Lately, many people have asked: “Is stamping employment contracts mandatory?”
If we’re talking about strictly following the law… Yes, employment contracts are legally required to be stamped under the Stamp Act 1949.
But here’s my beef with the law.
That same Act says employment contracts with salaries below RM300/month are exempted from stamp duty. And guess what? That threshold hasn’t been updated since 1949. I mean, even the minimum wage has been revised five times since it was introduced in 2013. And let’s be real, no one has seen a RM300/month salary in over a decade! (remember, car salesmen >.<)
Now, here’s the important part.
In Malaysia, an unstamped employment contract is still a valid agreement between parties. It does not become void just because it’s missing a RM10 stamp. In fact, the Employment Act acknowledges even an oral agreement is legally binding.
However, the enforceability in court is affected until stamping is done. If a dispute arises and we need to enforce the contract, or defend the company using its terms, we’ll have to get it stamped at that point, along with paying a relatively small penalty.
Malaysian courts have consistently held that lack of stamping is not a fatal flaw. It’s considered a procedural issue that can be rectified by paying the duty. In the Industrial Court, the focus is still on the substantive employment relationship. Even if the contract isn’t stamped, the employment relationship exists.
So, in conclusion, an unstamped employment contract isn’t invalid – it remains as a binding agreement. But to fully enforce it legally (eg. to sue an employee for breach of contract or defend against a wrongful dismissal claim), we need to ensure the agreement gets stamped.
If you ask me whether it’s absolutely necessary, I’d say no. But if we want cover all bases and be super exact about the law, stamping contracts on time is a good practice. After all, it’s only RM10 and can now be done online – unlike back in 1949.
Thoughts?
xoxoxo, AuntyHR
