Daily Express Subscriber
Sign in to your account.

LATELY there’s been a lot of hoo-ha in the human resources (HR) circles about the requirement to stamp employment documents. 

The requirement was always there but recently it appears the relevant agency has made proactive efforts to enforce it especially with the introduction of Finance Act 2024 which came into effect on Jan 1, 2025.

This new legislation has transformed the landscape of stamp duty collection by introducing a self-assessment system for stamp duty.

The Stamp Act 1949 requires employment contracts to be stamped as they are listed as chargeable instruments listed in the First Schedule.

Only employment contracts involving monthly wages below RM300 are exempt from stamp duty which seems irrelevant currently as minimum wages are set at RM1700.

The cost of stamping is RM10 for each copy of the employment contract.

The time frame to stamp the documents is laid out under Section 47 of the Act, which states any unstamped instrument drawn or made within Malaysia may be stamped after execution on payment of the unpaid duty if the instrument is presented for stamping: within 30 days of its execution if executed within Malaysia; or within 30 days after it has been first received in Malaysia, if it has been executed outside Malaysia.

If there’s a delay in stamping the document, then there would be a fine as follows: Delay 31 days to three months: RM50 or 10% of the stamp duty, whichever is higher Delay more than three months: RM100 or 20% of the stamp duty, whichever is higher.

An unstamped employment contract is still admissible as evidence in both the Industrial and Labour Court.

Any unstamped agreement is still valid under the law. The Federal Court in Malayan Banking Bhd v Agencies Service Bureau Sdn Bhd & Ors (1982) 1 MLJ 198 clarified that a unstamped document is only inadmissible as evidence and it does not make the document invalid as the main purpose of Stamp Act 1949 is to allow the government to collect revenue.

Hence, in the Civil Courts, the unstamped documents are admissible as evidence once it’s duly stamped.

Perhaps it’s time to review the First Schedule of the Stamp Act 1949, maybe a full exemption can be granted for employment contracts or the exemption threshold of wages can be increased from RM300 to RM20,000 for instance (only for local employment contracts as a small incentive to encourage companies to hire locals).