Malaysia has officially tightened enforcement of the Stamp Act 1949, and HR teams now have a new compliance responsibility that cannot be ignored:
👉 All employment contracts must be stamped, or they risk becoming inadmissible in court and subject to penalties.
This applies to new contracts, renewals, addendums, training bonds, and NDAs—basically anything signed between employer and employee.
The Inland Revenue Board of Malaysia (LHDN) rolled out a special 2025 grace period to help employers catch up. But once the clock hits 1 January 2026, penalties kick in—and they are not small.
Let’s break down what you need to know.
📌 What Needs to Be Stamped?
Under the Stamp Act, any written instrument that creates a binding agreement must be stamped.
For HR, this includes:
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Employment contracts (full-time, part-time, fixed-term)
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Confirmations and extensions
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Salary revisions
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Addendums
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Training bonds
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Non-disclosure agreements
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Any document that both employer and employee sign
If it commits obligations or rights, stamp it. Simple as that.
🕒 The 2025 Compliance Window
For the entire year of 1 January 2025 – 31 December 2025, employers can stamp contracts with:
✅ RM10 stamp duty
❌ No late penalty, even if contract was signed years ago
This is the only opportunity to clean up backlogged documents without financial pain.
If you have hundreds of employee files from previous years… this is the moment to fix them.
🔥 What Happens Starting 1 January 2026? Penalties Apply.
Beginning 2026, all employment contracts must be stamped within 30 days of signing (or 30 days of receiving a foreign-signed contract).
If late, Section 47 of the Stamp Act applies:
📍 Late Stamping Penalties
| Delay |
Penalty |
Minimum for Employment Contracts |
| ≤ 3 months |
RM10 or 2× duty |
RM20 |
| 3–6 months |
RM20 or 4× duty |
RM40 |
| > 6 months |
RM50 or 4× duty |
RM50 |
For companies with high turnover, this adds up quickly.
A company with 200 unsigned employee agreements could easily face a RM10,000+ penalty if discovered during an LHDN audit.
⚠️ Additional Risks Beyond Penalties
1. Unstamped Contracts Are Inadmissible in Court
Under Section 52 of the Stamp Act, unstamped documents cannot be used as evidence.
Meaning:
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No proof of employee obligations
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Weaker position in disputes
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Higher risk in unfair dismissal cases
2. HR Compliance Red Flags
During an audit, LHDN may expand checks into:
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payroll
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benefits
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allowances
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contractor status
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tax filings
If they find one issue, they rarely stop at one.
📂 What Should Employers Do Now?
To stay compliant and avoid 2026 penalties:
1️⃣ Audit all employee contracts
Check:
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Is it stamped?
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If exempt (salary < RM3,000), is it endorsed?
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Are old addendums included?
2️⃣ Stamp everything before 31 December 2025
You only pay RM10, with zero penalty.
3️⃣ Put a stamping workflow in place for 2026 onwards
30-day stamping needs automation or strict SOPs.
🚀 How HR Forte & AskGenie Can Help
HR Forte already manages compliance across Asia, and we can integrate stamping workflows with:
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Automated 30-day reminders
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Document upload and tracking
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AskGenie’s instant Q&A:
“Is this document exempt?”
“How much stamp duty is payable?”
“When do penalties apply?”
AskGenie can also help HR teams understand cross-country obligations with real-time updates for APAC.
If you want the workflow built into HRF for 2025/2026, talk to us — we’re already helping clients prepare.
💬 Final Thoughts
Malaysia’s move to strictly enforce contract stamping is a major HR compliance shift.
The good news?
2025 is your penalty-free year.
Use it wisely.
After 31 December 2025, the real penalties begin — and HR will not want to be on the wrong side of an audit.