afma breakfast talk employment in...

In association with

U Myint Lwin Law Office

an association of independentlaw firms in 60 countries

AFMA Breakfast TalkEmployment in Myanmar

20 September 2013

Siri LerdsirisoponSenior Associate

siri.lerdsirisopon@vovan‐bangkok.com

1Vovan & Associes ‐ U Myint Lwin Law Office

.

Overview• Myanmar workforce: 33.41 million (2012) Employment

Agriculture

Industrial

Construction

• Salary (2012):Services

Type of workforce Average Monthly Salary (USD)Unskilled 100Semi‐skilled 150Supervisors/Team Leaders 200‐300U i i d i h k l d 300 00 d di i


University graduates with knowledge of computer and English

300‐500 depending on experience

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Legal Framework• There is no one comprehensive labour law in Myanmar• Current labour laws:

•Employment Restriction Act (1959)•Employment Restriction Act (1959)•Employment Statistics Act (1948)•Employment and Skill Development Law (30 Aug 2013 replacing Employment and Training Act (1950))and Training Act (1950))•Factories Act (1951)•Labor Organization Law (11 Oct 2011 replacing Trade Unions Act)•Leave and Holidays Act (1951)y•Law on Minimum Wages (March 2013 replacing Minimum Wages Act (1949))•Oilfields Labor and Welfare Act (1951)•Payment of Wages Act (1936)•Shops and Establishment Act (1951)•Workmen’s Compensation Act (1923)•Labor Dispute Settlement Law (28 Mar 2012 replacing 1929 version)•Social Security Act (1954)


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GovernmentSocial Security Board

Department Boardof Labour

Ministry of Labour Factories and

GeneralCentral General Labour Laws Inspection

Inland Freight Handling

C t l T d Inspection DepartmentCommittee Central Trade

Dispute C itt


Committee

.

RecruitmentTownship Labour Office*New Employment & Labour Exchange Office to be set up

Employment Agency

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Employment Contract• Generally must be approved by Ministry of Labour for foreign companiesGenerally must be approved by Ministry of Labour for foreign companies

hiring Myanmar nationals to ensure compliance• New Employment & Labour Exchange Office to be set up and take over the

approval process• Department of Labour publishes an employment law booklet that contains a• Department of Labour publishes an employment law booklet that contains a

sample contract• Basic terms:

• Scope of work• Location of work• Salary• Overtime

E l i d• Employment period• Working hours• Holidays• LeaveLeave• Termination

• Violation of employment contract: imprisonment not exceeding 3 months, or fine, or both


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Wages• Must comply with Law on Minimum Wages (2013)• Previous legal minimum wage: USD 15 per month • Market rate: USD 70‐80 per month• Under the new law, a National Committee, comprising

t ti f th t th lrepresentatives from the government, the employers, and the labour organisations, would be set up to determine the new minimum wagesg

• The minimum wage will be based on sectors• Employers must inform employees of the new

minimum wage and have it prominently posted• Pay discrimination based on gender is prohibited


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Social SecurityM t l ith S i l S it A t (1954)• Must comply with Social Security Act (1954)

• Employer with 5 or more employees must enter the Social Security Insurance Scheme

• Employer’s duty to deduct and deliver the payment• Employer s duty to deduct and deliver the payment• Contributions:

Payer Contribution Maximum Contribution

Employer 2.5% USD 5

Employee 1.5% USD 3

• Benefits: Free medical care, free maternity care, sickness cash benefit, maternity cash benefit, funeral grant, disability benefit (due to work‐related accidents), survivor pension

• New Social Security Law of 2012 not yet in force• New Social Security Law of 2012 not yet in force• Workmen’s Compensation Act (1923): stipulates compensation that

Employer must pay if worker suffering from disability or death due to workplace injury is not covered under Social Security Actp j y y


.

Trainingg• Must comply with Employment & Skill Development

Law (30 Aug 2013) – to become effective in 3 months• Employer’s obligations:

• make monthly contribution in the amount equivalent to at least 0.5% of employee’s salary to the Employee Skill Development Fund (cannot be deducted from employee’s salary)

• provide training to employees in line with policy of the Skill Development Team (on‐the‐job training, systematic training program outside training and/or computerized training)program, outside training, and/or computerized training)


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Leave and Holidaysy• Must comply with Leave and Holidays Act (1951)• Employee’s entitlements:

Paid Annual Leave Number of Days Allowed

Casual leave 6 daysCasual leave 6 days

Earned leave 10 days

Medical leave 30 days

Public holidays 21 days on average


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Working Hours• Applicable laws: Factory Act (1951); Shops and Establishment Act

(1951)• Working hours:Working hours:

Industry Maximum Working Hours

Minimum Rest Period

MaximumOvertimeHours Period Overtime Hours per week

Hoursper

Hours per

k

Days per

kDay Week Week

Factory andindustrial work

8 44 630 mins after 5

12

• Overtime rate is double that of ordinary wage

hours of workOffice and shops 8 48 6 16

• Overtime rate is double that of ordinary wage


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Termination of Employment• Employment in Myanmar is not “at will.”• Employer must pay severance to terminated employees• Severance payment amount:• Severance payment amount:

Length of Service Severance Pay

Less than 3 months 1 month’s salaryLess than 3 months 1 month s salary

3 months – 1 year 2 months’ salary

1 ‐3 years 3 months’ salary

• Exception: if employee willfully resigns, or if employee engaged in

y y

More than 3 years 5 months’ salary

p p y y g , p y g gaction that damages employer’s reputation

• Ministry of Labour to announce new severance pay in accordance with Employment and Skill Development Lawwith Employment and Skill Development Law


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Workplace Health and Safetyp y• More applicable to factories and industrial work• Requirements depend on the industry involvedRequirements depend on the industry involved• Oil & Gas: MIC directives on environmental protection• Mining: Mining Law on working conditions, safety,Mining: Mining Law on working conditions, safety,

health• Factories: Factories Act on health and safety standards y• New workplace safety law is expected in 2013

according to the government


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Labour Disputes p• Labour Dispute Settlement Law (2012) applies:

Resolution Body DescriptionWorkplace Coordinating Committee

‐ Required for employer of more than 30 employees‐ Promote good relationship‐ Grievances negotiated and settled within 5 days

Conciliation Body ‐ Township level (formed by region or state government)‐ To conciliate a dispute within 3 days‐ Without settlement, individual disputes can move to court, p

Dispute Settlement Arbitration Body

‐ Region/State/Division level (formed by Ministry of Labour)‐ To make a decision within 7 days‐ Without settlement, strike/lockout is possible (except

disputes involving “essential services”)

Dispute Settlement ‐ National level (formed by Ministry of Labour)Co ncil to nominate a Trib nal to resol e disp tes


Arbitration Council /Tribunal

‐ Council to nominate a Tribunal to resolve disputes‐ To issue a decision within 14 days for non‐essential services

or 7 days for essential services.

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Lockouts and Strikes• Labour Organisation Law (2011) applies• Conditions:

Type of strike/lockout Conditions Employer locking out public utility

i th i kNotify employees and conciliation body at l t 14 d i d R iservice or other service workers least 14 day in advance; Receive permission from conciliation body

Labour organisation strike in public Notify employer and conciliation body at g putility service

y p y yleast 14 days in advance; Reach an agreement with employer on provision of services during strikeservices during strike

Labour organisation strike in other services

Notify employer and conciliation body at least 3 days in advance


Strike/Lockout in essential services Not permitted

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Labour Organisationsg• Labour Organisation Law (2011) applies• Labour organisations can be registered with Township Registrar or

Chief Registrar• Employee has a right to join or resign from a labour organisation

Type CriteriaType Criteria

Basic Labour Organisation ‐ At least 30 members; recommended by at least 10% of workers in the same trade

Township Labour Organisation Recommended by at least 10% of all basic labourTownship Labour Organisation ‐ Recommended by at least 10% of all basic labourorganisations in the same trade/township

Region or State Labour Organisation ‐ Recommended by at least 10% of all township labourorgnisations in the same trade/stateorgnisations in the same trade/state

Labour Federation ‐ Recommended by at least 10% of all region/state labourorganisations in the same trade

M L b C f d ti R d d b t l t 20% f ll M l b


Myanmar Labour Confederation ‐ Recommneded by at least 20% of all Myanmar labourfederations in the same trade

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Foreign Investment LawU kill d f i k ll d• Unskilled foreign workers not allowed

• Proportion of skilled workforce:Period Proportion of MyanmarPeriod Proportion of Myanmar

employeesFirst 2 years 25%Second 2 years 50%Third 2 years 75%

• Must sign employment contract within 30 days from the date of employment

• Employment contract must be approved by Ministry ofEmployment contract must be approved by Ministry of Labour

• Foreign employees must obtain work permit and stay permitpermit


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VisaType of foreign employees Initial entry Other documents

Foreign employee staying for Business visa ‐less than 70 days each timeForeign employee staying long time

Business visa Stay permit, Multiple Journey Reentry Visa Foreignertime Reentry Visa, Foreigner Registration Certificate

Foreign employee in an FIL Business visa Stay permit, Multiple Journey company Reentry Visa, Foreigner

Registration Certificate

• Recommendation letter from relevant ministry and Ministry of Immigration and Population is needed to obtain stay permit and multiple journey reentry visa

• Registration with the township immigration office is recommended• Registration with the township immigration office is recommended


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Work PermitType of foreign employees Need work

permit?permit?

Foreign employee in non‐FIL company N/A (may change in the future)

Foreign employee in an FIL company Yes


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Tax• Employer has the duty to deduct income tax at the time of salary

payment based on annual income tax • Tax rate is based on residency:

Type foreign employee Residency Status

TaxRateStatus Rate

Foreigners working for an FIL company Resident 1‐20%Foreigners working for a non‐FIL company staying Resident 1‐20%Foreigners working for a non FIL company staying in Myanmar for at least 183 days in a fiscal year

Resident 1 20%

Foreigners working for a non‐FIL company staying f l h d f l

Non‐resident 35%

• Non‐resident foreigners working in a state project is taxed at 20%

in Myanmar for less than 183 days in a fiscal year


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Income Tax Rates for ResidentsTaxable Income Rate

From (Kyat) To (Kyat)

1 500,000 1%

500,001 1,000,000 2%

1,000,001 1,500,000 3%

1 500 001 2 000 000 4%1,500,001 2,000,000 4%

2,000,001 3,000,000 5%

3,000,001 4,000,000 6%, , , ,

4,000,001 6,000,000 7%

6,000,001 8,000,000 9%

8,000,001 10,000,000 11%

10,000,001 15,000,000 13%


15,000,001 20,000,000 15%

20,000,001 ‐ 20%

.

Contractor• Withholding tax for contractor applies:

Type of Income Resident Rates Non resident RatesType of Income Resident Rates Non‐resident Rates

Payments for services 2% 3.5%

• Note: Double Tax Treaty may apply• Myanmar has DTA withy

India, South Korea, Malaysia, Singapore, Thailand, United Kingdom, Vietnam, Indonesia, Bangladesh, Laos


Thank you.

In association with

UMyint Lwin Law Office

an association of independent

U Myint Lwin Law Office

an association of independentlaw firms in 60 countries

Siri LerdsirisoponSenior AssociateVovan & AssociesOcean Tower 1, 14th Floor No. 162, First Floor, 35th Street170/42 New Ratchadapisek Road Kyauktada TownshipKlongtoey, Bangkok 10110 Thailand Yangon, P.O. Box 1126, MyanmarTel: +66(0)2 261 3138 Tel: +95(0)94 202 32998siri.lerdsirisopon@vovan‐bangkok.com


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