No major changes in employment law has been enacted or implemented in the last 12 months.
The Occupational Health and Safety Law issued in 2019 has yet to come into effect, and its implementing rules also have not been announced. It is understood from discussions with the Ministry of Labour, Immigration and Population (MLIP), that rather than issuing comprehensive implementing rules under the Occupational Health and Safety Law, it instead plans to issue industry-specific guidelines.
The Foreign Worker Law, which intends to streamline the oversight of foreign workers, improve the skills and productivity of local workers and protect the rights of foreign workers in Myanmar, remains in the drafting stage, and no progress has not yet been announced as at the time of this writing.
In response to COVID-19, the MLIP first issued a list of preventive measures recommended to be implemented at factories and other workplaces, the first version of which was circulated on 26 March 2020, and which were later replaced with updated versions.
These preventive measures were initially issued as guidelines on a non-mandatory basis, until the MLIP passed an official letter on 19 April 2020, ordering all factories and workplaces to shut down until they have implemented the preventive measures instructed by the Ministry of Health and Sports (MHS) and have undergone inspection by the inspection teams formed among the MHS, the MLIP and other experts.
The required preventive measures include among other things physical distancing of minimum 6 feet and the implementation of transportation arrangements for employees.
Healthcare Benefits and Financial Support
In addition to these mandatory preventive measures, the MLIP issued several announcements on the healthcare benefits and financial support that employees insured under the Social Security Law (2012) may seek, including the extension of benefit coverage and the three-month deferral of monthly contribution payments. Particularly, the Social Security Board is offering insured employees additional financial support of up to 40% of the employees’ wages during the period of temporary closure of his employer, and pending inspection and clearance by concerned authorities.
The Myanmar government has also temporarily suspended the issuance of all entry visas, except for urgent diplomatic and United Nation visits. All international flights into Myanmar have also been suspended (save for cargo and relief flights) since March 2020, and while formally the ban is set to expire on 31 July 2020, there are strong indications that the Myanmar government will extend this ban until the end of October.
There is no overarching labour legislation or employment code in Myanmar. As such, the laws and regulations governing employment are scattered through several laws, notifications and sample employment contracts that are issued from time to time by the labour authorities, such as the Ministry of Labour, Immigration and Population (MLIP). Further, as the labour law framework is relatively inadequate, loose, or ambiguous, the labour authorities are able to assert a fair amount of authority and control in terms of determining and deciding the applicable conditions for employment.
The firm has thereby prepared these responses to these questions based on the laws and regulations of Myanmar that are available to the public as of the date of publication. There may be laws, decrees, regulations or notifications that exist but that are not published or that are not generally available to the public, and the existence of the same may affect the responses here. Furthermore, much of Myanmar's labour regulations are driven by internal government policies that may not necessarily be codified and that may not be implemented uniformly across various ministries or regions. It is possible that there are prevailing policies, or changes to such policies, that are not known to the firm, and that may affect the responses to the questions hereunder.
There is no statutory or regulatory definition of who would be considered blue-collar versus white-collar workers, although there are differing labour standards that govern the employment of persons in “offices, shops and establishments” under the Shops and Establishments Law (2016) (SEL), and persons employed in factories under the Factories Act (1951) (the Factories Act). For example, there are different permissible maximum working hours and overtime works for employees covered under the SEL and those employees covered under the Factories Act. These differences will be discussed below.
Myanmar law recognises the following employment statuses.
While the Employment and Skills Development Law (2013) (ESDL) allows employers and employees to agree upon a probation period (in effect recognising probationary employment), there are no laws that specifically govern probationary employment.
In Myanmar it is customary to provide for a probation period up to three months, but it is not mandatory to offer a probation period.
Probationary employees are entitled to the same statutory benefits and rights accorded to a permanent employee, subject to the terms and conditions of applicable laws (eg, the same wages and pro-rated benefits as are available to permanent employees).
Employers are generally free to set their own requirements and standards of work according to the nature of the work for purposes of evaluating the probationary employee’s fitness for confirmation. If the probationary employee completes the probationary period while meeting the requirements and standards of work to the satisfaction of the employer, then the expectation is that the probationary employee shall be confirmed as a “permanent employee” (see below). Should the probationary employee fail to meet the stipulated requirements and standards, the employer is entitled to dismiss the probationary employee upon one month’s written notice or payment of one month’s salary in lieu of such notice.
Similarly, while the ESDL recognises that an employer may require an employee’s attendance of a training course, there are no laws that specifically govern pre-employment trainees. As there is no distinction, pre-employment trainees are entitled to the same statutory benefits and rights accorded to a permanent employee, subject to the terms and conditions of applicable laws (eg, the same wages and pro-rated benefits as are available to permanent employees). The training course is for a certain period whereby the pre-employment trainee receives pre-employment training, on-the-job training, skills training, or the like to enhance the pre-employment trainee’s qualifications and skills.
The ESDL allows employers to employ persons who have attained the age of 16 years of age as apprentices in accordance with the regulations stipulated by the Skills Development Agency and train them in various skilled occupations. As there is no distinction, apprentices are entitled to the same statutory benefits and rights accorded to a permanent employee (eg, the same wages and pro-rated benefits as are available to permanent employees), subject to the terms and conditions of the applicable laws, eg, special rights and privileges afforded child workers under the Child Law (1993).
Technically, there is no legal concept or definition of "permanent employees" under the Myanmar labour laws, since all employees are, in strict point of law, subject to employment periods agreed between the employer and employee under the Standard Employment Contract Template (SECT). Such employment term is required to be indicated in the SECT (see 2.2 Contractual Relationship). Nonetheless, the SECT provides an option of renewing the SECT upon mutual agreement of the employer and the employee. Further, the SECT provides that the employer shall not refuse to extend the term of the contract without any valid reason. For further information, see 2.2 Contractual Relationship.
The Child Law (1993) (the Child Law) provides that children have the right to work voluntarily in accordance with Myanmar laws. Child workers enjoy special rights and privileges such as shorter working hours, more leaves and special allowances. The Child Law categorises workers from the age of 14 to 18 as young workers and only permits them to work with a valid certificate of fitness for work from a licensed medical practitioner. Employers are prohibited from employing children under the age of 14.
On 3 December, 2019, the parliament approved Myanmar’s ratification of the Minimum Age Convention (138) of the International Labour Organization, and it is a major progress towards abolition of child labour for a country like Myanmar where in 2015 there were about 1.12 million child workers between the ages five and 17.
Independent contractors and consultants are generally understood as working for their own benefit and therefore not considered employees of the principals that engage them. However, because of the absence of any specific legal recognition of independent contracts under Myanmar law, and the fact that the definition of "worker" in the ESDL is broad enough to cover even independent contractors and consultants, there is a risk that Myanmar authorities will, especially upon dispute, consider such independent contractors and consultants as employees of the principal, rendering the latter liable for employment-related benefits and obligations.
To minimise this risk, it is necessary for principals entering into independent contractor or consultancy arrangements to provide clear contractual provisions setting forth the nature of the independent contractor’s or consultant’s relationship with the principal.
There is only one type of employment contract – the SECT – required for all types of employees in Myanmar. The MLIP prescribed the first standard employment contract template in 2015 and updated it in 2017. With the effect of Notification 140/2017, employment contracts must be executed in the prescribed employment contract form – ie, the SECT – within 30 days from the commencement of the employment.
The SECT is considered a fixed-term contract as the term of employment needs to be indicated. While there is no maximum or minimum term of employment prescribed under any law, in practice, the Township Labour Offices (TLOs) may insist that the employment term must be a minimum of one year and a maximum of two years based on the draft implementing rules of ESDL. Nonetheless, such rules have not come into effect, and there is no legal basis for the TLOs to enforce such maximum or minimum term of employment.
In fact, there have been instances where the TLOs have approved employment terms that exceed such a range. This is also endorsed under the SECT that expressly allows the employer and the employee to set the term of SECT longer than the prescribed term which essentially does not exist as the implementing rules of ESDL have not come into effect.
Additionally, the SECT stipulates that the employer shall not refuse to extend the term of the SECT arbitrarily should the employee not have breached any of the provisions of the SECT. Therefore, it is possible that the employment would continue for indefinite term, provided that the employer and the employee are able to agree to such terms.
Requirement to Execute SECT
Generally, the execution of the SECT is required for all types of employments, with the exception of probationary employees, pre-employment trainees and companies with fewer than five employees.
The SECT must be in writing and registered with the relevant TLO. The failure to sign a SECT may result in imprisonment of up to six months or in a fine, or both.
Employment Contracts for Probationary Employees, Pre-employment Trainees and Workers at Companies with Five or Fewer Employees
The MLIP issued Notification No 140/2017, which provides that the obligation to adopt the SECT only covers enterprises with more than five employees (whether full-time, temporary, etc), which must be registered. For those not yet covered by the requirement, there is no obligation to adopt, and it is theoretically possible to enter into any type/form of employment contract, although the best practice is, of course, to adopt the SECT.
For probationary employees, the ESDL states that employers are not required to execute an employment contract, whether in the form of SECT or otherwise, with an employee during the probation period. However, according to the TLOs, there is nothing that would prevent an employer from executing a contract or adopting the SECT. Alternatively, the employer and employee can decide to enter into tailormade employment contracts or opt not to enter into any written contract at all, provided that the working conditions do not breach minimum standards provided under the Myanmar labour laws.
If the probationary employee successfully completes the probationary period, the probationary employee shall be confirmed as a permanent employee and a SECT will be entered into with the employer within 30 days.
As for pre-employment trainees, the ESDL and Myanmar laws neither require employers to enter into a written employment contract with pre-employment trainees during the training period nor provide duration of the training. By implication, this has been understood to mean that employers have the liberty to adopt a different employment contract with respect to pre-employment trainees similar to probationary employees. However, once a trainee successfully completes the required training, he shall be deemed a permanent employee and the employer and employee will enter into the SECT within 30 days.
The law does not provide for an exemption from entering into the SECT with regard to apprentices; thus, employers shall execute the SECT within 30 days of the employment.
Matters to be Covered under the SECT
The employment contract consists of two parts: the SECT and, if agreed by the parties, an appendix. The SECT (sans the appendix) must be strictly adhered to and cannot be modified. However, additional conditions that are not covered in the SECT can be incorporated in the contract through annexes provided that none of the conditions is less than the minimum protections provided in the law. In practice, the TLOs will consider any provision that is less favourable to workers than the minimum standards provided in the relevant laws void upon registration.
The SECT includes the following fundamental terms and conditions of employment:
Registration of SECTs
The SECTs must be registered with the relevant TLO having jurisdiction over the workplace of the employee. As a general rule, the employee should appear before the TLO and execute the SECT in the presence of the TLO. An exception, however, may be given by the relevant TLO considering the number of employees to be registered and other logistical constraints.
There are differing maximum working hours for employees working in offices, shops and establishments and those working in factories. The SECT also provides that after negotiations between the employer and the employee, the working hours shall be altered by seeking permission from the authority concerned, provided that the working hours do not exceed the maximum hours provided by law.
For employees covered under the SEL – ie, employees working in offices, shops and establishments – the normal working hours of employees are up to eight hours per day and six working days per week, and shall not exceed 48 hours per week in total. Employers and employees can agree on a flexible holiday arrangement that any day in a week agreed by an employer and employee shall be granted as a paid rest day. The SEL further stipulates that an employee shall be granted a break of at least half an hour after four continuous hours of work.
The Factories Act
The Factories Act permits employees in factories to work up to eight hours per day and 44 hours per week in total. The rest day shall be Sunday unless the manager of the factory sends notice of his intention to require the workers to work on the Sunday and of the day to be substituted therefore. Nonetheless, no employee shall be required to work more than ten consecutive days without a rest day in between. The Factories Law further stipulates that an employee shall be granted a break of at least half an hour after five continuous hours of work.
There is no distinction between full-time and part-time contracts under law. Both full-time and part-time employees, subject to the discussion above, are required to execute SECTs and all the basic terms will be the same, including the working hours as discussed above.
Any work beyond eight hours of work per day or 48 hours per week shall be considered as overtime work for employees working in offices, shops and establishments. An employee shall not be required to work more than 48 hours per week. The law permits employees to produce overtime work for a maximum of 12 hours in a week. In the case of a special matter to do overtime work, it shall not exceed 16 hours for any one week and overtime work shall not extend beyond midnight.
Moreover, the SEL does not exempt employees in managerial and confidential positions who were previously regarded as managers from being entitled to overtime compensation. Notwithstanding the foregoing, an employer can annex the provision in the SECT that a manager shall not be entitled to payment of extra remuneration for overtime work, subject to the approval of the TLO. Further, it is also a common practice in Myanmar that only non-managerial employees are entitled to overtime pay.
The Factories Act
Under the Factories Act, any work beyond eight hours of work per day or 44 hours of work per week shall be considered as overtime work.
Overtime payment rate
The SEL stipulates that payment for overtime work shall be calculated in accordance with the law, and in this regard, the Payment of Wages Rules (2018) provide an exact formula for calculating the overtime pay which is roughly double the rate of ordinary wages.
Overtime wage rates for workers in factories can be found in the Factories Act and Directive No 615/2 under the Factories Rules (1935). The overtime rate provided in the Factories Act and the aforementioned directive is twice the ordinary wage.
Laws governing specific industries
Overtime work and working hours for specific industries such as oilfield work and other sectors are governed by sector-specific laws such as the Oilfields (Labour and Welfare) Act (1951).
The Minimum Wage Law (2013) (MWL) governs the minimum wage requirements for all employees, including probationary employees and trainees, except civil service personnel, seafarers and the employer’s close relatives and dependents.
As per Notification No 2/2018 issued on 14 May 2018, the current minimum wage for all business types shall be MMK600 per hour or MMK4,800 per day for eight working hours per day excluding break time. This minimum wage, however, shall not apply to small enterprises and family businesses with fewer than ten employees. Probationary employees are entitled to 75% of the minimum wage, and apprentices/pre-employment trainees before the probation period are entitled to 50% of the minimum wage. Both probationary period and the apprenticeship/pre-employment training period are limited to three months each.
There is no prescribed scheme of bonuses and other additional remunerations under Myanmar laws. It is, however, a usual practice to incorporate a clause for payment of bonuses in the SECT. Employers can pay bonuses to employees at their own discretion decided from time to time.
While bonuses are discretionary for the employer to give, there is basis to state that if such bonuses have been enjoyed for a long period, then the same can ripen into a demandable benefit. Both the SEL and the Leaves and Holidays Act (1915) (LHA) recognise the right of the employee to receive more favourable terms and conditions of employment if the same has been provided for at the time of the issuance of the SEL or the LHA.
Deduction or Failure to Pay Wage
The Payment of Wage Law (2016) (PWL) confers power on investigation officers from the Department of Factories and Labour Law Inspection to intervene in the event of unreasonable deduction of or failure to pay wage. The concerned employees may directly coordinate with the employer or via a registered labour organisation or by the in-house workplace coordination committee.
If the employer takes no action, the employee can present the case to the relevant inspector within six months from the date of dispute and the inspector shall issue a decree after reviewing the case. Upon hearing the outcome, the unsatisfied party shall be entitled to appeal the case to the Chief Inspector within 30 days of the issuance of the decree and the Chief Inspector’s decision will be final.
With regard to remuneration, employers and employees are free to fix the salary with mutual agreement provided that the salary is not less than the minimum wage stipulated in the MWL. The PWL stipulates time and manner to pay wages and permissible deductions from wages. The salary payments must adopt the prescribed format provided by the MLIP. The salary shall be increased at the employer’s sole discretion.
Vacation and Vacation Pay
The LHA is the framework for leaves covering all employees except family members in small family enterprises, shareholders, domestic workers and government workers who are not employed in government factories. The employer and the employee can agree upon different numbers of leaves and holiday arrangements provided that it will not be less than the following number of days.
Employees are entitled to rest with full wage during the public holidays determined by the union government through annual notifications. Customarily, government-published lists provide for approximately 26 public holidays. This varies from year to year depending on the discretion of the union government. The public holidays for 2020 are as follows:
The exact dates of the Burmese New Year and traditional festivals vary based on the Myanmar Buddhist calendar. The dates provided above are based on the list of public holidays announced under Letter No 668/5/AhLaRa-Law2/19(3702) issued by the Ministry of Labour, Immigration and Population on 13 June 2019.
*Date to be announced in the newspapers.
Employees are entitled to enjoy six days of casual leave. Causal leave cannot be taken more than three days at a time except for long-distance travel and religious customs or observances, and/or in combination with any other type of leave. Casual leave entitlement not used in a year may not be carried forward into the subsequent year.
Employees are entitled to ten days of earned leave and all earned leaves can be taken continuously at one time, provided that the employee has been in service for twelve continuous months and has worked for at least 20 days in a month. A day of earned leave shall be deducted from the entitled earned leave days for each month in which the employee has worked for less than 20 days. Earned leave may be accumulated for up to three years subject to mutual agreement between the employer and the employee.
There are required leaves (including pay) for maternity, disability, childcare, illness, etc.
Workers can enjoy 30 days of medical leave annually, with full pay, if they can provide a medical certificate and have rendered six months of service. Notwithstanding the foregoing, employees can take an unpaid leave if they have not rendered service for six months. Additionally, employees covered by the Social Security Law (SSL) shall enjoy services from government hospitals and other benefits as granted under the law.
Pregnant female employees are entitled to take six weeks of pre-natal leave and eight weeks of post-natal leave with basic wage, provided that the employee has rendered six months of service. Maternity leave and medical leave can be taken together if the requirements for medical leave are met; ie, a medical certificate can be provided and the employee has rendered six months of service. The SSL also provides that employees covered by the SSL may have an additional four weeks in the case of twins or up to six weeks in the case of a miscarriage. The said employees may receive part of their salary from the Social Security Fund. Similarly, male employees may enjoy 15 days of paternity leave with full wage provided that they are registered for the Social Security Scheme under the SSL.
Limitations on Confidentiality, Non-disparagement Requirements
There are no statutory limitations on confidentiality and non-disparagement requirements.
The SECT stipulates that employees shall keep the work-related information confidential and prevent it from being leaked to the public. Employees shall also abstain from quoting, copying, removing, getting rid of or carrying away the documents, accounts and records related to work without permission.
There is no specific non-disparagement requirement in the SECT but an employer and employee can annex in the appendix by mutual agreement upon the approval of the TLO. Furthermore, the Competition Law (2015) prohibits broadcasting false information directly or indirectly in order to damage the reputation, financial situation or business operation of other businesses.
The SECT imposes the following duties and responsibilities on employees:
Failure to comply with the stipulated regulations may lead to termination of the SECT without any severance pay or shall be charged under the penal code if it is criminal conduct.
In addition, the parties shall agree on terms and conditions to be complied with by the employees and annex in the SECT. For discussion on annexing additional responsibilities of employees in appendixes, see 2.2 Contractual Relationship.
The Contract Act (1872) (the Contract Act) invalidates any agreement restraining someone from exercising a lawful profession, trade or business of any kind. Thus, post-contractual non-compete clauses may be deemed as being in restraint of trade and void. Nonetheless, non-compete clauses prohibiting employees from securing interest, directly or indirectly, in any company or business carrying on business in competition with the employer, without prior consent of the employer, during the term of the employment may not be considered as being in restraint of trade.
While there is no non-competition clause in the SECT, employers may nonetheless incorporate these clauses in the SECT’s annex by mutual agreement between workers and employers with the approval of the concerned authorities.
Enforcement of non-compete clauses presents a significant challenge for employers as there are no precedents for enforcement of these clauses. In reality, it is very difficult to enforce these clauses in courts.
While there is no non-solicitation clause for other employees in the SECT, employers and employees can, with mutual agreement and with the approval of the concerned authorities, incorporate restrictive clauses prohibiting resigning or terminated employees from enticing away the employer’s in the SECT’s annex. While there are no jurisprudential standards for non-solicitation clauses, the enforceability of these clauses is uncertain.
Similarly, there is no non-solicitation clause regarding the employer’s customers in the SECT. Nevertheless, it is possible for the employers and the employees to insert, with mutual agreement, prohibitive clauses restraining resigning or terminated employees from soliciting or enticing away the employer’s clients and customers either for the employee’s own account or on behalf of another person or company in the SECT’s annex. Likewise, the enforceability of these non-solicitation clauses is very uncertain.
There are no specific legal provisions protecting employees’ privacy and data protection rights. The Competition Law generally prohibits disclosing confidential information with the purpose of disrupting other’s businesses. Laws in specific sectors protect the privacy of interested parties. For example, the Telecommunications Law (2013) imposes a duty on the service licensees to maintain the information and content that are transmitted or received through their telecommunications services and keep the personal information of individual users confidential and not to disclose to third parties.
In the absence of such protections being explicitly mandated for employees, employees may face difficulty in respect of privacy and data protection.
Employment of Foreign Workers in Companies Registered with the Myanmar Investment Commission (MIC) and under the Special Economic Zones (SEZ)
Subject to the registration requirements of foreign employees as discussed in 5.2 Registration Requirements, there is no limitation on the number of expat workers for MIC and SEZ-registered companies. Investors are permitted to appoint any qualified person as senior manager, technical and operational expert, or adviser in the investment within Myanmar.
As a proviso, the Myanmar Investment Law (2016) requires employers to appoint only Myanmar citizens for works that do not require skill.
Employment of Foreign Workers in Wholly Owned Myanmar Companies
Previously, the Directorate of Investment and Company Administration (DICA) issued a notification requiring that either prior permission be obtained from DICA or that DICA be informed in advance of the hiring of a foreigner for a directorship or for C-level positions (ie, CEO, CFO, COO) in a 100% Myanmar-owned company. While there is no official notification repealing the foregoing requirement, it appears that DICA has recently relaxed this requirement.
ASEAN Economic Community
Workers in specific professions from the Association of Southeast Asian Nations (ASEAN) region enjoy privileges conferred upon them. The ASEAN Economic Community was founded in 2015 with an objective of close economic collaboration between Southeast Asian countries. Through Mutual Recognition Arrangements, practitioners in the eight professions – doctors, dentists, nurses, engineers, architects, accountants, surveyors and the tourism industry – are allowed to practise in all the ASEAN member states.
However, the intended practitioner will not be exempted from the requirement to secure work permits and stay permits. Furthermore, the terms and conditions of the employment of these practitioners shall also be governed by the Myanmar labour laws just like other foreign employees.
This has yet to be implemented in Myanmar.
Obtaining a Business Visa
A foreigner engaged to work in Myanmar is required to apply for a business visa, which is valid for 70 days. Applications for business visas are usually made at the Myanmar embassy or consulate in the applicant’s home country or the nearest available Myanmar embassy or consulate. The MLIP has also recently made e-Visas for business available online.
While the exact requirements and application fees may vary for each Myanmar embassy or consulate in different countries, applications for an employment visa shall generally be supported by an invitation letter or appointment letter from the employer and shall be submitted together with a passport with at least six months’ validity and documentation evidencing the registration of the inviting entity and a completed application form.
Alternatively, foreigners may opt to apply for a visa-on-arrival at the Yangon International Airport, instead of applying for the business visa with their respective Myanmar embassy or consulate. The requirements for such visa-on-arrival include:
Currently, it is understood that the visa-on-arrival is limited to arrivals by air at the Yangon International Airport, and to certain nationalities.
As of July 2020, all types of visas are temporarily suspended until further notice in Myanmar as a precautionary restriction measure for control of COVID-19. Nonetheless, foreigners who are already in Myanmar are still allowed to apply for an extension of their visas and stay permits.
Work Permit/Stay Permit
At present, a stay permit operates as a work permit, which enables foreigners to reside and work in Myanmar for protracted periods, except for the foreigners employed at a company operating with an investment permit or endorsement from the MIC, who will thereby be required to satisfy additional requirements as discussed in the next section. A stay permit essentially removes the 70-day or 90-day exit requirement for foreigners that have a single or multiple entry visa, respectively. A stay permit, however, does not operate as a visa, and foreigners who are granted a stay permit and exit the country must still obtain a new visa either prior to or upon their return.
Stay Permit for Employees Employed by Entities Operating under a MIC Permit
The Implementing Rules of the Myanmar Investment Law (2016) requires that companies registered with the MIC shall register and apply for MIC approval when hiring foreigners for senior management, technical experts and consultants, whether it be short-term or long-term employment. According to the announcement issued by the Investment Monitoring Division of MIC (IMD) that came into effect starting from 21 October 2017, it is required to apply for the approval of the MIC for foreign employees working for MIC companies within seven working days after the date of arrival of such foreign employees.
The application for the approval of MIC is to be submitted to the IMD and the validity of the approval of IMD varies from six months to one year, and upon expiration, the extension can be applied for at MIC One Stop Service (MIC OSS).
To apply for the approval of IMD, the following documents must be submitted to IMD, subject to change from time to time upon discretion of the concerned authorities:
Upon issuance of the approval of IMD, the same documents listed above must be submitted along with the approval of IMD to MIC OSS to secure the approval of MIC OSS. The approvals of IMD and MIC OSS serve in combination as recommendations for the issuance of a stay permit in favour of the foreigner.
After registration of the foreign employees with the MIC, the company shall apply for foreigner labour registration cards with a recommendation of the MIC (ie, the approvals of IMD and MIC OSS) to the Ministry of Labour and Immigration and Population. The stay permit shall be valid for up to one year and can be extended subject to application by the necessary parties and payment of the relevant application fees.
Stay Permit for Employees Working under Companies Registered under the Companies Registration Office
To obtain a stay permit, a foreigner must be employed by a company established in Myanmar and must also be travelling to or working in Myanmar with a valid business visa. Foreign employees employed by companies without a MIC Permit shall obtain a letter of recommendation from the Ministry of Planning, Finance and Industry. After the recommendation is obtained, the foreigner may apply, to the MLIP, for a stay permit valid for up to one year.
Stay permits may be extended subject to application by the necessary parties and payment of the relevant application fees.
Foreign Registration Certificate (FRC)
Additionally, foreigners residing in Myanmar for more than 90 days consecutively are also required to apply for an FRC within one month of the arrival. The validity of all Foreigner's Registration Certificates expires on November 30th of every year, and the Foreigner's Registration Certificate has to be renewed during December annually.
The Labour Organization Law (2011) permits labour organisations to form at a factory with the approval of 10% of the workers provided that there are at least 30 factory workers. These duly formed labour organisations have authority to negotiate with employers if employees complain that they do not enjoy rights conferred under existing labour laws. Further, they can also demand that the employer reappoint an employee that is dismissed and if there is cause to believe that the reason for termination is not in accordance with laws or the dismissal was due to membership in labour organisations.
In the case of dispute settlements between the employer and employees, the labour organisations are entitled to send representatives to the conciliation body to represent the employers.
Enterprises with 30 or more employees are required to form a workplace coordinating committee, consisting of an equal number of representatives from both the employer and the employee in accordance with the Settlement of Labour Dispute Law. The objectives of these working committees are to coordinate on the terms and conditions of employment and to negotiate and conclude collective agreements. As mentioned, the labour organisation shall send representatives on behalf of workers.
If there is no labour organisation, workers can elect two representatives and the employer can elect two to the working committee. The term of these working committees is one year and if there is a vacancy, the party whose representative resigned can fill the vacancy.
Labour organisations are entitled to lead collective bargaining and propose terms and conditions better than that of minimum requirements. The working co-ordination committees shall negotiate and conclude collective agreements. The SECT permits employers and workers to negotiate and make amendments and additions to the SECT in accordance with the existing labour laws.
Once the foregoing supplements or amendments have been made, the updated SECT is required to be registered at the relevant Labour Exchange Offices.
There is no specific law or regulation that specifically deals with the procedural and substantive requirements for termination of employment in Myanmar. However, the SECT provides for guidelines on termination of employment and dismissal of employees. Although the SECT is not a law or formal regulation, the MLIP (as discussed above) does not allow amendments to the SECT, save for the instances discussed above. Therefore, its provisions, including guidelines for termination of employment and dismissal of employees, will usually be required to be observed by employers.
The SECT only provides for specific instances under which employment may be terminated, ie:
Employers may also terminate employment purely on a discretionary basis by providing one month's prior notice (or payment in lieu of notice) and the applicable severance pay set forth below.
Procedures Depending on Grounds for Dismissal
There are different procedures for resignation, mutual termination, termination with cause and termination without cause.
Employees desirous of resigning from a job shall send a resignation letter to the employer or through responsible personnel of the employer at least one month in advance. No compensation shall be made to the employee for his or her own resignation.
The SECT permits an employer and employee to cancel the SECT by mutual agreement. Should employment be terminated by mutual agreement, neither a notice nor severance payment shall be required.
Termination for authorised cause
In the case of factory closure, discontinuation of business and the like, employers may dismiss an employee by giving one month’s notice at least and settling the relevant severance payments based on the employee’s duration of employment in accordance with the ESDL. Alternatively, an employer may dismiss an employee paying one month’s salary in lieu of notice on top of a severance payment. A severance payment is required to be paid if the termination of employment is not due to the employee's fault.
The foregoing one month’s notice with a severance payment or payment of one month’s salary in lieu of notice and severance payment is not required if the reason for the termination of employment is the death of the employee, resignation of the employee, or upon expiration of the term of the SECT, provided that it is known to the parties before the commencement of the employment that the employment is for a particular project, the nature of which only requires employment for a particular period, and at the end of such period, the employment will be terminated without notice and without severance pay, and/or any other kind of compensation for the employee.
Nonetheless, termination shall not be arbitrary or based on one of the prohibited grounds discussed in 7.5 Protected Employees.
In the case of redundancy, the employer shall coordinate with the representative of the labour organisation or with the workplace coordinating committee in the absence of a labour organisation and severance payment shall be made to terminated employees.
Termination with cause
The procedure for termination with cause shall differ depending on whether the reason for termination is for committing common offences or serious offences. In this regard, the list of common and serious offences must be indicated in the annexes of the SECT. The MLIP has provided a sample list of offences that can be referred to and that may be amended according to the nature of work of the employee as may be necessary.
Should a worker fail to comply with principles or breach any internal regulation, the employer shall give a written admonition for the first and second incidents. For the third incident, the employee shall be required to sign an undertaking that they will not commit these offences again. Notwithstanding the undertaking, if the employee commits a breach or offence for the fourth time within twelve months after signing the undertaking, the employer shall be entitled to dismiss the employee immediately without compensation or severance pay.
The ESDL permits the employer to immediately dismiss an employee without paying compensation or severance pay if the employee is found to have committed a serious offence. See 7.3 Dismissal for (Serious) Cause (Summary Dismissal).
The SECT provides that in the case of termination of employees due to a reduction of its labour force, employers shall coordinate with the workplace coordinating committee if there is no labour organisation. However, should there be a labour organisation, the representatives from the labour organisation shall coordinate with the workplace coordinating committee.
The SECT provides that either an employee desirous of resigning or an employer desirous of terminating the employment shall serve the other party with a written notice at least 30 days in advance.
Severance payment is required to be paid if the termination of employment is not due to the employee's fault. However, severance is not required if the reason for the termination of employment is the expiration of the term of the SECT, death of the employee or resignation of the employee.
As provided under Notification No 84/2015, no severance payment is required to be paid in the case of the employee having rendered service for less than six months. For those who have rendered service for more than six months, the severance payments have to be made as following:
As discussed, there is no specific law or regulation that specifically deals with the procedural and substantive requirements for termination of employment in Myanmar, but the SECT’s guidelines for termination of employment and dismissal of employees will usually be required to be observed by employers.
The SEL stipulates that any employer of a shop or establishment shall notify the concerned inspector about workforce changes. While no such requirement is stipulated under the Factories Act, out of an abundance of caution, some employers in practice still provide notification for workforce changes in factories, such as in the case of retrenchment, redundancies, and/or expansion of operations.
The MLIP has provided a sample list of grave misconducts that can be referred to and additional serious offences may be added as annexes to the SECT. The sample list of grave misconducts includes:
Upon finding that the employee committed a grave misconduct, the employer may dismiss the employee summarily, without giving any notice or severance payment.
Termination agreements are not formally recognised in Myanmar. Nonetheless, employees shall, by explicit agreement of employers, execute releases and quitclaims upon termination of the employment. To avoid running afoul of the provisions of the Contract Act, termination agreements cannot restrain the terminating employee from exercising a lawful profession, trade or business, as discussed in 7.1 Grounds for Termination.
Aside from the payment of stamp duties on the relevant agreements, no formal procedures, such as registration, are required to theoretically enforce the releases. Notably, however, as termination agreements are not formally recognised under Myanmar labour laws, government offices may decline to register the documents, even on a voluntary basis.
The Labour Organization Law prohibits the dismissal of those who are:
The Leave and Holidays Rules prohibit termination of employees while they are leave, and termination of employees for the reasons of availing maternity or sick leave.
There are two major grounds for a wrongful dismissal claim: unfair dismissal and arbitrary dismissal. Employers are prohibited from dismissing employees unfairly for their membership in an organisation, disparity of race, religion, gender or age. The Labour Organization Law also prohibits employers from dismissing employees arbitrarily. Nonetheless, the SECT expressly allows employers to dismiss employees at the employers’ sole discretion, provided that they give due notice and the applicable severance pay, and are not in violation of any existing labour laws in Myanmar.
In the case of wrongful dismissal, an employee may bring a claim to the relevant body to seek damages for the breach of contract. In the case of collective disputes, the labour organisation of the enterprise can demand that the wrongfully dismissed worker be reinstated to his position. If a collective dispute cannot be settled internally, parties shall resort to an arbitration procedure provided under the Settlement of Labour Dispute Law, as discussed in 9.1 Judicial Procedures.
The SECT prohibits discrimination on the basis of race, religion, gender, age or being a member of an organisation.
The burden of proof will fall on the claimant, who will need to show upon a balance of probabilities that he was dismissed under the invalid ground in accordance with Myanmar Civil Procedure.
There is a wide latitude given in respect of the relief and damages that may be awarded; however, the claimant will likely be restored to their original position or alternatively awarded compensation if restoring them to their original position is not practicable due to a breakdown of the relationship between the claimant and the defendant. Furthermore, breach of the SECT can result in fines or imprisonment.
The Settlement of Labour Dispute Law (2012) (SLDL) provides for the labour dispute resolution system in Myanmar. Employers with more than 30 employees are required to form a workplace coordinating committee that initially helps resolve disputes in the workplace. If the dispute is not settled by the committee, the parties may elevate the dispute to the township conciliation body and thereafter to the relevant court if the dispute is an individual dispute or the regional or state dispute settlement arbitration body if the dispute is a collective dispute. If the collective dispute is not resolved by the dispute settlement arbitration body, then either party may refer the dispute to the relevant regional or state settlement arbitration council, which will form an arbitration tribunal.
Myanmar law does not specifically provide for or prohibit class action claims.
The SLDL allows employees to appear in court in person or by the legal representatives.
While it is unclear if the dispute resolution system provided for under the SLDL has exclusive jurisdiction over labour disputes, the Arbitration Law (2016) does not prohibit arbitration as a mode of settlement of labour dispute.
Therefore, while untested, in the case of individual disputes it is theoretically possible for employers and employees to incorporate an arbitration clause in the SECT and resort to arbitration in the event of a dispute.
Notably, arbitration is the principal method of settling collective labour disputes. The State/Regional Dispute Settlement Arbitration Bodies, formed under the SLDL, shall be the authority to settle collective labour disputes.
Theoretically pre-dispute arbitration agreements should be enforceable, but these are untested in the context of labour disputes.
Employers and employees can stipulate in the contract that in the event of a dispute the prevailing party be awarded attorney’s fees. Myanmar labour laws do not provide any rules for the award of attorney’s fees, but neither do they prohibit the award of attorney’s fees. The Code of Civil Procedure confers power on the court to award the costs of an incident in all suits at the discretion of the court. The judge usually directs that the prevailing party be awarded all costs, including that of attorney’s fees.
Although there have been no significant changes in the past year to Myanmar’s labour regulations, the economic conditions wrought by the COVID-19 pandemic have brought to the forefront, certain regulatory inadequacies relating to employer versus employee rights in Myanmar, in a depressed economy. Whilst the Myanmar’s economy has avoided a recession during the COVID-19 pandemic, the pandemic has seriously disrupted Myanmar’s economic growth. In particular, there will be a slowdown from 6.8% in the 2018-19 fiscal year, to 0.5% in the 2019-20 fiscal year, according to World Bank estimates.
The slowdown in economic growth has adversely affected all sectors, with tourism and transportation services, retail and wholesale trading sectors experiencing a stronger direct impact because of travel bans and consumers’ precautionary behaviour resulting from the pandemic.
Responses to the Pandemic
One of the earlier initiatives undertaken by the Myanmar Government to contain the spread of the pandemic was the introduction of restrictions on cross-border movements, imposing quarantine measures on all incoming Myanmar nationals and foreign nationals from 24 March 2020. Visa on arrival and e-visa schemes were also suspended for travellers from all countries from 21 March 2020. Further to the suspension of the visa on arrival and e-visa schemes, incoming international passenger flights into Myanmar were also suspended on 29 March 2020. Such measures were necessary but nevertheless impacted foreign investment activities in Myanmar.
In terms of a financial response, the Myanmar’s Government had issued the Covid-19 Economic Relief Plan (CERP) in April 2020, outlining seven primary goals for the government and action plan for achieving each goal in order to mitigate the impact on the economy. Two central goals are easing the economic impact of the pandemic on labourers, and easing the impact of the economic impact on the households. The CERP also included action plans on easing the impact on private sector firms through providing low-cost funds, monetary stimulus measures such as reduction of interest rates and relaxation of reserve requirements, and reduction of electricity tariffs to ease the impact on the individual households.
In alignment with the CERP, the Ministry of Immigration, Population and Labor (MIPL) issued Directive 63/2020, providing a three-month deferral to the monthly social security contribution payments required under the 2012 Social Security Law, and Directive 83/2020, offering employees insured under the social security scheme, financial support of up to 40% of the employees’ wages in the event of a redundancy caused by the employer’s closure of business. In response to the pandemic, the MIPL had also issued Directive 64/2020, stipulating that employees registered under the social security scheme who have lost their jobs are able to receive medical treatment and reimbursement for up to one year from the date of the loss of employment.
For businesses, the President’s Office had passed the Order No 1/2020 in June 2020, providing the following tax reliefs for 2020-21 fiscal year:
Redundancy and Severance Pay
With economic conditions adversely spreading through Myanmar’s economy, the issue of termination of employment resulting from closure of business prevailed through different sectors, ranging from tourism to garment manufacturing in Myanmar.
The Standard Employment Contract Template (SECT) issued under the Employment, Skills and Development Law (2013) (ESDL), clause 16 provides that the employment contract may be terminated by reason of:
This references isolated cases of termination and there are no provisions which seeks to address an across the board reduction in work force, save only for SECT’s clause 15 (b)(4) which provides that in the event of redundancies or termination of employees, the employer is required to co-ordinate with the Workplace Coordinating Committee if there is no labour organisations, or with the representative of the labour organisation as well as the Workplace Coordinating Committee, if there is a labour organisation. The Workplace Coordinating Committees are stipulated under the Settlement of Labor Dispute Law (2012) (SLDL) for any workplace which have more than 30 workers, composed of the representatives of the employers, employees. However, there is a lack of detailed regulations as to how such co-ordination or negotiation are to take place between the employer on the one hand, and the Workplace Coordinating Committee and the labour organisation on the other hand, in a redundancy exercise. Given the absence of detailed procedures, concerned employees are not safeguarded, and at the same time, employers encounter uncertainties in implementing workforce reduction.
There are no further specific regulations as to the amount of severance or other benefits to be made available to employees on a redundancy exercise. In the absence of such specific regulations, the usual severance payment, stipulated under Notification 84/2015 of the MIPL, for termination of employment apparently applies. Generally, severance payment is required for termination of employment not due to employee’s fault, except where the termination of employment is from the expiration of the terms of the SECT, death of the employee or the resignation of the employee. The Notification 84/2015 prescribes the amount to be made to employees who have rendered service for more than six months. The prescribed severance payment for an employee terminated under the Notification 84/2015 ranges from the equivalent of half a months' pay, up to the equivalent of 13-months pay, based on their length of service. The Payment of Wages Law (2016) (PWL) also requires the payment of all wages of a terminated employee within two working days from the date of termination, and failure to do so may result in a penalty under Section 24 of the PWL, of not more than three months imprisonment, or a monetary fine of at least MMK2 million, or both for the employer. No particular relief is afforded to employers who may have found it necessary to reduce workforce as a matter of business survival.
One of the topics currently under discussion is the stipulation of the minimum wage. The Minimum Wage Law (2013) (MWL) stipulates with formation of the National Committee on Minimum Wage, whose functions include the issuance of a notification on the stipulation of the minimum wage every two years, with the approval of the Union Government. Currently, the Notification No 2/2018 provides that the minimum wage for all locations and business types shall be MMK600 per hour or MMK4,800 for eight working hours per day. The minimum wage however does not apply to small enterprises and family businesses with fewer than ten employees. While the Notification 2/2018 prescribes the daily minimum wage, based on queries with the Department of Labor of the MIPL, the computation of the minimum monthly salary for monthly paid employees is MMK4,800 x 30 days or MMK144,000 regardless of the employee’s number of actual working days. The Minimum Wage Rules also stipulates that trainee employees and probationary employees are entitled to fifty percent and seventy-five percent of the minimum wage respectively.
New minimum wage
Given that the current minimum wage was established in 2018 with the Notification 2/2018, in accordance with the MWL, the National Committee on Minimum Wage is to issue a new notification on minimum wage in 2020. However, due to the COVID-19 pandemic, the National Committee on Minimum Wage had stated in June that not all of the states and regions have been able to submit the respective recommendations for the proposed new minimum wage, and that it is expected to only be able to issue the new notification for the minimum wage in November 2020, as negotiations between labour representatives, employer organisations and the National Committee on Minimum Wage are delayed. While the discussion on the new minimum wage is still on hold, based on the discussions between labour representatives and the National Minimum Wage Committee, the new minimum wage being proposed is approximately MMK7,200 for eight working hours per day, an increase of MMK2,400 (approximately USD1.76) from the current minimum wage of MMK4,800 for eight working hours per day.
Such discussions and the final decision on the new minimum wage by the National Committee on Minimum Wage will heavily impact the labour-intensive industries in Myanmar which are already negatively affected by the pandemic. According to the International Labor Organization, the garment and textile manufacturing sector, a highly labour-intensive sector that employed approximately 1.2 million workers in Myanmar, faced severe supply disruptions, as the garment sector relies on China for its raw materials, along with order cancellations from Europe, one of the major markets for garment exports from Myanmar, leading to closures of export-oriented garment factories.
Although the government has undertaken initiatives to provide one-year working capital loans with low interest rates towards supporting the garment sector and micro-small and medium enterprises to ensure their survival, ensuring that garment sector remains cost-competitive against regional neighbors should also be considered in stipulating the new minimum wage.
Companies Operating under Investment Permits or Endorsements from the Myanmar Investment Commission
Although the government has taken initiatives to lessen the impact of the pandemic on the economy, companies operating with a Permit or an Endorsement from the Myanmar Investment Commission (MIC) are not able to effect changes to the plans contained in the initial application for the Permit or Endorsement from the MIC without reasonable excuse, which would mean that the approval of the MIC would have to be obtained, in accordance with the Section 138 of the Myanmar Investment Rules. In this regard, material reduction of the number of employees as stated in the Permit or Endorsement application as a result of the restructuring or downsizing would also require prior approval of the MIC. Such hurdles impose additional time and resource commitments for investors striving to adapt and respond to the rapidly changing environments caused by the COVID-19 pandemic.
Although there have not been major legislations affecting the labour regulation framework in Myanmar in the last year, considering the impact of the COVID-19 pandemic on the economy and consequently on employment and labour market in Myanmar, specific adaption of the labour regulations may be necessary to keep businesses afloat, bearing in mind that jobs will be saved only if businesses survive.