Planning to Hire Foreign Workers?
Talk to our team about employer compliance requirements before applying for a permit.
Many SMEs looking to hire foreign workers (especially in manufacturing, construction, plantation or services) are surprised to learn the permit process involves several layers of approval and an annual levy paid directly to the government. This guide gives an overview of the process and what employers should expect in terms of cost and timeline.
Current Limits and Restrictions
The government has been gradually tightening foreign worker conditions — foreign workers currently make up about 15% of Malaysia’s workforce, and the government’s target is to bring that down to 10% by 2030 and 5% by 2035, within the existing cap of 2.5 million foreign workers. This means quota approvals for new foreign worker hires are getting tighter, particularly for lower-skilled sectors.
General Process for a Foreign Worker Permit Application
- Apply for quota approval from the Ministry of Home Affairs (KDN) or the relevant sector agency.
- Recruitment process through a licensed employment agency or directly from an approved source country.
- Apply for a Temporary Work Visit Pass (PLKS) once quota approval is granted.
- Mandatory health screening for foreign workers before/after arrival.
- Register with relevant agencies — including SOCSO/PERKESO contributions for foreign workers (a separate scheme from local employees).
- Pay the annual levy — paid to the Immigration Department, with rates varying by sector and subject to frequent review.
Foreign Worker Levy: What Employers Should Know
Levy rates vary by sector (manufacturing, construction, plantation, services, domestic help) and can change from time to time based on current government policy. The government is also studying a Multi-Tier Levy Mechanism that would impose higher levies on companies with a higher ratio of foreign to local workers — aimed at encouraging automation and reducing dependence on foreign labour. Because levy rates change frequently, please confirm the current rate directly with the Immigration Department before making any cost projections.
Employer Responsibilities After a Foreign Worker Starts
- Ensure the PLKS stays valid and is renewed before expiry.
- Register the worker for SOCSO contributions under the foreign worker scheme.
- Keep worker documentation (passport, permit, health screening) properly organised.
- Comply with sector and employer restrictions — foreign workers can typically only work for the employer and sector approved in their permit.
- Notify the relevant authority if a worker leaves the job or returns to their home country before the contract ends.
Risks of Non-Compliance
Employers who fail to meet permit conditions — for example, letting a permit lapse, or allowing a worker to work outside the approved scope — can face compounds, restrictions on future quota approvals, and in serious cases, action under the Immigration Act 1959/63.
PERKESO Contributions for Foreign Workers: What’s Different
Foreign workers are registered under a special scheme through the PERKESO ASSIST Portal — they’re eligible for employment injury scheme protection, but not the invalidity scheme reserved for local employees. Employers must register foreign workers within the set period after they start work — failing to do so can jeopardise PLKS renewal the following year.
JTK and Foreign Workers: Employment Terms Still Apply
Although the permit process is handled by the Immigration Department, a foreign worker’s day-to-day employment terms — wages, working hours, accommodation — remain subject to the Employment Act 1955, enforced by the Department of Labour (JTK). Complaints from foreign workers about unpaid wages or working conditions can be brought to JTK just like local employees, and a finding of violation can affect the company’s future quota approvals at the Immigration Department.
Documents Employers Need for a PLKS Application
- Quota approval letter from KDN/relevant agency.
- Valid foreign worker passport (usually at least 18 months validity from application date).
- Agreed employment contract.
- FOMEMA health screening report (for renewal) or source-country screening (for new applications).
- Proof of insurance and accommodation meeting the Minimum Standards of Housing and Amenities Act 1990.
Sectors That Most Commonly Hire Foreign Workers in Malaysia
The main sectors permitted to hire foreign workers under quota are manufacturing, construction, plantation, agriculture, and services (limited to specific sub-sectors like cleaning and domestic help). Each sector has different quota caps and local-to-foreign worker ratio requirements — some sectors require a minimum ratio of local workers before new foreign worker quota approvals are granted.
How Long Does the Whole Process Take From Application to Start of Work?
On average, the full process from quota application to a foreign worker arriving and starting work can take 3 to 6 months, depending on the source country, sector, and processing speed of the agencies involved. Employers are encouraged to start the process well ahead of their actual hiring need to avoid operational disruption.
How SASCO Can Help
While the permit application itself is handled directly with the Immigration Department/KDN, our team can help with the related corporate compliance side — foreign worker statutory contributions, payroll records, and general employer compliance advice so your company’s employment structure stays in order.
Note: Levy rates and quota conditions are frequently reviewed by the government. Please confirm the latest information directly with the Immigration Department of Malaysia or the Ministry of Home Affairs before planning.
Frequently Asked Questions
How much is the annual levy for foreign workers?
Rates vary by sector and are reviewed frequently. Check the current rate directly with the Immigration Department before estimating costs.
Can a foreign worker change employer or sector?
Generally not without official approval — foreign workers are tied to the employer and sector approved in their permit.
Do foreign workers need to be registered with PERKESO?
Yes, foreign workers must be registered under a special SOCSO scheme for foreign workers, separate from the local employee scheme.
What are the risks if an employer fails to comply with foreign worker permit conditions?
Employers may face compounds, restrictions on future foreign worker quotas, and action under the Immigration Act in serious cases.
Is JTK involved in foreign worker complaints?
Yes, complaints about unpaid wages or working conditions can be brought to JTK just like for local employees.
What is the minimum passport validity for a PLKS application?
Usually at least 18 months from the application date, subject to current Immigration Department requirements.
Do employers need to provide accommodation for foreign workers?
Yes, accommodation must meet the Minimum Standards of Housing and Amenities Act 1990.
What is the Multi-Tier Levy Mechanism?
A proposed levy structure under government study that would charge higher levies to companies with a higher ratio of foreign to local workers, aimed at encouraging automation.