What Myanmar law says
Myanmar does not have a Gratuity Act like India's Payment of Gratuity Act 1972 or Bangladesh's Labour Act gratuity provisions. The statutory end-of-service payment is severance pay under the Employment & Skills Development Law 2013 (ESDL), scaled by tenure under Notification 84/2015. "Gratuity" in Myanmar usage typically means a contractual end-of-service payment the employer commits to in addition to or instead of statutory severance.
Statutory severance schedule (the legal floor)
| Tenure | Severance entitlement |
|---|---|
| < 6 months (still on 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 |
| 4 – 5 years | 4 × month's salary |
| 5 – 6 years | 5 × month's salary |
| 6 – 8 years | 6 × month's salary |
| 8 – 10 years | 7 × month's salary |
| 10+ years | 9 × month's salary + 1 additional month per year of service beyond 10 |
— Source: Notification 84/2015 (or current). Severance is owed on employer-initiated termination, not on resignation, fixed-term expiry, or gross-misconduct dismissal.
Documentation requirements
- Contract clause — clearly distinguish statutory severance from any contractual gratuity.
- Final settlement statement showing each component (wages, leave encashment, severance, gratuity).
- PIT withheld at the marginal rate on the payment month.
- Record retention: at least 7 years.
Edge cases
- Resignation — no statutory severance; some contracts pay gratuity anyway after a service threshold.
- Fixed-term contract expiry — no statutory severance; treat as natural end-of-term.
- Gross misconduct termination — no statutory severance; document the cause carefully.
- Retirement — statute is silent; many employers pay a contractual retirement gratuity.
- Death in service — contractual death gratuity is common; statutory severance does not apply.
- Gratuity tax — fully PIT assessable; see is gratuity taxable.
Employer takeaway
Myanmar has no statutory gratuity. Pay severance under Notification 84/2015 on employer-initiated termination, scaled by tenure. Add contractual gratuity (e.g., on retirement or long service) only if the contract or policy commits to it. Treat both as fully taxable PIT in the month paid, settle within 7 days of last working day, itemise on the final settlement statement, and retain records 7 years.
Common payroll mistakes
- Calling severance "gratuity" and confusing the legal basis.
- Paying severance on resignation when the statute does not require it.
- Withholding the final settlement to chase exit clearance — a Payment of Wages Law violation (see withhold for exit clearance).
- Forgetting PAYE on the gratuity payment month.
- Using the wrong tenure band on long-service exits — the schedule shifts at 5, 8, and 10 years (see gratuity calculation).
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.