News

1 August 2025

STAMPING OF EMPLOYMENT CONTRACTS: COMPLIANCE WITH THE STAMP ACT 1949

In light of the Inland Revenue Board’s (“IRB”) Press Release dated 6 June 2025 (“Press Release”), employers are reminded of their legal obligations to duly stamp all employment contracts in accordance with the Stamp Act 1949.

Part A: Employment contracts must be stamped

Each copy of an employment contract is subject to a nominal stamp duty of RM10.00.

Employers should present employment contracts for stamping within thirty (30) days after they have been executed within Malaysia, or within thirty (30) days after they have been first received in Malaysia if they have been executed out of Malaysia. Penalties would be imposed if employment contracts are not stamped within the aforementioned timeline.

Part B: Transitional relief and penalty remission

Pursuant to the Press Release, IRB announced the following treatments in respect of the stamping of employment contracts:

Employment contracts executed before 1 January 2025

• Stamp Duty: Exempted.
• Penalty: No penalty will apply for late stamping.

Employment contracts executed between 1 January 2025 and 31 December 2025

• Stamp Duty: Stamp duty of RM10.00 applies.
• Penalty: Remitted if stamped on or before 31 December 2025.

Employment contracts executed on or after 1 January 2026

• Stamp Duty: Stamp duty of RM10.00 applies.
• Penalty: Applicable if the stamping deadline is missed.

Part C: What this means for employers

Employers should take immediate steps to review and update their internal processes to ensure employment contracts are duly stamped within the prescribed timeline. Recommended actions include:

• reviewing existing employment contracts to identify unstamped documents. Note employment contracts here would include all types of employment contracts and policies that has been executed by the employer and employee to form part of their employment contract;
• implementing a tracking system for timely stamping of all new employment contracts; and/or
• seeking professional assistance to manage stamping compliance and penalty mitigation where necessary.

Failure to comply may expose businesses to unnecessary legal and financial risk, particularly if employment contracts are required as evidence in disputes.

This article is intended for general information. It should not be regarded as legal professional advice.

If you have any questions about how this development may impact your organisation or business, please feel free to reach out to Ivan Ho Yue Chan (Partner) and Nyau Kok Cheong, Jeff (Partner) of our firm’s Corporate and M&A Department, and Mehala Marimuthoo (Partner) of our firm’s Industrial Disputes and Employment Department for further advice.

This alert is prepared with the assistance of Sai Jia Siang (Associate).