Expatriates and Work Permits

The Malaysian government encourages employers in Malaysia to train and employ more locals in tandem with the government’s policy and vision to have more locals trained and employed at all levels within various organizations to reflect the multi-racial composition of the country.

Nevertheless, the current shortage in the amount of employees or lack in the availability of trained locals has resulted in employers bringing in expatriate individuals to fill in the respective posts, i.e. “Key Post”, “Time Post”, “Executive Post” and “Non-Executive Post”.

For expatriates wishing to work in Malaysia, they are required to have work permits. These work permits are generally valid for between 6 months and 5 years, depending on the respective durations and salary ranges of the employment contracts and the types of visas according to the requirements set out by the Expatriate Services Division (ESD)1, a division under the Immigration Department of Malaysia of the Ministry of Home Affairs of Malaysia. ESD is responsible for the processing of applications and the issuance of work permits for expatriates here in Malaysia.

In short, there are 3 types of work permits available to expatriate workers which are issued by the government. The 3 types of work permits available are the: Employment Pass, the Professional Visit Pass and the Residence-Pass Talent.2 This article seeks to discuss the process of getting the commonly sought and most suitable work permit type for expatriates – the Employment Pass.

Additionally, those who fail to have work permits while working or rendering services in Malaysia can be liable to be fined up to RM10,000 or imprisoned for not more than 5 years or both.3 As such, it is vital for an expatriate to possess and for the employer to ensure that the expatriate possesses a valid work permit prior to working or rendering services in Malaysia.

Process: Step-by-Step Procedures & Requirements

In Malaysia, the Employment Pass will be applied by the person wishing to employ the expatriate (i.e., the employer). The application for the Employment Pass and related applications are done online mostly through the ESD portal. This potential employer must already have an account or register for one with ESD prior to the application process.4

When a potential employer wishes and is ready to employ expatriate, either of the following two (2) circumstances applies: -

1. First-Time Hiring
2. Subsequent Hiring

For first-time hiring i.e. a potential employer who is employing an expatriate as the first instance exercise, the employer will first needs to be registered with ESD. The registration is a ‘one-time’ process and employers will not be required by ESD to re-register for each subsequent expatriate hire, unless the employer ceases to be registered with ESD or becomes de-registered with ESD (*in this situation, the employer needs to register with ESD afresh).

This registration is necessary as the employer would not be able to proceed further to apply for the Employment Pass without first being registered.

However, the registration is not automatic: the employer needs to apply to be registered. In order to become registered, the employer needs to undergo the following step-by-step procedures (brief):

1. Create Login ID and Password.
2. Insert Requisite Information and Upload Requisite Documents via ESD Portal.
3. Evaluation of the Registration Application by ESD.
4. Issuance of Registration Approval by ESD.
5. Appoint Endorser, Company Login ID User, Submission Officer 1 and Submission Officer 2 via ESD Portal.
6. Print Letter of Undertaking from ESD Portal.
7. Set Face-to-Face Appointment with ESD via ESD Portal.
8. Signing of the Letter of Undertaking at ESD’s Office and Submission of the signed Letter of Undertaking to ESD.
9. Change Password via ESD Portal

Per ESD’s client charter, the overall processing timeframe (from the initial step until the last step) is 14 working days upon ESD’s receipt of complete information and documents excluding the timeframe for various query stages (if any).

For subsequent hiring i.e. existing employer of expatriate who is now employing subsequent expatriate(s), the employer can straightaway proceed with the application for the Employment Pass(es).

The step-by-step procedures for the Employment Pass application are briefly as follows: -

1. Application for Expatriate Post Approval (to the Approving Agency).
2. Issuance of Expatriate Post Approval (by the Approving Agency).
3. Application for Employment Pass (to ESD).
4. Issuance of Employment Pass (by ESD).

Per ESD’s client charter, the processing timeframe for the 1st Step and 2nd Step is 5 to 10 working days while the processing timeframe for the 3rd Step and 4th Step is 5 to 10 working days, leading the overall processing timeframe of 10 to 20 working days, upon ESD’s receipt of complete information and documents excluding the timeframe for various query stages (if any).

Further, it should be noted that as a pre-condition, a potential employer is required to advertise for job vacancies to locals for the position requiring the expatriate via designated online platform before submitting the application for the Employment Pass5. The job vacancy needs to be advertised for a period of at least 30 days prior to the application for the Employment Pass6.

During this period, the employer is required to conduct interviews of the locals7. This is a new requirement implemented by the Ministry of Human Resources (via one its agencies, the Social Security Organisation (SOCSO)) and adopted by ESD, quite recently on 1 January 2021 onwards8.

Be that as it may, there are several exceptions to this requirement, as follows:-9

• automatic exemption.
• important roles (C-Suite & Key Posts).
• expatriates with monthly income of RM15,000 and above.
• Representative Office/Regional Office (RERO).
• investors/ shareholders/owners.
• corporate transfers/secondments/trade agreements.
• international organization.
• sports sectors.
• conditional exemption (i.e. requiring exemption letter from SOCSO by way of formal application).
• specialized skilled positions.

This is to say that in respect of any of these situations, the employer does not have to advertise the job vacancy, as normally required. This means that the employer can skip this step and straightaway apply for the Employment Pass.

In summary, the brief process of obtaining Employment Pass is as per Table 1:10

TABLE 1

All in all, the overall processing timeframe ranges from 10 to 20 working days to 24 to 34 working days depending on the status of the potential employer (i.e. whether first-time expatriate hiring or subsequent expatriate hiring). However, in practice, the timeframe is typically longer due to various other factors.

[Note:

*This step is not relevant and no longer required upon the employer for subsequent expatriate hiring exercise (unless the employer has ceased to be registered or has becoming de-registered with ESD as explained above). The employer may straightaway proceed with the subsequent steps.

#As pre-condition to the application for expatriate post approval, the employer needs to satisfy both the Approving Agency and ESD that an advertisement for job vacancy to the locals in respect of the position requiring an expatriate has been posted and interviews of the locals vis-à-vis the advertisement has been conducted, as mentioned above.]

Conclusion

It is important to note that the process of getting work permit for expatriate in Malaysia is quite long and arduous. The process involves filling in and completing some forms, preparing the requisite supporting documents and on frequent basis liaising with the relevant authorities (for example the Approving Agency and ESD) both via online and offline platforms, whereby the application for the work permit is done from within the country.

Thus, it is highly recommended for potential employers of expatriates in Malaysia to engage professionals to help going through with the process in terms of procedures, formalities and requirements.

Authors: Mohammad Ashraf Mohamed Sopiee and Fatin Razanah Redzuan

Footnotes

1. ESD ONLINE GUIDEBOOK V3.1 2017.
2. https://esd.imi.gov.my/portal/about-us/esd/.
3. IMMIGRATION ACT 1959/63 [ACT 155].
4. https://esd.imi.gov.my/portal/employers/#.
5. FREQUENTLY ASKED QUESTIONS (FAQ): ADVERTISEMENT OF VACANCIES ON MYFUTUREJOBS FOR THE HIRING OF EXPATRIATES NO. 2/2020 | 29 DECEMBER 2020.
6. Ibid.
7. Ibid.
8. Ibid.
9. Ibid.
10. https://esd.imi.gov.my/portal/employers/#.