How is severance calculated for 2 years of service in Myanmar?
For an employee with 2 years of service in Myanmar, severance under ESDL Notification 84/2015 is 2 × the last drawn monthly salary. Resignation, gross misconduct, and fixed-term contract expiry are excluded. The amount is paid as part of final settlement, typically within 7 days of last working day.
Step-by-step severance calculation for 2 years of service
Severance is owed when employment is terminated by the employer without cause. Walk-through assumes an employee on indefinite contract, post-probation, with the contract terminated at the 2-year mark. All amounts in MMK.
Step 1 — Confirm severance entitlement at 2 years of service
| Tenure | Severance entitlement |
|---|---|
| < 6 months (probation) | None |
| 6 months – 1 year | 0.5 × month's salary |
| 1 – 2 years | 1 × month's salary |
| 2 – 3 years | 2 × month's salary |
| 3 – 4 years | 3 × month's salary |
| ...and so on | see ESDL schedule |
An employee at exactly 2 years of service falls in the 2–3 year band: 2 months' salary.
Step 2 — Apply the rate to last drawn monthly salary
| Item | Value |
|---|---|
| Last drawn monthly basic salary | e.g. MMK 800,000 |
| Multiplier (2 years of service) | × 2 |
| Severance payable | MMK 1,600,000 |
Step 3 — Combine with final settlement components for 2 years of service
- Outstanding wages — pro-rated to last working day.
- Leave encashment — accrued earned leave × daily rate.
- Notice pay — if not served, 1 month at this tenure (1–5 years bracket).
- Severance — 2 × month's salary.
- Other contractual benefits — gratuity, bonus pro-rata if contractually due.
- Timeline — typically paid within 7 days of last working day.
Tax treatment of severance at 2 years of service
Severance is part of assessable income for PIT in Myanmar. It is taxed in the year of payment as ordinary salary income — no separate concessional rate. The 20% basic relief and dependent allowances apply against total annual taxable income including severance. Withhold PAYE on the severance payment in the month it is paid.
Employer takeaway
For an employee with 2 years of service, pay 2 months' last salary as severance — owed only on employer-initiated termination, not resignation or gross misconduct. Combine with notice pay (1 month at this tenure), leave encashment, and outstanding wages in a final settlement statement, paid within 7 days. Withhold PIT on the full settlement and remit to IRD by the 15th of the following month.
Variations on 2 years of service
- Resignation — no severance owed; only notice pay if not served, plus leave encashment.
- Gross misconduct termination — no severance; document the misconduct and follow due process.
- Fixed-term contract expiry — no severance; expiry is not "termination".
- Mutual separation — pay severance per ESDL or per the negotiated package, whichever is higher.
- Compare with 5 years of service and 10 years.
Common severance mistakes at 2 years of service
- Paying notice pay or severance — both are due if employer terminates without cause and notice is not served.
- Calculating severance on basic + allowances when the contract specifies basic only.
- Withholding final settlement pending exit-clearance items — wages cannot be withheld under the Payment of Wages Law.
- Failing to issue a relieving + experience letter at final settlement.
- Employment & Skills Development Law (ESDL) 2013 — severance provisions
- Notification 84/2015 (or current) — severance schedule
- QHRM Myanmar Tax Calculator — severance methodology
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