Following the tabling of Malaysia’s Budget 2027, the Ministry of Human Resources (KESUMA) provided further details at a press conference on 16 October 2026 on two payroll developments targeted for June 2027:
Employers should monitor both developments closely, as they may affect workforce costs, salary structures, payroll processes and statutory compliance. Early assessment will help employers identify potential exposure and prepare for implementation. However, the final scope, exemptions and administrative requirements should be confirmed against the gazetted order and official guidance before changes are implemented.
Proposed Minimum Wages Order 2027
Micro, Small and Medium Enterprises (MSME) exemption based on group-level assessment
At its 16 October 2026 press conference, KESUMA reiterated the proposed increase in the national monthly minimum wage from RM1,700 to RM2,000, targeted to take effect in June 2027.
MSMEs with annual sales below RM50 million were announced as exempt from the increase to allow additional time to adjust. Reports on the conference indicate that eligibility would be assessed using total group turnover rather than the revenue of each subsidiary. The final eligibility criteria, group-assessment methodology, exemption period and transitional arrangements should be confirmed against the gazetted order and official guidance. A Malaysian subsidiary should therefore not assume that it qualifies solely because its own sales fall below the threshold.
Starting salary guidelines and legislative pathway
The follow-up announcement also outlined how the Budget 2027 proposal for a RM2,500 starting salary would be developed. Occupation- and qualification-based guidelines would use the Malaysian Standard Classification of Occupations (MASCO), initially covering graduate roles in categories 1 to 3, with complementary skills-based benchmarks for other categories. The guidelines are targeted for publication alongside the new Minimum Wages Order in June 2027, with benchmarks updated using official wage data and made available through the e-MASCO portal.
The framework has initially been described as guidance rather than a mandatory RM2,500 minimum for all employees. KESUMA also plans to amend the National Wages Consultative Council Act 2011 to incorporate educational qualifications into minimum wage determinations. Any binding obligations will depend on the final legislation and implementing instruments.
[New!] e-Wages system
Key updates
KESUMA outlined a proposed e-Wages system, featuring a live dashboard to monitor timely wage payments and minimum wage compliance, to be implemented in June 2027. The announced scope covers all workers, including non-Malaysian employees, and contractual payments such as basic salary, allowances, incentives and bonuses. The system is also intended to improve wage data across occupational groups and ensure fair remuneration practices in organizations.
What remains uncertain
The mechanism remains under development. At this stage, there is no further information confirming the final registration process, reporting frequency, required data fields, payroll-system integration or enforcement arrangements. Further guidance is also needed on the treatment of overseas-paid remuneration, split payrolls and individual remuneration components, which would be announced by KESUMA later.
Vialto perspective
The announcements provide greater clarity on the intended monitoring and implementation framework, but do not change the wage rates presented in Budget 2027. Employers should strengthen wage-payment records and remuneration policies, assess workforce impact and keep implementation plans flexible until the final requirements are issued.
Employers should prioritize the following:
Vialto can help employers assess the workforce, payroll and global mobility implications of these developments, review wage components and payment arrangements and prepare practical implementation plans as further legislation and guidance are released.
We will also continue to monitor developments relating to the proposed Minimum Wage Order 2027 and e-Wages system and provide updates once further guidance becomes available.
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Hilda Liow
Partner
Lim Phing Phing
Partner
Wee Lay Har
Director
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