Your monthly guide to regulatory and workforce developments in Malaysia.
October brought several developments affecting Malaysia’s employment and foreign workforce landscape, from renewed recruitment arrangements with Bangladesh to continued scrutiny of responsible recruitment practices and foreign worker approvals.
This month, we look at Malaysia’s standing in the latest US Trafficking in Persons Report, the reopening of recruitment processing for Bangladeshi workers, calls for tighter enforcement of foreign worker recruitment policies, and amendments to the Employment Insurance System.
1. Malaysia maintains Tier 2 status in US human trafficking report
Malaysia has maintained its Tier 2 status in the 2026 US Trafficking in Persons Report, according to an announcement by the Home Ministry on 9 October.
Tier 2 indicates that a country does not fully meet the minimum standards for eliminating human trafficking but is making significant efforts towards compliance.
The report acknowledged Malaysia’s ongoing efforts, including action against public officials suspected of involvement in trafficking, increased resources for anti-trafficking operations and additional specialised personnel.
However, it also identified areas requiring further improvement, including earlier identification of trafficking victims, stronger investigations, greater accountability for recruitment fees and closer cooperation with non-governmental organisations.
For employers and recruitment stakeholders, the findings reinforce the importance of ethical recruitment practices, transparent recruitment costs and appropriate worker protection mechanisms.
Responsible recruitment remains an ongoing commitment that extends from the recruitment process through to employment and worker welfare.
2. Recruitment processing for Bangladeshi workers resumes
Bangladesh announced the resumption of recruitment processing for workers seeking employment in Malaysia in mid-October, following a suspension lasting more than two years.
According to Bangladesh’s Ministry of Expatriates’ Welfare and Overseas Employment, approved recruitment agencies may begin processing applications, while prospective workers can proceed with medical examinations.
The announcement also outlined an agreement in principle for Malaysia to recruit 10,000 Bangladeshi workers at zero cost to the workers. However, details concerning eligibility, recruitment costs, departure arrangements and administrative procedures had not been fully clarified at the time of the announcement.
The reopening is a significant development for the Malaysia–Bangladesh labour corridor, particularly for industries that depend on foreign labour to address workforce shortages.
For Malaysian employers, the key consideration is to distinguish between the resumption of recruitment processing and the practical readiness of recruitment channels. Employers should continue referring to official requirements and approved procedures before making workforce deployment commitments.
3. MEF calls for tighter enforcement of foreign worker recruitment approvals
In its 21 October statement, MEF highlighted reports of foreign workers working in customer-facing roles such as cashiers, retail assistants and service personnel, raising questions about compliance with existing recruitment conditions.
The federation called for recruitment approvals to remain aligned with genuine labour shortages, particularly in approved sectors and occupations where employers face difficulties attracting local workers.
MEF also emphasised the importance of prioritising Malaysian workers through appropriate wages, working conditions, training and career development, while recognising the continued need for foreign labour in certain industries.
These are recommendations from the employers’ federation rather than newly announced government regulations.
For businesses employing foreign workers, the discussion highlights the importance of ensuring that recruitment approvals, actual job roles and workforce deployment remain consistent with applicable requirements.
4. Employment Insurance System amendments take effect
Amendments to Malaysia’s Employment Insurance System (EIS) came into effect on 1 October 2026, introducing enhanced benefits and employment support for eligible contributors.
Among the changes announced by the Social Security Organisation (SOCSO) are:
- An increase in the Early Re-employment Allowance from 25% to 50% of the remaining Job Search Allowance.
- An increase in the maximum Training Fees benefit from RM4,000 to RM7,000.
- An increase in the Training Allowance to RM30 per day.
- A new one-off Mobility Assistance Allowance of RM1,000 for eligible contributors who secure employment more than 100 kilometres from their residence.
The amendments are intended to strengthen employment protection and support workers transitioning into new jobs through financial assistance, training and job-matching services.
Separately, the amendments also introduce requirements for employers to notify PERKESO of job vacancies before recruitment and report when those positions have been filled.
These vacancy-reporting provisions are subject to separate implementation arrangements. Employers should monitor further announcements from PERKESO regarding commencement, reporting procedures and enforcement.
For businesses, the changes highlight the importance of keeping up with employment requirements and reviewing HR and recruitment processes as new provisions are introduced.
What employers should take away this month
October’s developments highlight several connected priorities for Malaysian employers: responsible recruitment, accurate workforce deployment, clearer recruitment processes and evolving employment obligations.
The latest trafficking report reinforces the importance of transparency and worker protection. Developments involving Bangladesh demonstrate how changes in source-country recruitment arrangements can affect manpower planning, while MEF’s recommendations draw attention to compliance with approved employment conditions.
Meanwhile, the EIS amendments remind employers that employment requirements continue to evolve beyond foreign worker recruitment alone.
For businesses planning their workforce needs, maintaining accurate documentation, monitoring regulatory developments and ensuring appropriate support throughout the employment journey remain essential to effective workforce management.
Osadi: Your Partner in Workforce Management
At Osadi, we support employers in navigating an evolving foreign workforce landscape, from recruitment and documentation to accommodation, welfare, transport, payroll and ongoing workforce management. We’re here to ensure your workforce remains efficient, compliant, and future-ready. Stay tuned for more updates, and don’t hesitate to reach out to our team for personalized assistance as we navigate 2026 together.
Prepared by Ken Wooi
Business Development Team
bdteam@osadi.com.my
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