Doing business in Myanmar holds as many risks as it does opportunities and firms keen on expanding into the country should be aware of the unique regulations and procedures involved in setting up shop.

Among the areas investors should take note of in doing business in Myanmar is employment, given the power labour unions hold and since labour offices tend to be more friendly towards employees.

Just last month, Hong Kong’s Fu Yuen Garment Factory, which runs a facility in Yangon, was forced to reemploy 30 union members it had sacked without notice in August for allegedly violating company rules and slowing production.

Fu Yuen agreed to rehire the workers after Yangon Chief Minister U Phyo Min Thein intervened in the wake of a 72-day strike by 300 of the factory’s 1400 workers ensued. In October, a march at Maha Bandula Park calling for the regional government to help settle the dispute also took place.

As such, investors must be aware of the rules and requirements of employing workers in Myanmar to ensure smooth business operations.

For some insight on the employment landscape in the country, The Myanmar Times spoke to Lester Chua, partner and foreign lawyer at Rajah & Tann NK Legal Myanmar Company Ltd:

How does an employer let go of unproductive employees? What are the procedures to deal with non-performing workers under the law?

There are in general three ways to fire unproductive employees. Firstly, an employer may terminate the employee by serving a notice of termination of employment, provided that at least one month’s notice period is given and the prescribed severance payment is made to the employee.

Secondly, the model employment contract template which employers are required to utilise for local Myanmar employees allows employers and employees to set out two lists of offences which would warrant disciplinary action to be taken, namely serious offences and normal or ordinary offences.

The employer may terminate the employee should he or she commit a serious offence set out in the employment contract, without making any severance payment.

Employers should take care to ensure that the termination of employment in such a scenario is well-documented with clear reasons given and, if possible, the employee’s written acknowledgement of the commission of the serious offence is obtained.
Any terminations should ideally also proceed after consultation with the relevant case officer at the township labour office where the employment contract was registered.

In the event that an employee commits a normal offence, the employer may terminate the employment contract without making any severance payments after giving the errant employee three warnings. The first warning can be a verbal warning. Still, proper records should be kept evidencing the issuance of the verbal warning.

Upon the second commission of the offence, the employee must be issued with a written warning. Upon the third commission of the offence, the employee shall be made to give a signed written undertaking that he will not commit any further offence.

If the errant employee commits a further breach of the offence anytime within 12 months after signing the undertaking, the employer will be entitled to terminate the employee’s contract without making any severance payment.

However, if the employee does not commit another breach within 12 months following a breach of a normal offence or within 12 months following the issuance of a signed undertaking, the employer shall waive all prior breaches committed by the employee.

What are the basic, compulsory rights and benefits every employer should give their staff?

Some of the basic rights and benefits of an employee include:

(i) registration for social security under the Social Security Law 2012;

(ii) the right to a minimum of 10 days of earned leave upon completion of a period of 12 months of continuous service and six days of casual leave each year;

(iii) for permanent employees, the right to be paid their salary on a monthly basis. Where there are 100 employees or less in the company, salaries must be paid at the end of the payment period. Where there are more than 100 employees in the company, salaries must be paid not later than five days after the end of the payment period;

(iv) the right to receive a minimum wage of at least K4, 800 per day;

(v) the right to at least 30 minutes of rest for every 5 hours of continuous work in the case of a factory and 4 hours of continuous work in the case of a shop or establishment; and

(vi) the right to receive overtime pay for any work done in excess of 8hours a day or 44 hours a week in the case of a factory and 48 hours a week in the case of a shop or establishment.

Are labour unions legal in Myanmar? How powerful are they? How should employers legally go about handling situations like workers going on strike?

Labour unions are regulated by the Labour Organisations Law 2011 (LOL) and the Settlement of Labour Disputes Law 2014 (SLDL). The legal framework accords labour organisations with considerable powers, including the right to organise strikes.

Here are a few practical tips for employers to take note of in handling situations where workers are threatening a strike. Employers should ensure that they know the legal limits within which a strike may be conducted.

There are certain circumstances which would render a strike as illegal under the LOL. For example, where the strike involves interruptions that could endanger the life, health or security of the people in any segment of the population, where the strike is carried out without permission of the relevant labour federation, and where the labour organisation has failed to provide the required advance notice of the strike.

Under Section 39 of the LOL, a labour organisation which intends to go on strike must first inform the relevant employer and the relevant conciliation body of the strike and get permission from the relevant labour federation by stating the date, place, number of participants, manner and time of strike at least 3 days before the day of the strike.

Strikes are also illegal if they do not relate to labour affairs or the occupational interest of workers, such as wages, worker salaries, welfare and working hours.

Employers should know the procedure which needs to be complied with before a strike can be legally organised. This procedure is set out under the SLDL. Briefly, the dispute must first be submitted to the relevant conciliation body to see if parties can reach a mutually agreeable settlement.

If a mutual agreement cannot be reached within 3 working days, the dispute must be referred to the relevant arbitration body for its decision on the dispute. Employees are only allowed to proceed to carry out a strike after the relevant arbitration body has issued its decision, in the event that they are not satisfied with the said decision.

As a strike can only be carried out with approval from the relevant labour federation, employers may wish to engage with the authorities to suggest reasonable limits to be placed regarding the conduct of the strike. Thiswill minimise disruption to their business and ensure that employers’ core business functions can still continue during the strike.

Does the employer have the right to sack employees who go on strike? Is there a procedure?

Employers are prohibited from sacking employees on the basis of their membership in a labour organisation or their participation in a strike. Any violation of this prohibition would attract a penalty of a fine of up to K100, 000 and/or imprisonment for up to one year.

That said, as a strike suspends the employment agreement temporarily, employers are exempted from paying salary or allowance to an employee during such period that the employee goes on strike.