In 2025, the paperwork is the challenge.

Recent amendments to the Malaysian Penal Code, stamping requirements, and EPF obligations for foreign employees are raising the stakes for HR teams and business leaders.

Where previously a delay in stamping an employment contract was seen merely as an internal oversight, this may now constitute financial penalties and will render a contract inadmissible as evidence in legal proceedings.

This article outlines the key updates and highlights the actions required to ensure companies remain compliant and safeguarded.

1. Delays in stamping now have legal consequences

Effective 1 January 2026, employers are required to stamp employment contracts within 30 days of signing the employment contract. Pursuant to the Stamp Act and Inland Revenue Board (IRB) requirements, delay in stamping is subject to escalating penalties – and in some cases, maybe interpreted as intent to evade stamp duty.

The risk of delay stamping employment contracts would be:

• Late-stamped contracts may be rendered inadmissible as evidence in disputes related proceedings

• Employers may be subject to financial penalties or even regulatory investigations, where backdating is involved
• Pursuant to section 63 of the Stamp Act, a fine of up to RM1,500 per document can be imposed for non-compliance

Actions to take:

• Review and complete stamping of all employment contracts, within the 30-day time frame
• Update internal SOPs to secure prompt execution and regulatory compliance

2. Foreign employees now subject to mandatory EPF contributions

Effective 1 October 2025, all employers are required to  register and contribute to EPF (KWSP) for non-Malaysian citizen employees, excluding domestic workers. Both employer and employee will each contribute 2% pursuant to the latest EPF guideline.

Primary obligations include:

• Registration of foreign employees with the EPF
• Reflecting contribution amount in the payslip
• Ensuring accurate deductions and remittance

Non-compliance risks include:

• Back-pay liabilities resulting from incorrect deductions
• Claims or complaints lodged with the Tribunal under Section 69 of the Employment Act
• Potential immigration or audit complications, especially during inspections

Employers should treat this as a fundamental statutory duty rather than a grey area.

3. Falsification of HR documents may attract criminal liability

Recent interpretations of the Penal Code (Sections 463–464) and Stamp Act provisions expressly indicates that certain HR practices – if proven to be intentionally misleading – may lead to criminal charges.

This includes:

• Backdating employment contracts or termination letters
• Misrepresenting facts in performance documentation
• Falsifying or withholding key documents to avoid liability

If carried out with intent to defraud or deceive, such actions may constitute “making a false document” or “intent to commit fraud”, both of which are punishable under criminal law.

As courts and regulators place greater scrutiny on employer conduct, it’s crucial to ensure that:

• HR documentation is accurate, timely, and compliant
• Disciplinary or termination processes are transparent and well-evidenced
• Contracts and letters are never altered retroactively without legal review

What Should Employers Do Now?

• Audit your employees’ files and contracts
• Review payroll processes and deduction compliance for all categories of employees
• Avoid potential dispute by seeking legal support

MECA can help.
MECA members get access to real-time support and 1-on-1 guidance from our consultants. For more information, contact us today via admin@meca.com.my or +603 2779 4227.