You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

August 24, 2015

Overview of Key Employer Obligations in Myanmar

Subscribe to Updates
Informed Counsel

Employers should be familiar with their obligations under Myanmar’s rapidly evolving labor laws. These laws often impose unique restrictions and procedural requirements on employers which could result in disastrous consequences if not complied with. In this article, we provide an overview of foreign investors’ significant obligations when hiring employees in Myanmar.

Minimum Wage Laws

Since the implementation of the Minimum Wages Law of 2012, there has been extensive debate regarding the actual minimum wage rates. Until recently, there was no officially prescribed minimum wage rate in Myanmar. However, after conducting research to quantify a base minimum wage rate, the National Minimum Wage Committee of Myanmar released a notification on June 29, 2015, proposing a minimum wage.

According to Notification (1/2015) of the National Minimum Wages Fixation Committee of Myanmar, the proposed minimum wage—regardless of place and type of work—is set at MMK 3,600 (about USD 3) for an eight-hour day and MMK 450 (about USD 0.38) per hour as a basic hourly wage for all workers across the country. The proposed minimum wages, however, do not apply to small businesses with less than 15 workers and those which are classified as family-run businesses.

The National Minimum Wage Committee has invited organizations and individuals to propose amendments to the Notification. After considering the proposed changes, the National Minimum Wage Committee will fix the minimum wage rate. Investors and employers should consider the proposed rates and use the proposed rate structure until the rates are finalized.

Working Hours

The prescribed working hours for employees of companies, entertainment houses, service enterprises, shops, and trading centers are eight hours a day and six working days a week. For employees of factories, working hours are no more than forty-eight hours a week. For oil field and mine employees, it is eight hours a day. In addition, mandatory overtime payments need to be paid for every hour or day worked beyond the prescribed limits.

Severance Obligations

Employment contracts in Myanmar are not at will. Therefore, when an employer terminates an employee, the employer must provide clear notice and fulfill any statutory severance obligations. The amount of compensation depends on the employee’s length of service. The Ministry of Labor, Employment and Social Security, published Notification No. 84/2015 on July 3, 2015, which details the minimum severance rates based on years of service. They are  as follows.

Years of Service Severance Rate
Severance Obligations in Myanmar
6 months – 1 year of service ½  of monthly salary
1 year –  2 years of service 1 month’s salary
2 years – 3 years of service 1 ½ month’s salary
3 years – 4 years of service 3 months’ salary
4 years – 6 years of service 4 months’ salary
6 years – 8 years of service 5 months’ salary
8 years – 10 years of service 6 months’ salary
10 years – 20 years of service 8 months’ salary
20 years – 25 years of service 10 months’ salary
25 years + 13 months’ salary

There are exceptions to statutory severance obligations in cases of fair dismissal, such as dismissal for criminal acts and wrongful conduct. The distinction of what constitutes fair and unfair dismissal depends on the individual facts of each case.

Work Permit Rules

There are currently no explicit work permit rules for expatriate employees. The common practice is to apply for a business visa either in advance of or upon arrival. Business visas are usually granted for single entry, 70-day stays. They can be renewed, and normally, an application for a multiple-entry business visa can be made after obtaining three single-entry visas. However, this is at the absolute discretion of the authorities. A multiple-entry business visa may be granted for six months per time and may eventually be extended to a one-year multiple entry visa.

Specific work permit rules govern certain business classifications. As a requirement under the Foreign Investment Law, foreigners in companies that have applied for a permit from the Myanmar Investment Commission to operate their businesses must obtain specific work permits and stay permits. A normal business visa would be insufficient in this case. To date, however, the procedures to obtain these work permits have not been fully implemented. Therefore, the requirements are not practically enforced. Employers should still contact the Myanmar Investment Commission to clarify the process and status of the work permit program.

Social Security Contributions

Investors must register under the Social Security Law and contribute toward an established social security fund. The fund is formed with contributions from both the employer and the employees. An employee contributes 2 percent of his or her wages and the employer is obligated to contribute 3 percent of an employee’s wages to the fund. Employers who have registered a social security fund are exempt from provisions of the Workmen’s Compensation Act of 1923.

Employment Contracts

The Ministry of Labor has played an active participatory role in the review and formation of employee contracts. While employers are free to contract directly with employees in accordance with terms agreed to by the parties, employers should set out the minimum terms required under Myanmar law in an employment contract with the employee. The Ministry of Labor has issued an employment contract template, and it will review and vet such contracts prior to execution.

Employers have the duty to protect the health, safety, and welfare of their employees during the course of their employment relationship. This is particularly important for investors setting up labor-intensive factories and manufacturing units in Myanmar. Foreign investors should therefore be mindful of the various employment regulations in Myanmar and the evolving regulatory environment, and they should adopt policies to reflect those standards mandated by law. Failure to observe those requirements or to adequately understand employer and employee obligations could create additional risk for investors and to companies employing both foreign and local employees.

Download Full Article
Related Professionals

Practices

Employment

Location

RELATED INSIGHTS​ 

April 3, 2023
Most employers know that terminating employees for poor job performance is not easy. But it is actually legally possible—if employers have the right approach and take specific precautionary measures. However, failing to take these precautions can mean that an employer is either stuck with an incompetent employee or on the losing end of a lawsuit for unfair termination. This article will lay out some essential considerations for employers in Thailand regarding termination of employment for poor performance. First, understand that “poor work performance” is a lack of performance or ability, or an inability to work with other employees. It does not constitute a violation of work rules or regulations. In some cases, however, an employee’s failure to act in accordance with lawful instructions or commands of the employer, resulting in poor work performance, could also be considered a violation of work rules or regulations. This may be the case if the work rules or regulations clearly state that an employee must strictly comply with the employer’s instructions or commands. Second, an employer can, in fact, terminate an employee due to poor work performance. For example, this may be possible in the following scenarios: Records show that an employee’s work performance has fallen below the employer’s required standards, and the employee has not tried to improve his or her work performance for three consecutive years. In addition, it does not appear that the employer was biased when giving ratings or scores for the employee’s work performance. The job description of the employee includes coordination with employees in other departments, but the employee has not been able to do so. Therefore, the employee was reassigned to a new job function, but the employee still did not improve. This suggests that the employee has a lack of interpersonal skills and is not
Read More
March 23, 2023
On March 19, 2023, Thailand’s new work-from-home (WFH) legislation amending the Labour Protection Act (No. 8) B.E. 2566 (2023) was published in the Government Gazette. It will come into effect on April 18, 2023. The amendment aims to enhance employee protections to accord with current global standards, provide alternative working arrangements for employers and employees, increase workforce efficiency, and strengthen employees’ job security and a better quality of life. As we detailed previously, the new WFH legislation allows employers and employees to reach agreements that permit employees to work remotely. Since there are no accompanying criminal punishments relating to this new provision, and the legislation incorporates the term “may agree,” it appears that this WFH provision is not mandatory but is primarily intended to facilitate and encourage remote working agreements between employers and employees. For more details on the WFH legislation, or on any aspect of employment law in Thailand, please contact Tilleke & Gibbins at [email protected].
Read More
February 24, 2023
Many companies have moved to Southeast Asia to benefit from the advantages of this vibrant and diverse market. The region is already a manufacturing hub for a multitude of industries—computer and automotive products in Thailand, textiles in Cambodia, and footwear and electrical goods in Vietnam, to name a few—and an increasing number of companies worldwide are reconfiguring their supply chains to include regional suppliers. A key challenge is keeping up to date with employment law trends in these jurisdictions to ensure compliance with local regulations—and avoid costly, time-consuming business interruption. Here we outline trends and recent regulatory developments in Cambodia, Thailand, and Vietnam, and consider what they mean for employers. Cambodia The Ministry of Labour and Vocational Training (MLVT) is likely to pursue a more proactive enforcement strategy in 2023. Last May, the MLVT announced companies would be required to submit a twice yearly self-declaration on labour compliance through a new online system. The self-declaration form requires companies to confirm and upload evidence of compliance, and the MLVT online system—through which the ministry can easily determine if a company is compliant –generates a report that lists all fines. Companies should comply with the self-declaration requirement and carefully review the form to understand what fines will apply for non-compliance. On 1 October 2022, regulations relating to the National Social Security Fund (NSSF) pension system came into effect, and employers and employees began making NSSF pension contributions. Over the next five years, total compulsory pension contributions will amount to 4% of an employee’s wage, half of which is paid by the employer and half deducted from the employee’s salary. The contribution wage is capped at KHR 1.2m (USD 300). Employers are currently required to pay a relatively small amount (KHR 24,000, or around USD 6). This will increase to 10.75% over
Read More
January 19, 2023
The Thai parliament has passed the so-called Work from Home Bill—formally known as Labour Protection Act (No. 8) B.E. 2566 (2023)—which amends the country’s Labour Protection Act (LPA) to reflect current circumstances. The accompanying legislative remark states that the proposed amendments to the LPA will provide additional options for work arrangements between employers and employees, upgrade the level of labor protection, increase work stability, and improve quality of life for employees in Thailand. The legislation adds a single section to the LPA providing that an employer and an employee “may agree in the employment contract” that the employee is allowed “to bring work . . . to perform at home or at the residence of the employee or anywhere that the employee can work remotely through information technology, if the nature of the work permits.” The provision further provides that employers are responsible for ensuring that remote work agreements are in writing, either physically or electronically, and may include the following details: Period of the agreement; Normal working hours, rest periods, and overtime work; Criteria for overtime work, holiday work, and various types of leave; Scope of work and control or supervision by the employer; and Responsibility for arranging supplies and equipment, including necessary costs relating to the work. The amended LPA gives employees who work from home the right to refuse contact from the employer or the supervisor beyond working hours. In addition, employers must treat remote employees equally to on-premise employees. The most notable question surrounding this legislation is whether employers must allow employees to work remotely. The phrase “may agree” suggests that employers do not have to agree to allow an employee to work remotely. Another important aspect of the amendment is that there is no criminal punishment attached to it, which suggests that the legislation
Read More