Myanmar has a developing economy and is an attractive destination for foreign investments. The country’s large workforce and strategic location in Southeast Asia make it a lucrative option for companies looking to establish a regional presence. The government has implemented various economic and labor act rules in Myanmar in recent years to support the growth of businesses and encourage foreign investment.
A foreign company can establish a legal entity and hire in Myanmar to take advantage of the various incentives the country provides. Companies must stay compliant with applicable rules and regulations, especially the labor act rules and the labor code of Myanmar, while hiring.
Read more about the employment act/ labor law in Myanmar from this article.
Applicability of the Act
Myanmar labor laws apply to all employees working within the country, including the employees of companies owned by a foreigner. The laws also apply to employees who have been transferred or seconded to Myanmar for a short period under a foreign employment contract. It covers:
- Employers interest groups
- Trade unions
This Act applies to:
- User enterprises
- Service beneficiaries offered by school cooperatives
There can be two types of employment contracts according to Myanmar labor laws.
- The first is a collective agreement covering employees of a labor organization or trade union.
- The second type of employment contract is one with a single employee.
According to the Employment and Skills Development Law (2013), employers must establish employment contracts with their employees within 30 days of hire.
Employment contracts must contain specific terms and conditions of employment as outlined in the Employment and Skills Development Law 2013 and a Standard Employment Contract Template. While framing an employment contract, the standard template can be used for the necessary terms and conditions.
There are a few elements that are compulsory in any employment contract, which are as follows:
- Employment location
- Working hours
- Days off
- Holidays and leave
- Medical treatment
- Internal regulations
- Termination of employment
- Responsibilities of the employer and worker
- The length of the contract is a few things that ought to be included in the contract
Key Provisions of the Act
Here are some labor regulations in Myanmar that employers must check before setting up a business.
- According to Myanmar labor laws, the minimum wage is 600 Kyat per hour or 4,800 Kyat per day, based on an eight-hour workday.
- This wage does not include overtime, bonuses, incentives, or other allowances. Part-time employees should be paid based on the hours they worked for.
Payment of wages
- Myanmar labor laws state that employees must receive their salaries at least once a month.
- As mentioned in the employment contract, it can pay in cash, through a cheque, or via bank transfer.
- If fewer than 100 employees are in a workplace, the employer must pay their wages within one day of the previous wage period. However, if there are more than 100 employees, the employer must pay their wages within five days of the previous wage period according to the labor act rules in Myanmar.
Under Myanmar labor laws, employers must record any deductions from a worker’s wages using Form 7 of the Payment of Wages Rules. Deductions that are authorized include the following:
- Absences from work without permission
- Accommodation costs
- Meal allowances
- Transportation allowances
- Income tax
- Overpaid wages
- Court-ordered payments or arbitration-awarded payments
- Social Security contributions
- Contributions made under other laws.
Employers can make deductions through penalties depending upon specific criteria, states the Myanmar labor law. Deductions made during a pay period cannot exceed 50% of a worker’s wages. Apart from this, some more deductions can be made based on other criteria. They are as follows:
- The employer can deduct an employee’s wages in cases of willful negligence, lack of due diligence, dishonest performance, or default by the worker. This has to result in the direct loss of money or damage or loss of something that the employer had openly entrusted to the employee.
- The employer can also deduct wages if the employee breaches any workplace regulations specified in the employment contract, and fines have been set for such breaches, the employer can deduct the amount of the fine from the worker’s wages.
- Employers cannot impose fines on employees below 16 years of age. Additionally, deductions exceeding 5% of an employee’s salary are prohibited.
- Myanmar’s working hours law ensures that employees work 8 hours a day and 44 hours a week.
- The working hours in Myanmar labor law can differ depending upon the industries.
- Myanmar has about 16 public holidays every year.
- Employees who have to work on a public holiday must be paid double the normal rate plus a cost-of-living allowance, if applicable.
- The employer must obtain the employee’s written consent and FGLLID approval at least 24 hours before requiring work on the public holiday and display a relevant notice at the workplace.
- Employees are entitled to six days of paid casual leave per year, and they can use up to three days at a time without the employer’s approval.
- Unused casual leaves will not be carried forward to the next year, and the employer is not required to pay on the unredeemed casual leaves.
- Employees are eligible for paid medical leaves.
- Employees are entitled to 30 days of medical leave if they work with the same employer for six months.
- Employees must provide a medical certificate from a doctor to get medical leaves.
- Maternity leave in Myanmar provides 14 weeks for expectant mothers, comprising six weeks of prenatal leave and eight weeks of postnatal leave.
- A female employee is eligible for another 4 weeks of leave if twins are born.
- If a woman employee has suffered a miscarriage, she is given up to six weeks of leave.
- Male employees are eligible for 15 days of paternity leave.
- If the mother is not covered under social security, they can get 25% of their average salary.
An employee is eligible for a pension on turning 60. Additionally, they should have worked for at least 180 months. Apart from this, three other circumstances make an employee eligible for a pension.
If an employee has contributed for at least 12 months but less than 180 months, the employee is entitled to receive 40% of the total contributions. The accrued interest is also to be included in these cases.
In the case of a disability pension, the employee must have worked for at least 180 months and be incapable of working any further.
A survivor pension is given to a deceased employee’s dependent spouse, children, and parents. One is eligible for this kind of pension only if the deceased received or was entitled to an old-age or disability pension at the time of death.
Employers may have to face rigorous penalties if they fail to comply with Myanmar labor laws laid down by the government. For instance, every employer has to adhere to the Minimum Wage Laws 2013. In case of non-compliance with the minimum wage as enumerated by law, the employer may have to serve a sentence of up to one year in prison, a fine of up to five hundred thousand kyats, or both.
Employers must draft and prepare an employment contract per the Employment and Skills Development Law 2013. In non-adherence, the employer may have to pay a fine or be imprisoned for up to seven years.
Compliance Strategies for Employers
Here are some compliance strategies that can help prospective employers set up their business in compliance with the Myanmar labor code:
- Companies must maintain records of all compliance-related aspects, such as policies, procedures, training sessions, audits, and instances of non-compliance to avoid future legal and regulatory problems.
- Use standard templates for basic employment documents like employment contracts, termination notices, and offer letters.
- Employers must have a whistleblowing policy allowing employees to report any non-compliance or fraud committed by their colleagues. This policy must also ensure the safety of the whistleblower.
- Hire third-party organizations like Multiplier that will ensure regulatory mandates and monitor the company’s policies from time to time.
- Employers should conduct background checks on all new hires to ensure that they are suitable for the role and do not pose a risk to the company’s compliance.
How Can Multiplier Help?
Multiplier is a global PEO-EOR platform that helps companies comply with local rules and regulations while hiring. Our team of experts can aid your business in several ways, including drafting multilingual contracts, employee onboarding, and international payroll management. Expand into new markets, accelerate growth, and bypass the complications of establishing a new entity with Multiplier!