You’ve just brought in a new employee on board and realized, weeks later, that nobody stamped the employment contract. What’s next? Will you face penalties? Can you still fix this?
Here’s some good news — Malaysian employers have a grace period until the end of 2025. If you signed your employment contracts before January 1, 2025, they now exempt from stamp duty, and you won’t get penalized for stamping them late.
But watch out — you need to make a move before time runs out. In this post, we’ll explain what this exemption means how it impacts your company, and what actions you should take now to follow the rules.
What Is Stamp Duty in Employment Contracts?
In Malaysia, employment contracts have a stamp duty of RM10, under the Stamp Act 1949. While the amount looks small, the real problem comes from breaking the rules. If someone doesn’t stamp a contract within 30 days of signing, fines can reach RM100, and contract might not be admissible in legal proceedings.
Putting a stamp on a job contract isn’t just a formality — it protects both employers and employees under Malaysian law.
What’s New with the Stamp Duty Exemption?
The Lembaga Hasil Dalam Negeri (LHDN) has made an official announcement that:
- Contracts signed before 1 January 2025 don’t need to pay stamp duty and won’t face penalties.
- Contracts signed between 1 Jan 2025 and 31 Dec 2025 need stamping by 31 Dec 2025 to skip penalties.
- Starting 1 January 2026 normal rules kick in — you must stamp contracts within 30 days, or you might face penalties of RM50 to RM100 for each contract.
This exemption helps employers catch up on overdue contracts and prepare for mandatory stamping requirement from 2026.
Why This Stamp Duty Timeline Is Important
Let’s break it down to understand better:
This transition period gives you a chance to adjust, but it won’t last forever. If you don’t pay attention, your HR team might run into operational and legal problems in 2026 and later.
Why Should Employers Take This Seriously?
1. Courts Might Not Accept Non-Stamped Contracts
Malaysian employment law states that unstamped contracts might not hold up in court. You could lose protection in disputes over salary, termination, or working hours, just because your contract lacks a stamp.
2. Penalty Fees Add Up
RM50–RM100 might seem small but think about hiring 50 people in a year. That’s RM5,000 in fines just for missing the stamp requirement.
3. The Government Is Tightening Rules
Starting in 2026, LHDN will roll out a new Self-Assessment System. This means employers need to follow the rules on their own. Expect more audits and a higher chance of getting fined.
| You can learn more about compliance risks and ways to steer clear of fines in our post on Common Payroll Compliance Pitfalls Malaysian Businesses Face. |
What Should Employers Do Now?
Here’s a simple 3-step checklist to get your company ready:
1. Audit All Current Contracts
Look through your HR records — digital or paper — and make a list of employment contracts signed before 1 Jan 2025 and those signed in 2025. Find out which ones don’t have stamps.
If you’re in charge of a big team, use a cloud-based HR tool like Info-Tech’s E-HR System to make tracking and checking easier.
2. Get Contracts Stamped Using STAMPS (LHDN Online Portal)
You need to stamp all contracts through the LHDN’s STAMPS portal. Here’s how it works:
- Sign up on the portal
- Upload your employment contract
- Pay RM10 (for 2025 contracts)
- Get the e-stamp certificate
This e-stamp serves as a legal record that validates the document.
3. Create a 30-Day SOP for 2026 and Beyond
Starting January 2026, you must stamp documents within 30 days. This isn’t optional — it’s required. Write an internal SOP now to help your HR team prepare for next year.
We suggest you sync this process with your employee onboarding SOP.
HR Software Benefits
Handling deadlines uploading files, and monitoring contract dates manually can be tough. This is where new HR tech steps in.
At Info-Tech, we provide:
- E-HR Software with built-in reminders for stamping deadlines
- Document Management Module to store stamped contracts
- Employee Onboarding Workflow that adds stamping to the contract-signing step
Have More Questions? Here Are Some Common Ones
- What if I don’t meet the December 31, 2025 deadline?
You’ll have to pay a RM10 stamp duty and face fine of RM50–RM100 for each contract, based on how late you submit for stamping.
- Does this rule apply to part-time or employees from other countries?
Yes — you need to follow these stamping rules for all employment contract stamping, no matter the job type or where the employee comes from.
- Can I get older contracts from 2023 or before stamped now?
Yes — contracts signed before January 1, 2025, don’t require the RM10 duty payment or any fines. But remember, this works if you get them stamped by December 31, 2025.
Final Thoughts
You might think stamping is just a small office task, but in the eyes of the law, it carries a lot of weight. The 2025 exemption gives you a clean slate to start over skip fines and tidy up your HR processes before full rules kick in come 2026.
Don’t put this off until January and end up in a rush. Review, stamp, and get compliant now. And if you’re still dealing with paperwork manually maybe it’s time to look into a quicker smarter way to do things.
Need help with all aspects of following the rules? Contact Us for a free demo and we’ll get you sorted out!