAL Analysis: Although some of the policies have been in place for some time, the authorities are emphasizing strict reinforcement of all rules moving forward.

This alert has been provided by the BAL Global Practice group and our network provider located in Malaysia. For additional information, please contact your BAL attorney.

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