What happens to unused leave at year-end in Myanmar?

What Myanmar law says

At year-end in Myanmar, unused leave is treated differently depending on the leave type. Under the Leave and Holidays Act:

• Annual leave carries forward to the next service year, typically capped at 30 days accumulated by employer policy.
• Casual leave and sick leave lapse at the end of each leave year — they do not carry forward and are not encashable.
• Maternity, paternity, and public holidays are event-driven, not annual — no year-end carry-forward concept applies.

The cap on annual leave carry-forward is set by employer policy because the Act does not specify a single statutory cap. The market-standard cap is 30 days. Days above the cap are typically forfeited or encashed at year-end, depending on the policy. The same rules apply under the Factories Act 1951 and the Shops and Establishments Act.

Year-end behaviour by leave type

Carry-forward worked example

Employee on MMK 700,000/month with the following annual-leave history:

If the employer chooses to encash the excess: (700,000 ÷ 30) × 9 = MMK 210,000 paid on the December 2028 payslip.

Year-end housekeeping

• Confirm the leave-year reset date. Most employers use the calendar year (1 Jan–31 Dec) or financial year (1 Apr–31 Mar). The reset date governs all year-end calculations.
• Communicate carry-forward and lapse rules. Send a year-end memo at least 1 month before the reset.
• Process forfeiture or encashment. If the policy encashes excess, calculate (monthly salary ÷ 30) × excess-days and pay on the December (or March) payslip.
• Reset balances. Casual leave to 6, sick leave to 30; annual leave keeps the carried-forward portion plus the new 10-day credit (if eligible).
• Show the reset on the next payslip. Opening, used, closing balance per leave type.

Edge cases and exceptions

• Probationary employees. Annual leave statutorily ineligible until 12 months — carry-forward begins only from the second service year.
• Mid-year hires. Pro-rated current-year accrual; first carry-forward is the partial-year balance.
• Daily-wage workers. Same year-end rules; encashment uses daily wage × excess days.
• Long sick leave around year-end. The new year's sick-leave balance covers continuation of an ongoing illness.
• Maternity around year-end. Maternity leave is event-driven; no year-end carry-forward.
• Resignation in December. Encash full balance at exit; do not apply year-end forfeiture.
• Factory vs office. Same rules; document in the register.

Frequently asked questions

Does this entitlement apply to employees on fixed-term contracts?

Yes. Fixed-term contract employees in Myanmar receive the same statutory leave floor as permanent employees once they meet the relevant service-tenure thresholds. The Leave and Holidays Act, the Factories Act 1951, and the Shops and Establishments Act do not distinguish between fixed-term and indefinite contracts for leave purposes — eligibility is set by months of continuous service. Contract expiry is not termination, so unused annual-leave balance is encashed at the end of the contract using (monthly salary ÷ 30) × unused-days. See the bucket E pages on fixed-term contracts for the contract-side rules.

How does this interact with payroll and SSB?

All paid leave is treated as ordinary salary income for Myanmar payroll purposes. PIT is withheld through PAYE on every payslip that includes leave pay. SSB contributions (2% employee + 3% employer, capped on a wage base of MMK 300,000/month) continue during paid leave because the employee is still earning wages. SSB contributions pause only during unpaid leave. Encashment of accrued annual leave at exit is part of taxable salary for PIT but practitioners differ on SSB treatment of the lump sum — confirm with the township SSB office on filing.

What records does the township labour office expect?

Inspectors typically request the leave register for the past 12 months, medical certificates for sick leave over 3 days, maternity / paternity SSB filings, final settlement worksheets for recent leavers, and the public-holiday gazette for the current year. Records must be retained for at least 7 years under both the Factories Act 1951 and the Shops and Establishments Act. Keeping a clean per-employee leave file with tagged entries makes inspections quick and defensible. Digital records from a payroll system are acceptable provided they can be printed on demand.

Common leave-law mistakes

• Allowing unlimited carry-forward. Without a cap, leave liability snowballs.
• Forfeiting without notice. Communicate the rules in writing well before year-end.
• Carrying forward casual or sick leave. Both lapse — only annual leave carries forward.
• Inconsistent encashment vs forfeiture. Pick one approach for excess above the cap and apply uniformly.
• Not resetting payslip balances in January. Show the new opening balances clearly so employees understand the reset.