Many Malaysian companies have not directly hired foreign workers since 2005. Instead, recruitment agencies employ foreign workers, outsourcing them to companies. This outsourcing practice was formalised by a 2012 amendment to the Employment Act of 1955. Work permits are attached to the recruitment agents rather than the companies to which the foreign workers are outsourced under this system. Companies prefer this arrangement because workers who are not direct employees are not subject to collective bargaining agreements and can be hired for specific periods before returning to recruitment agencies.
To hire foreign workers, the company must first obtain a letter from the Ministry of Human Resources (MOHR), Jabatan Tenaga Kerja Semenanjung Malaysia (JTKSM), confirming that they cannot hire Malaysian workers. With the letter from JTKSM, the company can apply to MOHR for a foreign worker quota. If the company meets the relevant criteria, the Ministry will approve the application. After receiving approval from MOHR, the company can apply to the Ministry of Home Affairs (MOHA) for the Ministry’s foreign worker quota. This is usually done online through the Foreign Workers Centralized Management System (FWCMS). When the quota is approved, the company must pay the workers’ levy, the necessary insurance policies, and a security bond.
The company can begin recruiting once the relevant quotas have been approved. This, however, is not a simple process. Internalising the recruitment process is logistically challenging and economically inefficient for companies requiring many workers’ services. Instead, they will enter into a contract with a recruitment outsourcing agency, which will assist in locating foreign worker candidates from the source country and become the workers’ direct employers.
Foreign worker agencies in Malaysia typically use the services of agents based in the targeted countries to find worker candidates. The agents rely on informal sub-agents to facilitate the process as intermediaries between prospective workers. They help by vouching for recruiters and persuading prospective migrants to migrate. They also help with paperwork, passport applications, bank account opening, medical examinations, and transportation to the airport for future migrant workers. They may even act as guarantors for workers who require credit in some cases.
Once the workers’ services have been secured, the outsourcing agency applies for a Visa With Reference (VDR) at the Malaysian Embassy in the source country, allowing the workers to travel to Malaysia. When the workers arrive in Malaysia, they have 30 days to undergo a medical examination by the Foreign Workers’ Medical Examination Monitoring Agency (FOMEMA) Sdn Bhd. The employer usually arranges the medical examination. After the workers have received medical clearance, the employer can apply for a temporary employment pass known as the Visitor Pass (Temporary Employment) or VP (TE). After receiving the VP (TE), the workers will be able to begin working in Malaysia.