What Severance Pay Rules Must Employers Follow in Myanmar?

Which Employees Qualify for Severance Pay?

• Employees terminated without cause, including redundancy, downsizing, or restructuring.
• Employees with continuous employment exceeding six months.
• Employees whose contracts are terminated by the employer, not due to resignation or misconduct.
• Employees working under a valid employment contract recognized by the Ministry of Labour.
• Fixed-term employees whose contracts are ended early by the employer.

What Are the Legal Timelines for Paying Severance?

In Myanmar, employers must pay severance immediately upon termination or within the final payroll cycle. The payment must cover the full severance entitlement corresponding to the employee’s years of service as set out in Notification No. 84/2015.

The timeline is strict. Delaying or withholding payment breaches Myanmar’s labor laws. Most employers process severance together with the final salary to demonstrate good faith and compliance. Termination documents and payment records must be retained for inspection by the Ministry of Labour.

What Penalties Apply if Severance Is Not Paid Correctly?

Failure to pay severance correctly can expose employers to serious penalties under Myanmar’s labor laws. Non-compliance can result in:

• Government fines imposed by the Ministry of Labour.
• Employee complaints or lawsuits leading to mediation or arbitration.
• Repayment of outstanding severance plus interest for late payment.
• Reputational damage and potential licensing or permit restrictions.
• Administrative sanctions or temporary suspension of business operations in severe cases.

Does Outsourcing Employment via an EOR Change Severance Liability?

Yes. Using an Employer of Record (EOR) in Myanmar shifts severance obligations to the EOR. Under local law, the EOR is recognized as the legal employer responsible for all employment-related payments, including severance, final wages, and social security contributions.

This arrangement protects the client company from direct severance liabilities and compliance risks. The EOR ensures that severance is calculated and paid correctly based on the employee’s service length, job role, and contract terms, in accordance with the Employment and Skill Development Law.

Be 100% Compliant in Offering Severance with Playroll

Managing severance obligations across borders can be complex, especially when laws, timelines, and rates differ as they do in Myanmar. Playroll manages the full termination process in compliance with Myanmar’s labor regulations. Our platform applies the correct severance rates from Notification 84/2015 and ensures payments are made on time to meet statutory deadlines.

With Playroll, you reduce legal risk and avoid fines or administrative errors. We calculate entitlements accurately, process payments promptly, and maintain compliance records for every employee exit. Partner with Playroll to ensure every termination in Myanmar is fair, lawful, and compliant.