The Employment Law Review: Myanmar

Introduction

The employment law framework in Myanmar is primarily set out in the following key pieces of legislation:

  1. the Workmen's Compensation Act 1923, which prescribes mandatory compensation to be paid by employers for certain types of workplace injuries;
  2. the Registration of Foreigners Rules 1948, which governs the registration process and the permits required for foreign employees to work in Myanmar;
  3. the Factories Act 1951, which applies to certain types of workplaces, primarily those in which manufacturing processes and related types of work are being carried out;
  4. the Leave and Holidays Act 1951 and the Leave and Holidays Rules 2018, which regulate the leave and holiday entitlements of employees in Myanmar;
  5. the Labour Organisation Law 2011, which provides for the formation of a basic labour body at organisation level and at township, state, region and union level, respectively;
  6. the Social Security Law 2012 and the Social Security Rules 2014, which provide for the establishment and regulation of the national social security fund to provide various forms of protection to employees who are registered under the social security programme;
  7. the Employment and Skills Development Law 2013, the aim of which is to facilitate and put in place measures to help employers select prospective employees and to promote the training and development of employees in Myanmar;
  8. the Minimum Wage Law 2013, which sets out the legislative framework for setting minimum wages;
  9. the Shops and Establishments Law 2016, which regulates various rights of employees working in shops and establishments, including limits on working hours and overtime pay requirements;
  10. the Payment of Wages Law 2016, which prescribes time limits within which salary must be paid to employees and the circumstances under which deductions may be made lawfully from the employee's salary;
  11. the Child Rights Law 2019, which specifies a general minimum age for any employment; and
  12. the Settlement of Labour Disputes Law 2019, which provides a mechanism for resolving labour disputes through conciliation or adjudication before a labour tribunal.

In addition to the above legislation, a few key employment-related notifications have been issued by the relevant authorities in recent years, including:

  1. Notification No. 84/2015 issued by the then Ministry of Labour, Employment and Social Security (a predecessor of the current Ministry of Labour (MOL)) on severance payments;
  2. Notification No. 140/2017 issued by the then Ministry of Labour, Immigration and Population (MOLIP, a predecessor of the MOL), which prescribes the model employment contract template that all employment contracts entered into with local Myanmar employees are required to follow; and
  3. Notification No. 2/2018 issued by the National Committee for Minimum Wage,2 which prescribes the minimum wage.

The employment law framework is primarily administered by the MOL. In practice, most labour law matters are handled by the relevant township-level labour office with territorial jurisdiction over the matter.

Year in review

There was a significant rise in unemployment levels in Myanmar, owing to the effects of the covid-19 pandemic and the fallout from the military coup on 1 February 2021. Although there have been no major changes to the prevailing employment laws, regulations or policies, it is worth highlighting the following developments and issues faced by employers in Myanmar during the past year:

  1. Many employers had to deal with covid-19-related human resource issues,3 such as whether it is lawful to impose covid-19 vaccination requirements in order for employees to return to the office for work, or to continue with their employment at all, especially in the absence of clear guidance provided by the MOL or other government authorities on these matters.
  2. Various disruptions in the banking sector and employee activism against the military junta led to several novel requests being made of employers, including deferring salary payments to a later date and holding back payment of personal income tax on behalf of employees to the Internal Revenue Department (IRD).
  3. In November 2021, the MOL reintroduced the requirement under the Overseas Employment Law 1999 for Myanmar citizens who intend to work overseas to first apply to the Department of Labour for an Overseas Workers Identification Card.

Significant cases

Employment disputes are typically referred to a labour tribunal (which is comprised of three members appointed by the Arbitration Council under the Settlement of Labour Disputes Law) for adjudication. The decisions of the labour tribunal are typically published on the MOL's website. However, we are not aware of any significant or landmark decision issued by a labour tribunal in 2021.

Basics of entering an employment relationship

i Employment relationship

An employer is required to enter into an employment contract with an employee within 30 days of commencement of his or her employment4 and to send a copy of the employment contract to the relevant township labour office (which is determined based on the employer's registered office address) within a 'stipulated period' for approval.5 There has not been any legislative or regulatory pronouncement on the length of the 'stipulated period' to date. In practice, employers are required to register their employment contracts with the relevant township labour office as soon as reasonably practicable after the contracts have been executed, and only after the employer in question employs five or more local employees.6 Township labour offices would typically refuse to register the employment contracts of a company with fewer than five local employees. An employer who fails to enter into an employment contract with its employees in accordance with the foregoing could, if convicted, face up to six months of imprisonment or a fine (or both).7

The Employment and Skills Development Law prescribes a list of provisions that must be included in all employment contracts,8 which are:

  1. job designation;
  2. probation period;
  3. wages or salary;
  4. place of work;
  5. term of the employment;
  6. working hours;
  7. rest days, holidays and leave entitlements;
  8. overtime (if applicable);
  9. meal arrangements during working hours (if applicable);
  10. provision of accommodation (if applicable);
  11. provision of medical treatment (if applicable);
  12. provision of transportation to and from work (if applicable);
  13. obligations of the employee;
  14. obligations of the employer;
  15. the employee's obligation to work for the employer for a prescribed minimum period after attending any training course arranged by the employer;
  16. resignation by employee and dismissal by employer;
  17. termination of the employment contract (including by mutual agreement between the employer and the employee); and
  18. amendments to the employment contract.

In practice, all employment contracts entered into with local employees are required to follow the model employment contract template (MEC) issued by the MOLIP, which contains the above-listed mandatory provisions.

The terms of the MEC may be amended by mutual agreement between the employer and the employee, provided that amendments providing for rights and benefits that are less favourable than those to which employees are otherwise entitled under applicable labour laws are considered void.9 In practice, such amendments are subject to the prior approval of the labour officer at the relevant township labour office.

Myanmar's labour policies and practices are generally employee-friendly. In line with this, the labour authorities observe the principle of non-diminution of benefits, in that amendments to the MEC template that have the effect of taking away or reducing any existing benefits provided for under the MEC (or, in the case of existing employment contracts, any amendments that purport to take away any existing benefits being provided to employees) are likely to be rejected by the relevant township labour offices.

ii Probationary periods

Although the Employment and Skills Development Law recognises the practice of providing for probationary periods in an employment contract,10 it does not impose any restrictions on the duration of a probationary period. That being said, the MEC provides that the probationary period must not exceed three months. It is therefore unlikely that township labour offices will approve an employment contract that provides for a probationary period that is longer than three months.

iii Establishing a presence

All overseas corporations 'carrying on business' in Myanmar are required to be registered under the Myanmar Companies Law 2017 (MCL).11 Although the MCL does not provide any definition for what constitutes 'carrying on business' in Myanmar,12 the hiring of employees in Myanmar to undertake certain business activities could give rise to an overseas corporation being construed as carrying on business in Myanmar, thereby triggering the registration requirements under the MCL.

It is possible for an overseas corporation to engage the services of persons in Myanmar through an agency or another third party in Myanmar, or as independent contractors, without registration as an overseas corporation under the MCL. Ultimately, the regulators and the Myanmar courts will look at the relevant circumstances in their entirety to determine whether or not a company is considered to be 'carrying on business' in Myanmar.

Myanmar's tax laws and practice do not currently apply the notion of permanent establishment (PE) to determine tax obligations of overseas corporations. Instead, the IRD imposes withholding tax requirements on payments to be made to overseas corporations, which apply whether or not the overseas corporation has a PE or taxable presence in Myanmar (this is currently set at 2.5 per cent for payments made to a corporation that is not tax resident in Myanmar).

It should also be noted that employers are required to deduct from each employee's monthly salary the personal income tax payable by each employee, and pay the due amount on behalf of the employees to the IRD.13

iv Statutory benefits

Myanmar has implemented a social security framework, as set out in the Social Security Law and the Social Security Rules, which provides certain baseline benefits for all Myanmar employees. There are five insurance systems that the Social Security Board (SSB) is required to administer under the Social Security Law. At present, only two of these systems (namely, the Health and Social Care Insurance System and the Invalidity Benefit, Superannuation Pension Benefit and Survivors' Benefit Insurance System) have been implemented and are being administered by the SSB.

Businesses employing five or more employees (inclusive of temporary workers and foreign employees) are required to register with the relevant township office of the SSB within 10 days of the appointment of a fifth employee.14

Employers and employees who are registered with the SSB are required to make contributions to the social security fund in accordance with the requirements prescribed by the MOL from time to time.15 Currently, employees are required to contribute 2 per cent of their applicable monthly salary (to be withheld and paid on the employees' behalf by their employers16) and employers are required to contribute 3 per cent of the same as monthly contributions to the social security fund. The total social security contribution in respect of each employee is capped at 15,000 kyats per month (i.e., contributions of 9,000 kyats and 6,000 kyats, respectively, by the employer and the employee).

The social security contributions must be made by the employer for itself and on behalf of its employees within 15 days of the end of the relevant month, failing which the employer shall be liable to a penalty of 10 per cent of the relevant contribution for every continuing day of default.17 However, as part of the slew of covid-19 relief measures implemented, the deadline for payment of social security contributions has been extended to three months following the end of the subject month.18

An employer who fails to comply with its obligation to register with the SSB or to pay contributions under the Social Security Law could be punished with imprisonment of up to one year or a fine (or both).19

Restrictive covenants

Every agreement that purports to restrain a person from exercising a lawful profession, trade or business of any kind is void, unless the restrictions are reasonable, having regard to the nature of the business.20 To this end, non-compete clauses that operate during employment are more likely to be construed by the Myanmar courts as being reasonable as compared to those that purport to operate after the termination of employment.

Separately, the severance test has not yet been expressly recognised under Myanmar law.21 As such, if any part of a non-compete clause in the employment contract is found to be unenforceable, this could have the effect of having the entire non-compete clause struck down as being unenforceable by the Myanmar courts.

In practice, we are aware of certain township labour offices that impose a blanket prohibition on post-termination non-compete clauses.

Wages

i Working time

Employees of a shop or a commercial establishment must not be required to work (as part of their normal working hours) for more than eight hours per day or 48 hours per week, unless they agree otherwise.22 To this end, Myanmar employment laws do not differentiate between daytime working hours and night-time working hours.

Employees working in any shop or commercial establishment (save for security guards and watchmen)23 must be permitted a break of at least 30 minutes for every consecutive period of four hours of work in a day.24 The total duration of working hours, overtime and breaks for employees working in any shop or commercial establishment must not exceed 11 hours in a day.25

ii Overtime

Any working hours in excess of the maximum working hours permitted under the labour laws will be counted as overtime hours. The total number of overtime hours must not exceed 12 per week, save for special circumstances, in which case overtime hours may be extended up to 16 hours in a week. Further, overtime hours should not extend past midnight.26

Employees who are required to work overtime are entitled to overtime pay. Based on current labour policies, this is calculated at a rate equivalent to twice the basic wage. The following formula is typically used for calculation of overtime pay on a per hour basis:

Overtime pay (per hour of overtime) = [(Monthly salary x 12 months) / 52 weeks / 48 hours] x 2

For completeness, the Factories Act also sets out certain requirements on working hours and overtime payments, which may differ from the requirements set out in the Shops and Establishments Law (SEL). For example, Section 64 of the Factories Act provides that the total number of hours that a factory worker is required to work, inclusive of any periods of rest or recess, cannot exceed 10 hours a day, except with the permission of the president (as compared to the SEL, which sets this limit at 11 hours a day).

Foreign workers

There are currently no general limits on the number of foreign workers a workplace or company may have in Myanmar. However, there may from time to time be certain sector-specific restrictions on the employment of foreign workers. For instance, the Central Bank of Myanmar (CBM) issued a directive on 2 August 2021 requiring all licensed Myanmar banks to obtain the prior approval of the CBM before hiring any foreign employees and placing restrictions on the total number of foreign employees that licensed Myanmar banks may employ.

There is no legal requirement for an employer in Myanmar to maintain a register of foreign workers. However, in practice, an employer within a sector that restricts employment of foreign workers or undertakes investment that requires certain local human resource commitments to be satisfied and maintained, it is likely that the company will need to maintain a register of foreign workers for the purposes of monitoring and demonstrating compliance with the relevant requirements.

i Visa requirements

Foreign workers may enter and stay in Myanmar for work purposes so long as they hold the required business visas, which would typically take the form of either a single-entry business visa (SE Visa) or a multiple-entry visa (ME Visa). SE visas are valid only for one entry into Myanmar and are issued with a validity period of 70 days. If a foreign worker exits Myanmar before the expiry date of an SE visa, he or she will be required to apply for a fresh SE visa when he or she wishes to re-enter Myanmar. ME visas, on the other hand, can have a validity period of either six or 12 months and permit a foreigner to exit and enter Myanmar multiple times with the same visa during its validity period. In practice, ME visas are typically only issued to foreigners after they have visited Myanmar a few times on the basis of SE visas.

Furthermore, a foreign employee will require a stay permit and a Foreigner Registration Certificate (FRC)27 to remain in Myanmar on a long-term basis (i.e., more than 70 days). An FRC allows a foreigner to remain within Myanmar for more than 90 days at a time,28 whereas a stay permit allows a foreign employee to remain in Myanmar for an extended period without having to leave the country every 70 days. Applications for FRCs and stay permits are typically undertaken on a concurrent basis and will be processed after a foreign employee has arrived in Myanmar.

ii Paying income tax on behalf of foreign employees

Whether the company is required to pay personal income tax on behalf of a foreign employee would depend on whether or not the employee is a tax resident in Myanmar (i.e., resides in Myanmar for at least 183 days during the year of assessment for income tax).

iii Protection for foreign workers under local labour laws

Myanmar's labour laws do not usually draw a distinction between protections granted to workers who are Myanmar citizens and protections granted to foreign workers. However, in practice, the labour offices are generally more protective of the rights of local employees than foreign workers. There are also certain requirements, such as registration of employment contracts (with the requirement to follow the MEC template) and registration for social security, which are applied strictly and made compulsory in relation to local employees but left optional for foreign employees.

Global policies

There is no express legal requirement under Myanmar law for employers to issue an employee handbook or a set of internal discipline rules. However, for any handbooks, company policies or internal discipline rules that are in place to be binding on employees, it must be shown that the employees had (individually) agreed to having the same incorporated into their employment contracts.

Although there is no strict requirement for handbooks, company policies and internal discipline rules to be submitted to the relevant township labour office for prior approval, doing so could have the advantage of mitigating the risk of any arguments that these handbooks, company policies and internal discipline rules have not been validly incorporated into a company's employment contracts with its employees.

Courts and labour tribunals in Myanmar generally accept documents into evidence whether written in the Myanmar language or English. Employers may therefore opt to draft their internal labour rules in English. That being said, some labour officers may require a Myanmar language translation to be prepared for their review during the approval process.

Although there is no express requirement under Myanmar's labour laws for employees to sign the internal labour rules of their employer, as a matter of practice, where the internal labour rules form a part of the employment contract (either by reference or by inclusion as an annexure), the relevant township labour officer would typically require either employees' signatures on every page of the rules to acknowledge consent to those rules or that employees sign a separate statement confirming that the internal rules have been explained to them and that they consent to the rules.

Parental leave

All Myanmar employees are entitled to paid maternity or paternity leave. Wages due during periods of maternity or paternity leave are required to be paid in full by employers. The township labour offices generally take the position that employees should not be dismissed while they are taking parental leave.

i Maternity leave

Female employees who are insured under the Social Security Law are entitled to at least six weeks of maternity leave prior to the delivery and at least eight weeks of maternity leave following the delivery, with their usual pay or wage (i.e., up to at least 14 weeks in total).29 Special rules apply in the case of twin deliveries or accidental miscarriages.30

In addition, female employees insured under the Social Security Law are also entitled to the following cash benefits extended by the SSB,31 provided that they have worked with the employer for at least one year and have made the relevant contributions under the Social Security Law for a minimum of six months within that year:

  1. a maternity benefit of 70 per cent of the average annual wage for the period of maternity leave (up to a minimum of) or, in the case of a miscarriage, 70 per cent of the average wage for the period of maternity leave (up to six weeks); and
  2. coverage of maternity expenses, at 50 per cent of the average monthly wage for a single delivery, 75 per cent for a twin delivery and 100 per cent for delivery of triplets or more.

Female employees who are not insured under the Social Security Law are entitled to similar maternity leave benefits under the Leave and Holidays Act. This maternity leave may be taken consecutively with medical leave.

ii Paternity leave

A male employee who is registered under the Social Security Law is entitled to 15 days of paternity leave and has a right to enjoy 70 per cent of his average annual wage during the previous year for the period of paternity leave, provided that his wife is similarly registered under the Social Security Law.32 The Social Security Law further provides that if the wife of an insured male employee does not enjoy coverage under the Social Security Law, the male employee would nevertheless be entitled to half of the maternity expenses stated above (i.e., 70 per cent of the wife's annual wage for the period of maternity leave for up to a minimum of 14 weeks in total, before and after delivery).

Translation

In practice, labour officers would typically require employment contracts to be either solely in the Myanmar language or bilingual (i.e., Myanmar and English) before they are approved for registration. For all other employment documents, it is usually not mandatory for these to be in the Myanmar language (although it is advisable for bilingual versions to be prepared to facilitate the approval process at the relevant township labour offices).

For documents that are not in either English or the Myanmar language, certified translations of these documents may need to be prepared for submission into evidence in proceedings before the courts or labour tribunals.

Employee representation

Although there is no mandatory requirement for employees to form work councils or labour organisations, employees are permitted to establish labour organisations subject to the provisions of the Labour Organisation Law.

Section 4 of the Labour Organisation Law provides for the formation of a basic labour organisation by the employees at the organisation level if at least 30 employees within the same trade or activity and at least 10 per cent of all workers in the organisation approve of the formation of the labour organisation. If there are fewer than 30 employees in a particular trade or activity, a basic labour organisation may be formed jointly with workers of any other 'trade or activity of a similar nature', although the Labour Organisation Law does not provide any guidance or illustration as to what would constitute 'trade or activity of a similar nature'.

A basic labour organisation formed under the Labour Organisation Law comprises only employees; no employer representatives are included.

The duties of employers under the Labour Organisation Law include:

  1. recognising labour organisations as the organisations representing the employees;33
  2. allowing workers who are assigned any duty in the labour organisation to perform that duty as part of his or her original work for a maximum of two days in a month;34 and
  3. assisting the labour organisation (if requested) on any matter that is in the interest of the employees.35

Employers are prohibited from dismissing an employee for being a member of a labour organisation or participation in strikes that are organised in accordance with the Labour Organisation Law.

Separately, under Sections 3(a) and 3(b) of the Settlement of Labour Disputes Law, employers with more than 30 employees are required to set up a workplace coordination committee (WCC) consisting of the following:

  1. if there is any labour organisation, two representatives of employees nominated by each of the labour organisations and an equivalent number of representatives of the employer; or
  2. if there is no labour organisation, two representatives of employees elected by the employees and two representatives of the employer.

The WCC is primarily responsible for promoting good relationships between employees and the employer. It also serves as a medium for negotiation and coordination on the conditions of employment and other issues relating to occupational safety, health, welfare and productivity. The WCC also functions as the first port of call for any requests or complaints raised by employees or employers. In practice, a WCC will typically attempt to facilitate negotiations and settlement of any labour disputes to avoid the need for them to be referred to the relevant township conciliation body for resolution. Each term of an WCC lasts for one year.

There is no provision under Myanmar law that prescribes the manner of election of representatives, the additional rights or protections of representatives or the frequency of meetings held by WCCs.

Data protection

There are at present no cross-sector data protection laws in Myanmar. The only legislation that briefly addresses data protection requirements is the Electronic Transactions Law, as revised by the Law Amending the Electronic Transactions Law (Law No. 7/2021) (ETL).

i Data protection under the ETL framework

Pursuant to the ETL, 'personal data' is defined as 'information that identifies or is capable of identifying an individual'.36

The ETL also introduces the concept of a personal data management officer, which is defined as 'a person or an employee who is authorised by a government department or an organisation to be responsible for the collection, retention and use of personal data in accordance with this law or any existing laws'. There is currently no express requirement for private companies to appoint a personal data management officer under the ETL, although such a requirement may be subsequently introduced either in the form of further amendments to the ETL or subsidiary legislation or regulations once the data protection framework is further developed.

In addition to the general restriction under Section 38B of the ETL against the collection, handling, use and disclosure of personal data without the owner's consent, the ETL also imposes specific obligations on personal data management officers, namely:

  1. not to permit the inspection of, disclosure, dissemination, transmission, amendment, destruction or copying of or adducing as evidence of any personal data under his or her management unless with the consent of the owner of the personal data or as may be required to comply with existing laws (the 'consent obligation'). However, the ETL currently does not prescribe any specific manner in which the consent of the owners of personal data must be collected to ensure compliance with the consent obligation;
  2. to ensure the systematic storage, protection and processing of personal data for which he or she is responsible, according to the level of security appropriate for the type of data and in accordance with laws (the 'protection obligation'); and
  3. to ensure that personal data collected with the intention of usage for only a limited period is destroyed after that period (the 'retention obligation').

ii Requirements for registration

As stated above, the personal data protection framework in Myanmar is currently in its preliminary stage and there is no legal provision for the establishment of a data protection agency or government body for data protection. Therefore, there is no requirement for companies to register with a data protection agency or government body.

In light of the consent obligation described above, it is likely that any data protection framework introduced in the future could require the consent of employees before an employer may collect, use or disclose the employees' personal data.

iii Cross-border data transfers

There is at present no legislation in Myanmar that regulates cross-border data transfers. However, in light of the consent obligation described above, it is likely that any cross-border transfer of an employee's personal data for a particular purpose could require the prior consent of the employee.

iv Sensitive data

There is currently no recognised definition of what data would be considered as 'sensitive' under Myanmar law. The closely related term 'personal data' has been given a broad definition that could include a person's social security numbers, addresses, phone numbers and medical information. It is an offence under the ETL to obtain, disclose, utilise, destroy, alter, disseminate, transmit to a third party or misuse personal data without the owner's consent.

v Background checks

Background checks (such as credit checks and criminal record checks) are not prohibited in Myanmar. It is common practice for companies to require new employees to have an endorsement of good character from the relevant ward administrator or an endorsement from the township police station to confirm that he or she has no past criminal records.

Discontinuing employment

i Dismissal

An employer may terminate the employment of an employee either (1) for cause without severance, provided that the required steps have been taken (as set out below), or (2) without cause by issuing a notice to terminate and making the required severance payments.

Termination for cause

An employer may terminate an employee's employment for cause in circumstances where the employee has either (1) committed a series of 'ordinary offences' (as defined in the employee's employment contract) several times within a given 12-month period, or (2) committed a 'serious offence' (as defined in the employee's employment contract).

For ordinary offences, based on the current policy and practice of the labour offices, an employer is entitled to terminate an employment contract for cause without making severance payments in the event that an employee commits the same ordinary offence four times. In addition, the current policy and practice of the labour offices is to require a written warning to be issued to the errant employee following the first and second occurrences of the offence (as opposed to a verbal warning as previously prescribed for a first offence). If there is a third instance of the same offence, the employee may be required to provide a signed undertaking to refrain from further commissions of the offence. If the employee then commits the offence again within 12 months of the date of the first offence, the employer may proceed to terminate the employment for cause without the need to make severance payments.

For serious offences, the employer will be entitled to immediately dismiss the employee without severance payment or notice.

In practice, if an employee is dismissed for cause (whether for an ordinary offence or a serious offence), the employer has to notify the relevant township labour office of the termination. Employers should take care to keep a well-documented record of disciplinary steps taken leading up to a termination for cause and the employee's commission of offences, so as to pre-empt any subsequent allegations of improper termination or unfair dismissal brought against the employer by an aggrieved former employee.

Termination without cause

The employer may dismiss an employee without cause by providing at least one month's prior notice (or a longer notice period, if provided under the relevant employment contract).

If an employer has exercised its right to dismiss an employee without cause, the employee is entitled to receive a severance payment from the employer. The specific amount of the severance payment to be made is determined based on the length of the employee's term of service for the employer prior to the termination. The table below sets out the required severance payment to be made by employers according to the employee's term of service.37

Length of serviceSeverance payTotal payment (including notice period of one month)
Less than 6 months1 month
6 months or more, but less than 1 year0.5 month1.5 months
1 year or more, but less than 2 years1 month2 months
2 years or more, but less than 3 years1½ months2.5 months
3 years or more, but less than 4 years3 months4 months
4 years or more, but less than 6 years4 months5 months
6 years or more, but less than 8 years5 months6 months
8 years or more, but less than 10 years6 months7 months
10 years or more, but less than 20 years8 months9 months
20 years or more, but less than 25 years10 months11 months
More than 25 years13 months14 months

Although there is no express statutory provision that requires an employer to notify the relevant township labour office of terminations of employment, employers are required in practice to notify the relevant township labour office, whether the termination is for cause or without cause.

There is no requirement under Myanmar law for employers to provide for any post-termination social plans for employees, such as alternative arrangements or rehire rights.

Finally, there is no prohibition under Myanmar law against employers and employees entering into private settlements regarding the termination of employment.

ii Redundancies

There is no specific legislative provision or written policy in Myanmar that covers redundancies, mass terminations or collective dismissals. In the event of a termination of employment because of redundancy or a mass lay-off, employers are required to follow the same procedure as the termination of an employee without cause (i.e., employers are required to provide at least one month's written notice and make the required severance payment in accordance with MOL Notification No. 85/2015).38

However, the MEC provides that in the event of mass lay-offs or termination because of redundancy, employers are required to coordinate with a representative of the basic labour organisation and a representative of the WCC, or, in the absence of any labour organisation, directly with the WCC.39

The employer is also required in practice to inform the relevant township labour office before initiating any mass lay-offs of employees for redundancies. Under Myanmar law, employers are not required to provide for any post-termination social plans for employees, including alternative arrangements or rehire rights.

Finally, there is no prohibition under Myanmar law that prevents parties from entering into a settlement agreement.

Transfer of business

There is no legislation to protect employees in the event of a business transfer, a merger, an acquisition or an outsourcing transaction. In practice, the employer must discuss any transfer with employees, who would be entitled to decide whether to proceed with the transfer or to bring their employment to an end (in which case they would usually be entitled to receive a severance payment in accordance with Notification No. 84/2015).

Separately, the local township labour offices may also insist on certain protections for employees, such as transfer of tenure of the employees from the previous employer to the new employer to protect severance payments due to the employees.

Outlook

We anticipate that a new Employment of Foreign Workers Law and Payment of Wages Rules may be promulgated (both of which are currently in draft form and undergoing review and revision).

The new Employment of Foreign Workers Law is likely to bring about significant changes to the current framework for regulation of foreigners working in Myanmar, including the introduction of a new type of FRC, allowing for temporary travel by foreigners into and out of Myanmar, and setting out certain basic obligations of foreigners working in Myanmar.

The new Payment of Wages Rules are expected to contain details of new methods for paying wages to employees.

Footnotes

1 Chester Toh is co-head of the Myanmar practice, Min Thein is managing partner and Lester Chua is associate director at Rajah & Tann Myanmar Company Limited.

2 The National Committee for Minimum Wage was formed by the President of Myanmar, pursuant to the Minimum Wage Law. It is made up of members who are representatives of government departments and organisations, labour organisations, workers, and employer organisations, as well as other persons who are experienced in matters concerning wage prescription.

3 With the onset of the covid-19 pandemic in early 2020, the Social Security Board previously issued Directive No. 1/2020, which permitted the suspension of social security contributions by the employer and employees whose workplace has been temporarily closed.

4 Employment and Skills Development Law, Section 5(a). Note, however, that this requirement to sign a contract of employment does not apply to permanent workers in government departments or government organisations.

5 ibid., at Section 5(g).

6 Notification No. 140/2017 issued by the then Ministry of Labour, Immigration and Population.

7 Employment and Skills Development Law, Section 38. In practice, it is uncommon for a jail term to be imposed on first offenders under Section 5(a) of the Employment and Skills Development Law.

8 ibid., at Section 5(b).

9 ibid., at Section 5(f).

10 ibid., at Sections 5(a)(2) and 5(b)(2).

11 MCL, Section 43(a).

12 Note, however, that Section 43(b) of the MCL sets out a list of activities that would not result in an overseas corporation being deemed to be carrying on business in Myanmar.

13 Income Tax Act, Section 16(a).

14 Social Security Law, Section 11(a).

15 ibid., at Section 15(b).

16 ibid., at Section 18.

17 Social Security Rules, Rule 64(b).

18 Notification No. 63/2020 issued by the then Ministry of Labour, Immigration and Population (MOLIP).

19 Social Security Law, Sections 93 and 94.

20 Myanmar Contract Act 1872, Section 27.

21 Severance test refers to an analysis of whether it is possible to remove only the specific contravening wording in issue, rather than striking down the entire non-compete clause as being unenforceable.

22 Shops and Establishments Law, Section 11(a).

23 ibid., at Section 12(b).

24 ibid., at Section 12(a).

25 ibid., at Section 12(a).

26 ibid., at Section 11(b).

27 An FRC is issued under the Registration of Foreigners Rules.

28 Note that FRCs expire at the end of the year in which they are issued.

29 Social Security Law, Section 25(c).

30 ibid., at Section 25(d).

31 ibid., at Section 27.

32 ibid., at Section 28.

33 The Labour Organisation Law, Section 29.

34 ibid., at Section 30.

35 ibid., at Section 31.

36 Electronic Transactions Law, Section 4(l).

37 Notification No. 84/2015 issued by the MOLIP.

38 Model Employment Agreement, Clause 15(b)(3).

39 ibid., at Clause 15(b)(4).

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