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.
Under the Stamp Act, any written instrument that creates a binding agreement must be stamped.
For HR, this includes:
Employment contracts (full-time, part-time, fixed-term)
Confirmations and extensions
Salary revisions
Addendums
Training bonds
Non-disclosure agreements
Any document that both employer and employee sign
If it commits obligations or rights, stamp it. Simple as that.
For the entire year of 1 January 2025 – 31 December 2025, employers can stamp contracts with:
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.
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:
| 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.
Under Section 52 of the Stamp Act, unstamped documents cannot be used as evidence.
Meaning:
No proof of employee obligations
Weaker position in disputes
Higher risk in unfair dismissal cases
During an audit, LHDN may expand checks into:
payroll
benefits
allowances
contractor status
tax filings
If they find one issue, they rarely stop at one.
To stay compliant and avoid 2026 penalties:
Check:
Is it stamped?
If exempt (salary < RM3,000), is it endorsed?
Are old addendums included?
You only pay RM10, with zero penalty.
30-day stamping needs automation or strict SOPs.
HR Forte already manages compliance across Asia, and we can integrate stamping workflows with:
Automated 30-day reminders
Document upload and tracking
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.
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.