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Forums For Adjudicating Employment Disputes

With the promulgation of the Settlement of Labour Dispute Law in 2012, the Myanmar government has adopted a conciliatory approach for the resolution of labour disputes. This is an important step forward from the antiquated Trade Disputes Act of 1926, which has been repealed with the enactment of this new law.

Under the new law, labour disputes are required to be placed before a workplace coordination committee for resolution, failing which, the claim or dispute may then go to a Township conciliation body for review. Further, dispute cases may be referred to an arbitration body by the reviewing conciliation body or aggrieved party. If the issue remains unresolved and the parties cannot arrive at an amicable solution at the Township or arbitration body, then the aggrieved party may file an action before the Arbitration Council or the competent court in that jurisdiction. It should be noted that concurrent to the dispute resolution process, the law permits either party to nonetheless approach the relevant court to institute criminal or civil proceedings in regard to the legal rights under labour laws. In such cases, a court, realising that conciliation or arbitration proceedings are ongoing, may exercise its discretion to stay proceedings until the conciliation or arbitration process is complete.

As regards the establishment of specialised courts, as of yet, no separate labour courts have been established in Myanmar. As such, labour actions would be filed with the competent court having jurisdiction in the matter.


The Main Sources Of Employment Law

There is no single umbrella legislation governing employment matters in Myanmar. Labour laws are an amalgamation of different pieces of legislation which regulate various aspects of employment. Employment contracts are covered by the Employment and Skill Development Law 2013, while welfare issues are addressed by the Social Security Law 2012 (SSL), The Workmen’s Compensation Act 1923 and The Leave and Holidays Act 1951. Wages, working conditions, and hours are governed by the Minimum Wages Law 2013, Payment of Wages Law 2016, Factories Act 1951, Occupational Safety and Health Law 2019 and the Shop and Establishment Law 2016. Labour unions and disputes are generally guided by the Labour Disputes Settlement Law 2012 and Labour Organization Law 2011. The Ministry of Labour, Immigration and Population (MLIP) is the primary authority responsible for ensuring minimum standards of employment.


National Law And Employees Working For Foreign Companies

Myanmar employment laws apply equally to all employees working in the country, including those working for foreign owned companies, but may exclude employees transferred or sent to Myanmar under a foreign subsisting employment contract.


National Law And Employees Of National Companies Working In Another Jurisdiction

The Law Relating to Overseas Employment (1999) requires all Myanmar citizens, except seamen and government servants, to register with the Directorate of Labour. If employees are sent to work outside of Myanmar by their employer (for example, for an intra-office scheme), their welfare and employment conditions will continue to be governed by existing Myanmar labour laws, unless the employment contract states otherwise.


Data privacy

Currently, there are no specific laws or regulations related to data protection in Myanmar. However, the Constitution of the Republic of the Union of Myanmar (2008), The Competition Law (2015), and the Law Protecting the Privacy and Security of Citizens (2017) set out provisions for the protection of data privacy and security of communications. In addition, other laws related to various industry sectors protect against the disclosure of confidential information. However, we are not aware of any action that has been taken by the authorities under any of these provisions for breach of privacy or the unauthorised disclosure of confidential information.

Legal Requirements As To The Form Of Agreement

As per Myanmar labour law, once an employee has been appointed, there is a compulsory obligation to have the employment agreement prepared. The employment contract must be signed within 30 days from appointment, except where the employee is on probation or training as a pre-condition to appointment. The law designates a list of mandatory provisions that must be included in the contract. Since 2015, the MLIP has required all employers in Myanmar to use an official employment contract form for their employment agreements with their employees, and to register these with the local labour office. In 2017, a new version of the official employment contract form was published. The official employment contract form requires a fixed term to be stated, with an option to renew the contract at the end of the employment term. The township labour offices, which administer the registration of these forms, stipulate as an internal practice for a maximum period of two years for each employment contract.


Mandatory Requirements
  • Trial Period
  • Employment on probation or as a trainee is not mandatory and depends on company policy. Employees who are on probation or are trainees are eligible for casual leave, medical leave, and maternity/paternity leave. However, the benefits under the SSL can be claimed when the employee already contributed with the minimum period under the SSL.

  • Hours Of Work
  • There is no statutory maximum on the number of hours that may be worked per week.

    The stipulated working hours for shops, companies, trading centres, service enterprises, and entertainment houses is 8 hours a day. For factories, the prescribed working hours are not more than 44 hours a week. For oil fields and mines, it is not more than 44 hours a week. There are mandatory overtime payments that need to be paid for every hour/day worked beyond the prescribed limits. These have been set by the following laws where relevant:

    1. The Factories Act 1951

    2. The Shops and Establishments Law 2016 and Rules 2018

    3. The Leave and Holidays Act 1951 and Rules 2018

    4. The Oilfields (Labour and Welfare) Act 1951

  • Special Rules For Part-time Work
  • Working hours are normally set at eight hours a day or a maximum of 48 hours a week, according to the nature of work. Weekly working hours must not exceed 48 hours. Working hours under Shop and Establishment Law 2016 for shops, companies, trading centres, service enterprises and entertainment houses are as follows: eight hours a day, 48 hours a week, and overtime working hours shall not exceed 12 hours a week. The prescribed minimum rest should be at least 30 minutes after four hours of work.

    Under current practices of the MLIP, overtime pay is double the employee’s basic salary. The standard calculation method is as follows:

    (Monthly salary x 12 months) x 2 = Hourly Rate

    52 weeks x 44 (or 48) hrs

    Under the SEL 2016, overtime is limited to a maximum of 12 hours per week, or 16 hours in cases of special needs.

  • Earnings
  • The Minimum Wages Law, which was passed on 22 March 2013, along with the Minimum Wage Rules of 12 July 2013, direct the National Committee to prescribe a minimum wage standard applicable to a wide number of sectors. The National Committee on Minimum Wages would consider existing salaries, living cost indices, standards of living, employment opportunities and various other considerations for setting the standard rate. The National Committee would also consider recommendations from the union, region and state committees in making its assessment.

    The minimum wage, as announced by the National Minimum Wage Committee via its Notification No. 2/2015 on 28 August 2015, sets the national minimum wage at an hourly rate of MMK 450, and MMK 3,600 kyat for an 8-hour workday. The minimum wage applies to all employees regardless of age, industry, experience and region, except small businesses and family-run business with fewer than 15 employees. It is also highlighted that the National Minimum Wage Committee has issued its Notification No. 2/2018 for public consultation on 14 May 2018, regarding a proposed new minimum wage set at MMK 600 per hour, and MMK 4,800 for an 8-hour work day, applicable to all businesses except those with fewer than 10 employees. Confirmation is expected within 60 days.

  • Holidays/Rest Periods
  • Every employee is to be granted any and all gazetted public holidays amounting to 20-26 days in a calendar year. Starting from 2019, Union Government granted alternative holidays, although there is no statutory obligation to provide an alternative holiday when a public holiday coincides with a weekly off day. However, for purposes of wages, if an employee works on a public holiday coinciding with a weekly off day, the employee must be paid for that day.

  • Minimum/Maximum Age
  • Employees must be 16 years or older. There is no statutory retirement age for employees working in the private sector. For civil servants, the statutory retirement age is 60 years old. Mandatory retirement age can be set by the employer when the employer is not prohibited from doing so.

  • Illness/Disability
  • The Social Security Law 2012 provides for a number of benefits to employees and is applicable to any organisation with more than five employees. Employees are entitled to medical treatment and cash benefit for sickness, maternity, confinement, retirement and for funeral benefit. Medical treatment can be taken for up to 26 weeks starting from the date of treatment. For purposes of medical leave, Myanmar law allows up to 30 days to every employee for sickness. An application for medical leave must be supported by a medical certificate from a certified medical officer, doctor or any other certified medical practitioner. For cash benefit, employees need to have worked for at least 6 months with the establishment.

    A unique feature of this legislation is that it makes express mention of an unemployment benefit insurance scheme, though it is not yet implemented. Under the Workmen’s Compensation Act, employers are liable to pay compensation for any injuries resulting from an accident arising during the course of employment, unless it has occurred due to negligence of the employee, such as due to intoxication or substance abuse.

  • Location Of Work/Mobility
  • Depending on the type of industry, an employer may be required to provide transport arrangements, such as ferries and shuttle buses, for the convenience of its employees.

  • Pension Plans
  • There are pension schemes available for employees working with the government. However, under the Social Security Law, employers and workers will contribute to the social security fund for superannuation as per rates set by the MLIP in consultation with the Union Government, but this is not yet implemented by the social security board.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
  • Every female employee, insured under the Social Security System or not, is eligible for six weeks’ leave prior to delivery and for 8 weeks after delivery, up to a maximum of 14 weeks, as maternity leave with pay. In case of delivery of twins, an insured employee is eligible for an additional 4 weeks of maternity leave post-delivery. In case of miscarriage, an insured employee is entitled to 6 weeks of leave. An insured male employee is entitled to 15 days of leave for infant care after delivery. Every insured employee is eligible for leave for up to 8 weeks for child care in case of adoption of a child who has attained less than one year of age.

  • Compulsory Terms
  • The law requires employment contracts to include minimum conditions of work. These are laid out in the Employment and Skill Development law, which contains provisions that are compulsory in the contract. Standard provisions, such as wages/salary, type of employment, location and working hours, have to be specifically stated. Additional terms, such as days off, meal arrangements, medical treatment, termination provisions, accommodation and transport arrangements, are all compulsory terms that need to be incorporated into the contract, if applicable to a given industry.

  • Non-Compulsory Terms
  • These may be anything apart from the bare minimum stated under the law. These can be mutually agreed by the parties, but shall not be less favourable than the minimum standards of employment under the law.


Types Of Agreement

Agreements are to be in writing and are generally contractual in nature. The contents of the mandatory employment contract template issued by the MLIP cannot be changed without prior government approval from the Directorate of Labour.


Secrecy/Confidentiality

There are no specific obligations under law to protect a party’s confidentiality. However, these should be included within the contract for employment. The mandatory employment contract form covers the non-disclosure and confidentiality obligations of the employee. The Competition Law (2015) also contains general provisions for non-disclosure and confidentiality. There are no specific legal provisions requiring employers to protect employee privacy and personal data.


Ownership of Inventions/Other Intellectual Property (IP) Rights

Newly enacted Myanmar IP laws generally designate the employer, in case employee(s) created the work during the course of employment, as the default rights owner if any creation by the employee does not contradict the provisions under the employment agreement, if the employer does not fail to register the creation within the prescribed notice period, and if the employee does not waive the rights.


Pre-Employment Considerations

There are no provisions on pre-employment consideration under Myanmar labour laws, which mostly consider post-employment conditions.


Hiring Non-Nationals

Employers must ensure that their employees are permitted to work in Myanmar. At present, companies formed under the Myanmar Investment Law are eligible to hire non-nationals and apply for work permits and visas. For all other companies, whether locally owned or foreign, there are no restrictions for hiring non-nationals. However, they must ensure that valid documentation is in place. Labour authorities are currently in the process of drafting a Foreign Workers Law to establish specific laws for foreign nationals working in Myanmar. Once the draft is approved by the Union Government, it will be submitted to parliament for final review.

 

Hiring Specified Categories Of Individuals

There are special requirements for certain industries due to the nature of work involved, and these may have restrictions such as age limits. For instance, in hazardous industries, employees must be at least 18 years of age and must have a valid certification in the relevant field.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

Employers are free to outsource work or sub-contract, if necessary.

Changes To The Contract

Amendments to employment contracts may be made. However, the terms and conditions of the government template for employment contracts cannot be unilaterally changed by the employer. The employer and employee must negotiate and agree on the desired changes and obtain approval from township labour office of the Directorate of Labour.


Change In Ownership Of The Business

There is no specific guidance on changes of ownership in the employment context under Myanmar law. However, in the case of a change in business ownership, the smooth transfer of employment with no layoffs does not require consent of employees. In practice, labour authorities require both outgoing and incoming employers to discuss any ownership changes with employees through the workplace coordinating committee or respective basic labour union of the workplace.


Social Security Contributions

In Myanmar, employees and employers contribute to the Social Security Fund to cover compulsory and non-compulsory social insurance schemes under the Social Security Act (in effect from 1 April, 2014). Currently, an employer is to contribute 3% of an employee’s wages towards the social security fund while an employee’s contribution to the fund is 2% of his or her wages. The total social security contribution is currently capped at MMK 15,000 (MMK 9,000 from the employer; MMK 6,000 from the employee), based on a salary cap of MMK 300,000.


Accidents At Work

Under the Workmen’s Compensation Act, employers are liable to pay compensation for injuries or death resulting from accidents during the course of employment. The few exceptions to this rule are if the employee was under the influence of any intoxicating substance, engaged in wilful misconduct or disregarded safety precautions during an accident. Generally, compensation is calculated on the wage rate or salary for death, disability or any other injury. There are maximum and minimum compensation values provided under the law.


Discipline And Grievance

Employers are allowed to set internal rules and procedures to maintain discipline. There are not yet mandatory requirements to set up procedures for grievance and redress. However, employees may bring their grievances to the local Labour Office or court.


Harassment/Discrimination/Equal pay

The Minimum Wage Law stipulates equal pay for all employees irrespective of gender. The law also requires employers to treat their male and female employees equally and not to discriminate.


Compulsory Training Obligations

The Employment and Skill Development law places obligations on employers to carry out training workshops for its employees, either individually or in a group. There is a definite focus on this area and the law stresses the need to build essential skills among the work force. There are also provisions for arranging apprenticeships for training in technology. For certain industries, the government may also set a skill development committee and a fund into which the employer will need to contribute.


Offsetting Earnings

The Payment of Wages Law sets out circumstances where an employer may deduct or offset an employee’s earnings. Such situations may arise due to absence from duty, deductions for damage or loss of goods entrusted, any house accommodation provided, social security contributions, saving schemes or for income tax payable. There is a maximum limit placed on the deductions that can be made and such deductions cannot exceed 50% of the employee’s gross wages or salary.


Payments For Maternity And Disability Leave

In addition to maternity leave outlined above, an insured woman will be entitled to enjoy a maternity cash benefit if she has worked for a minimum of one year before the commencement of the maternity period. Maternity cash benefit for an insured female worker is 70% of her average wage for the previous year, as well as 50% of the average month’s wage for maternity expenses for a single delivery. The rates increase for delivery of twins or triplets. In addition to paternity leave, an insured man is entitled to a paternity benefit of 70% of his average wage for the previous one year.


Compulsory Insurance

Contributions towards the Social Security fund referenced above are compulsory.


Absence For Military Or Public Service Duties

There is a Reservist Law of 2010 addressing military leave, but it has not yet been implemented.


Works Councils or Trade Unions

The 2011 Labour Organization Law regulates collective industrial relations, including trade unions, employers’ associations and collective actions. The law uses industry/occupation and geographic categories. These are categorised at a company level for the same trade or activities, for township labour organisations and regional or state labour organisations at the township and regional level for the same trade or activities, for labour federations in the same trade or activities and for the Myanmar Labour Confederation at the national level. The law essentially states that a labour union may be formed by a minimum of 30 workers working in the same establishment. The labour union would exist as a separate juristic entity liable to be sued and to sue, with a name and common seal. The law also provides for lockouts and strikes. However, in a situation of probable lockout or strike, prior notice must be given to the township labour organisation for approval. Lock-outs and strikes are restricted for essential services which cannot be interrupted, including water, electricity, fire and health services.


Employees’ Right To Strike

Employees have a right to go on strike if they meet certain criteria set out in the law. There are provisions for collective bargaining. In case of strikes, the labour union must obtain permission from the labour federation. The law allows strikes for labour organisations, but requires permission of the labour federation 14 days in advance for public utility service industries and 3 days in advance for others. The law also allows employers to lockout, but with permission of the relevant conciliation body, at least 14 days in advance. As noted, lockouts and strikes are illegal in the essential service sectors, such as water, electricity, health and telecommunications. In addition, lockouts and strikes are banned during the dispute settlement process, as is the dismissal of members due to collective actions.


Employees On Strike

Employers cannot dismiss employees for a strike organised by their labour union.


Employers’ Responsibility For Actions Of Their Employees

Employers are responsible for the acts of their employees, except to the extent that their employees act outside of the scope of their employment.

Procedures For Terminating the Agreement

Generally, for termination without any misconduct or no cause, employment with fixed-term contracts will terminate upon the end of the term unless it is to be renewed. One month's notice is required, as per the MLIP’s mandatory employment contract form. An employee cannot be dismissed without severance payment unless he or she commits an act of gross misconduct or commits a further act of ordinary misconduct within 12 months after receiving the third warning from the employer.


Instant Dismissal

4.1 Instant dismissal, except for gross misconduct, is not allowed. An employer cannot terminate an employee without notice or severance pay for other reasons. For instant dismissal, the circumstances must be serious whereby an employee dishonestly performs his or her duty or intentionally commits a criminal act against the employer, intentionally causes the employer to suffer losses, performs an act of gross negligence which causes the employer to suffer severe losses, or violates the lawful and just work rules or regulations or orders of an employer after having received written warnings. Before dismissing an employee for an act of misconduct without providing a severance payment, the employer must have provided three warnings (one verbal and two written) to the employee. An employee can only be dismissed only after a further violation is made within 12 months of the third warning. For behaviour considered to be gross misconduct, such as theft, gambling, or using narcotic drugs, an employer can dismiss the employee immediately without any severance payment.

The local township labour office must be notified after the dismissal of the employee.


Employee's Resignation

There is no specific guidance available under Myanmar law on severance pay for employees who resign. There is no severance payment on employee’s voluntary resignation, but, in practice, labour officers frequently advise to pay severance payment on voluntary resignation.


Termination On Notice

The Employment Skills and Development Law states that severance payment may be paid to employees who have been terminated with notice


Termination By Reason Of The Employee's Age

Please refer to “Termination on Notice” given above for guidance.


Automatic Termination In Cases Of Force Majeure

There is no specific guidance or regulations available under existing Myanmar laws on automatic termination in case of force majeure. If employment has to be terminated due to unexpected conditions or terminated prematurely not due to the fault of the employee, then the employer is liable to pay severance payments to the employee.


Collective Dismissals

Under Myanmar labour laws, there are no provisions that relate to collective dismissal. Employers must follow termination procedures according to the provisions of the mandatory employment contract template issued by the MLIP as a basic requirement for any dismissal.


Termination By Parties’ Agreement

The parties are free to agree on mutual termination, provided such termination provides severance payments.


Directors Or Other Senior Officers

There are, except severance payment, no specific compensation requirements given for terminating directors or other senior level officers.


Special Rules For Categories Of Employee

There is no specific rule for different categories of employees on termination.


Whistleblower Laws

At present, there are no relevant provisions under labour laws protecting whistleblowers.


Specific Rules For Companies in Financial Difficulty

The labour laws do not provide any rules for companies facing financial difficulty. .


Special Rules For Garden Leave

Currently, there are no relevant provisions under labour laws on Garden Leave.


Restricting Future Activities

Areas of non-compete have not been routinely included in contracts, nor have they been widely disputed in Myanmar. Section 27 of the Contracts Act and Section 57 of the Specific Relief Act provide that an agreement in restraint of trade would be considered void. This is consistent with the laws of most common law and civil law jurisdictions, whereby full restraint on trade is impermissible. What is typically permissible, however, is reasonable restraint, narrow in scope and specific to individual circumstances. Despite the absence of case law defining the scope of non-compete provisions in employment contracts, we are of the opinion that a carefully crafted and narrow provision would be enforceable.


Severance Payments

In the absence of enabling notifications under the law, the recommended practice from labour authorities is to give an employment package which includes at least one-month notice and severance payment according to years of service.

The severance payment rates stipulated by the MLIP are as follows:

  • Six months to one year of service: one-half of monthly salary.
  • One to two years of service: one month's salary.
  • Two to three years of service: one and a half months' salary.
  • Three to four years of service: three months' salary.
  • Four to six years of service: four months' salary.
  • Six to eight years of service: five months' salary.
  • Eight to ten years of service: six months' salary.
  • Ten to 20 years of service: eight months' salary.
  • 20 to 25 years of service salary: ten months' salary.
  • Over 25 years: 13 months' salary.

Special Tax Provisions And Severance Payments

Such compensation in the form of severance payment is not liable to income tax.


Allowances Payable To Employees After Termination

Only due salary and severance payments are payable after termination for the duration of the notice period unless the allowances are explicitly mentioned.


Time Limits For Claims Following Termination

There is a limitation period of one year from the due date for filing a petition in court. Following termination, wages earned by an employee are due from the second working day from the date the termination takes effect.

Specific Matters Which Are Important Or Unique To This Jurisdiction

It would be prudent to keep in mind that termination at will is, in fact, nearly impossible unless in exceptional circumstances. As is seen in many other Asian jurisdictions, the labour laws of Myanmar are heavily in favour of employees to provide job security. For this reason, it would be important to evaluate candidates thoroughly while recruiting. This is particularly so, given the small pool of international standard skilled employees

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Contact a Contributing Author:
Nwe Oo
Tilleke & Gibbins
Myanmar


Yuwadee Thean-ngarm
Tilleke & Gibbins
Myanmar


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© 2021, Tilleke & Gibbins. All rights reserved by Tilleke & Gibbins as author and the owner of the copyright in this chapter. Tilleke & Gibbins has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021