December 2, 2016

Myanmar: New Payment of Wages Law 2016

Taylor Vinters – International Employment Law Update

The Payment of Wages Law 2016 (the “Law”) came into force earlier this year, repealing the old Payment of Wages Act 1936 (the “Old Act”). The Law sets out (amongst other things):

  • The obligations on employers regarding the payment of employees’ wages
  • The methods and time frames for payment
  • The permissibility of deducting wages
  • The duties and responsibilities of the Director General and investigating officers of the Factories and General Labor Laws Inspection Department (the “Department”) under the Ministry of Labor, Immigration and Population.

Under the Law, “Wages” are defined as the wage or salary received by an employee working part-time, weekly, or monthly for an employer, and includes all overtime and bonus payments and other benefits which can be regarded as the employee’s income. Travel, accommodation, meal allowances, reimbursable work, and medical and recreational expenses are not considered as Wages under the Law.

In contrast to the Old Act, the definition of “Employer” under the Law covers those in the trade, manufacturing, services, agriculture, and livestock industries, as well as their contractors, authorized agents, and successors. “Employee” is defined as a person who earns his or her living on wages, whether from part-time work, piece work, or permanent work, and this includes interns, students, security guards, drivers, cleaners, and more.

Similar to the Old Act, the Law stipulates that wage periods should not exceed a period of one month. It nonetheless states that where there are fewer than 100 workers, payment must be made at the end of the wage period, and if the number of workers exceeds 100, payment must be administered no later than five days after the end of the wage period. Where an employee is dismissed, Wages must be paid within two days, and for resignations, payment should be made on the usual payday.

Employers with difficulties paying wages due to unforeseen events (such as natural disasters) must report to the Department. Employers cannot deduct more than 50 percent of an employee’s wages, except when the employee fails to perform his or her duties. Any deductions made due to fines, such as for intentional damage to company property, must be given prior approval from the Department. Further, the Director General and investigating officers of the Department can inspect workplaces, payroll documents, deduction records, and other evidentiary documents at any time with two witnesses upon showing their government ID.

An employer found guilty under the Law must pay all forfeited wages to the employee, and is subject to a term of imprisonment of up to three months, a minimum fine of MMK 2 million (approximately EUR 1,400), or both. A repeat offender under the Law must pay all forfeited wages to the employee, and is subject to a term of imprisonment of up to six months, a minimum fine of MMK 5 million (approximately EUR 3,500), or both. Any person convicted under any bylaws, notifications, or orders made under the Law is liable to a fine of between MMK 100,000 million (approximately EUR 70,200) to MMK 500,000 million (approximately EUR 351,000).

Comment

Employers must ensure that they have familiarized themselves with the Law to avoid incurring potential fines and/or imprisonment for breach of the new provisions.

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