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InsightMonthly Roundup

January 2026 Monthly Roundup

January 30, 20264 min read

Your monthly guide to regulatory and workforce developments in Malaysia

January 2026 was a pivotal month for workforce, talent and compliance developments across Malaysia. Employers faced several policy shifts and operational updates that reinforce the need for proactive planning and structured workforce governance.

Special Foreign Worker Quota Window Opens

Malaysia announced a special application window for foreign worker quota submissions running from 19 January to 31 March 2026, offering employers additional time to plan and regularise quota applications in line with current requirements and sector approvals. This window helps employers align workforce needs more strategically at the start of the year.

Read more here.

Employment Pass Changes and Processing Timelines

Revised minimum salary thresholds for Employment Pass (EP) Categories I, II, and III will take effect from 1 June 2026, prompting many employers to submit applications and renewals ahead of the policy implementation date.

As a result, authorities have reported a significant increase in application volumes, which may lead to longer processing timelines in the coming months. Applications continue to be processed on a queue basis, and employers remain responsible for maintaining immigration compliance while applications are under review.

Companies are strongly encouraged to plan ahead and submit renewal applications at least three months before pass expiry, with complete and well-structured documentation, to minimise delays and avoid disruption to expatriate employment continuity.

Read more here.

Fixed EP Validity Periods Introduced

In addition to salary changes, the expatriate employment framework will introduce fixed validity periods for Employment Passes:

  • Category I: 10 years
  • Category II: 10 years (with local succession planning)
  • Category III: 5 years (with local succession planning)

This provides clearer planning horizons for employers and reinforces the transition to local workforce development

Read more here.

Policy on Temporary Labour Quarters (TLQ) in Penang

Penang will stop accepting new Temporary Labour Quarters (TLQ) applications after 31 December 2025, reflecting a broader move toward better regulated and more structured worker accommodation models, such as Centralised Labour Quarters (CLQ). Employers need to anticipate this change as part of their workforce deployment and compliance planning in northern Malaysia.

This policy shift highlights a key operational challenge for employers: compliant and scalable accommodation is now more critical than ever, especially where traditional TLQ solutions may no longer be accepted.

To support organisations in meeting both compliance needs and worker welfare expectations, there are modern accommodation options already available, including:

Positioning accommodation solutions this way underscores how the right housing strategy can help employers maintain compliance, improve worker wellbeing, and reduce operational disruption as regulatory requirements tighten.

Source

Extension of 1:3 Internship Policy Pilot

The pilot phase of Malaysia’s 1:3 Internship Policy, linking expatriate employment with structured training placements for local interns, has been extended to 31 March 2026. Employers should use this additional time to embed internship pathways and strengthen collaboration with education providers in support of workforce readiness.

Source

Broader Labour System Reforms

Malaysia’s Ministry of Human Resources outlined a suite of reforms designed to modernise the labour system. This includes initiatives such as mobile labour courts, digital case recording, and an integrated labour management platform — all of which signal greater transparency, faster dispute resolution, and higher compliance expectations for employers. Proper documentation and governance practices will be essential as enforcement and oversight evolve.

Source

Osadi: Your Partner in Workforce Management

At Osadi, we are committed to supporting our clients through these regulatory changes. 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