What Myanmar law says
There is no statutory gratuity formula in Myanmar. The closest legal mechanism is severance pay under ESDL 2013 and Notification 84/2015, which scales by tenure. Most employers calculate the payment on the last drawn month's basic salary; some contracts use gross (basic + fixed allowances). The contract should specify which.
Severance / gratuity schedule and worked examples
Employee on last drawn monthly basic of MMK 800,000:
| Tenure | Months payable | Calculation (MMK) | Amount (MMK) |
|---|---|---|---|
| 6 months – 1 year | 0.5 | 0.5 × 800,000 | 400,000 |
| 1 – 2 years | 1 | 1 × 800,000 | 800,000 |
| 2 – 3 years | 2 | 2 × 800,000 | 1,600,000 |
| 5 – 6 years | 5 | 5 × 800,000 | 4,000,000 |
| 10+ years (12 yrs example) | 9 + (12 − 10) = 11 | 11 × 800,000 | 8,800,000 |
The "10+ years" band starts at 9 months and adds 1 additional month per completed year beyond 10, capped per the current notification.
Documentation requirements
- Final settlement statement showing tenure band, months payable, basis (basic or gross), and amount.
- Last drawn payslip and tenure records (joining date and exit date).
- PIT withheld at the marginal rate on the payment month, remitted to IRD by the 15th of the following month.
- Record retention: at least 7 years.
Edge cases
- Resignation — no statutory entitlement; pay only if contract commits to it.
- Fixed-term contract expiry — no severance owed.
- Gross misconduct dismissal — no severance owed; document the cause.
- Mid-band tenure — Myanmar tradition rounds down to the lower full year completed.
- Basic vs gross — many contracts say "month's salary"; clarify whether allowances are included.
- Death-in-service / retirement — typically a separate contractual gratuity rather than the severance schedule.
Employer takeaway
Compute on last drawn month's basic (or gross per contract) × the months from Notification 84/2015: 0.5 (6mo–1yr), 1 (1–2), 2 (2–3), 3 (3–4), 4 (4–5), 5 (5–6), 6 (6–8), 7 (8–10), 9 + 1/year beyond 10 (10+). Pay within 7 days of last working day, withhold PAYE, itemise, and retain records 7 years.
Common payroll mistakes
- Using last 12-month average salary instead of the last drawn month — the Myanmar convention is the latter.
- Forgetting to add 1 additional month per year beyond 10 years of service.
- Paying severance on resignation when the statute does not require it.
- Treating severance as tax-free — it is fully PIT assessable (see gratuity tax).
- Withholding final pay pending exit clearance (see withhold for exit clearance).
We publish practical, legally-grounded HR guidance for Myanmar employers. Each piece is reviewed by our compliance team against current MLIP and Labor Law requirements.