How is leave encashment paid in Myanmar?

What Myanmar law says

The Leave and Holidays Act sets the leave-accrual baseline. Earned / annual leave that is unused at exit is typically encashed in the final settlement, in line with contract or established practice. Sick leave, casual leave, and maternity leave are not encashable by default.

The standard formula: unused EL days × daily rate, where daily rate = monthly basic ÷ 26 working days. Some contracts use gross (basic + fixed allowances). Encashment is fully taxable PIT assessable income in the month paid.

Worked example — 8 unused EL days at MMK 800,000/mo basic

Encashment is added to YTD assessable income at exit — gross up PAYE at the marginal rate.

Documentation requirements

• Leave register showing accrued, taken, and unused balances.
• Final settlement statement with encashment line.
• Payslip on exit reflecting the final pay.
• Record retention: at least 7 years.

Edge cases

• Sick leave and casual leave — typically not encashable; check contract.
• Carry-forward cap — many employers cap EL carry-forward; only the carried portion is encashable.
• Resignation vs employer-initiated termination — encashment is owed in both cases (ungranted leave does not lapse).
• Pro-rated EL accrual to last day — accrue on completed months in the year.
• Gross-basis encashment — only if contract specifies "gross" rate.
• Foreign-currency-paid roles — convert at CBM rate on settlement date.

Common payroll mistakes

• Using a 30-day divisor instead of 26 — under-pays the worker.
• Encashing sick leave when the policy does not allow.
• Forgetting to gross up PAYE on the encashment lump sum.
• Not including encashment in the final settlement statement (see final settlement).
• Lapsing leave on resignation — encashment is owed regardless of exit reason.