Myanmar: IEL Guide To Restructuring A Cross-Border Workforce 2024 – Myanmar Chapter

A. Reduction in Workforce

1. Is there a concept of redundancy - based on a shortage of work or other economic reasons - as a justified reason to dismiss employees in your jurisdiction? If so, how is it defined?

Although there are no legislative provisions regarding (or defining) redundancy in Myanmar, the concept is recognised. In this regard, clause 15(b)(4) of the Employment Contract Template (EC) provides for redundancies and termination of employment. The EC is a standard form issued by the Ministry of Labour (MOL) and contains mandatory provisions to be included in all employment contracts.

Section 15(b)(1) of the EC states that an employer may dismiss an employee only with justified reasons. However, no mention is made of what is considered to be a justified reason.

As per our discussions with labour officials, dismissal of employees due to a shortage of work or for other economic reasons may be considered a justified reason. However, it will not be considered justified if it affects only a singular employee or is based on biased decision-making. In such cases, the Labour Disputes Settlement Arbitration Body (LDSAB) and Labour Disputes Settlement Arbitration Council (LDSAC) have the power to order reinstatement of the employee.

2. In brief, what is the required process for making someone redundant?

Pursuant to clause 15(b)(4) of the EC, an employer shall cooperate and negotiate with the workplace coordinating committee (WCC) if there is no labour organisation. A WCC must be formed if there are more than 30 employees. If there is a labour organisation, the employer must cooperate and negotiate with representatives of the labour organisation, the WCC, the employee, and the representative of the employee jointly, as applicable. In addition, according to labour officers, if there is no labour organisation or WCC, the employer should consult and negotiate with employees or their representatives before terminating employment on the basis of redundancy. In addition, the employer must inform the Department of Labour (DOL) or the Department of Labour Relations about redundancies and termination of employment.

3. Does this process change where there is a "collective redundancy"? If so, what is the employee number threshold that triggers a collective redundancy?

As stated, there are no legal provisions on redundancy. The EC also does not distinguish between collective and individual redundancy. Accordingly, there is no prescribed number for a collective redundancy. However, the officers of the DOL have informed us that if a redundancy was caused by a shortage of work, economic crisis, or business closure, the redundancy should not affect only one employee.

4. Do employers need to consult with unions or employee representatives at any stage of the redundancy process? If there is a requirement to consult, does agreement need to be reached with the union/employee representatives at the end of the consultation?

An employer must follow the consultation process set out in question 2 above, ie, consult with the employee, WCC, and/or labour organisation. No further consultations are required.

Sections 6(a) and 7 of the Settlement of Labour Dispute Law (SLDL) require that settlement be reached within seven days, failing which, either of the parties can submit a complaint to the township Labour Disputes Settlement Conciliation Body (LDSCB), according to Section 9(b) of the SLDL.

5. If agreement is not reached, can the restructure be delayed or prevented? If so, by whom?

There are no legal provisions that speak to restructuring being delayed or prevented by virtue of settlement not being reached..

In practice, employers tend to await the resolution of redundancy disputes for mainly logistical reasons.

6. What does any required consultation process involve (ie, when should it commence, how long should it last, what needs to be covered)? If an employer fails to comply with its consultation obligations, what remedies are available?

Consultations should commence prior to the employee being made redundant, and as set out in more detail in question 2, an employer must consult with the employee, the WCC, and/or the labour organisation.

If settlement cannot be reached within seven days, the employer or employees may lodge a complaint with the LDSCB. If no settlement is reached at the LDSCB, the case should be referred to the LDSAB and either party (or both parties) can file a further claim with the LDSAC if dissatisfied with the decision of the LDSAB.

During the state of emergency in Myanmar, the filing of writs with the Union Supreme Court was temporarily suspended, and remains suspended at the time of writing. As a result, the final appeal previously available to a party dissatisfied with a LDSAC decision is not currently available.

As per the advice of the SLDL and labour officials, the employer must discuss any matter relating to the employee's benefits with the employee before making them redundant.

Remedies for failure to consult will only be discussed at the LDSCB if either party submits a complaint. According to Sections 46(b) and (c) of the SLDL, if the employer or employee fail to comply with their consultation obligations without proper reason on the date and time set by the WCC or LDSCB, the defaulting party shall be fined between 300,000 and 1 million kyats.

7. Do employers need to present an economic business rationale as part of the consultation with unions/employee representatives? If so, can this be challenged and how would such a challenge normally be made?

There is no law in Myanmar requiring an employer to present an economic business rationale as part of consultation. However, insofar as an employer would like to explain the economic business rationale for redundancy, it may do so.

8. Is there a requirement or is it best practice to consult employees individually (whether or not the employer is also legally required to collectively consult employees)?

There are no requirements or best practices to consult with employees either individually or collectively. The consultation process as set out in question 2 must be followed, which includes consultation with the WCC, labour organisation, and employee representative, as applicable.

9. Are there rules on the selection of individual employees for redundancy?

While there are no laws or regulations on the selection of individual employees for redundancy, redundancy may not only affect a singular employee, but must be implemented for a group of employees, as stated in question 3.

10. Are there any specific categories of employees who an employer is prohibited from making redundant?

Section 27 of Leave and Holiday Rules states that an employee shall not be transferred, suspended, or dismissed during a leave period. Redundancy, as a form of dismissal, is then also prohibited during a leave period. Notably, in disputes referred to the LDSAB and LDSAC, employers have been ordered to reinstate dismissed employees to their former designations according to Section 25(a) of the Settlement of Labour Dispute Rules (SDLR), on the basis that the employers were discriminatory or biased in making the employees redundant.

11. Are there categories of employees with enhanced protection (eg, union officials, employees on sick leave or maternity/parental leave, etc)?

As stated above, employees on leave may not be made redundant. In this regard, employees are entitled to six days of casual leave with full pay in every 12-month cycle, ten days of earned leave per year, 30 days of medical leave per a year, maternity leave of six weeks before delivery of child and eight weeks after delivery of child, and 15 days of paid paternity leave.

12. What payments are employees entitled to when made redundant? Do these payments need to be made within a specified period? Are there any other requirements, such as giving contractual notice, payments into a central fund, etc.

All terminated employees, whether due to redundancy or otherwise, except in the case of dismissal for an act of gross misconduct, are entitled to severance and must be provided with one month's notice as prescribed in the EC. Section 35 of the SDLR further specifically provides that employees have a right to severance when an employer terminates its business. As a result, if employees are made redundant due to a business closure, they are entitled to a severance payment by virtue of Notification 84/2015 by the MOL. In addition, if the employer would like to make redundancy effective immediately, the employee is entitled to one month's salary in lieu of notice. No other payment is required by law, except for those (i) agreed to between the employers and employees in the employment contract; or (ii) set out in the company's policies or rules.

Although there are no periods specified in law for severance payments, the employer must pay due wages within two working days, pursuant to Section 4(d) of the Payment of Wages Law 2016, if the employee is terminated. No provision is made for when severance must be paid. In addition, if a dispute has been referred to the LDSAC or LDSAB, the employer must pay to the employee any amounts ordered within 30 days from the date of the decision.

13. If employees are entitled to redundancy/severance payments, are there eligibility criteria and how is the payment calculated? If this is formula based, please set out the formula.

Notification 84/2015 stipulates that severance payment rates are based on the employee's length of service as follows:

• less than six months of service: no severance payment is due;
• six months to one year of service: half of one month's salary;
• one to two years of service: one month's salary;
• two to three years of service: one and a half months' salary;
• three to four years of service: three months' salary;
• four to six years of service: four months' salary;
• six to eight years of service: five months' salary;
• eight to ten years of service: six months' salary;
• ten to 20 years of service: eight months' salary;
• 20 to 25 years of service: ten months' salary; and
• over 25 years of service: 13 months' salary.

14. Do employers need to notify local/regional/national government and/or regulators before making redundancies? If so, by when and what information needs to be provided?

There is no legal requirement for employers to notify local, regional, or national governments or regulators before making redundancies.

15. Is there any obligation on employers to consider alternatives to redundancy, including suitable alternative employment?

There is no formal provision in law that an employer has an obligation to consider alternatives to redundancy. However, as the unemployment rate in Myanmar is high, labour officers and the officials of the LDSAB and LDSAC have previously requested that employers consider suitable alternative employment for their employees.

16. Do employers need to notify local/regional/national government and/or regulators after making redundancies, eg, immigration department, labour department, pension authority, inland revenue, social security department? If so, by when and what information needs to be provided?

As redundancy is a form of termination of an employment contract, the employer must inform the DOL of the redundancy. Additionally, if the matter is settled through the WCC, the WCC will require the employer to submit a report to the LDSCB.

17. If an employee is not satisfied with the decision to make them redundant, do they have any potential claims against the employer? If so, what are they and in what forum should they be brought, eg, tribunal, arbitration, court? Could a union or employee representative bring a claim on behalf of an employee/employees and if so, what claim/s and where should they be brought?

As mentioned in question 6, an employee who has been made redundant may lodge a complaint with the township LDSCB. If a resolution cannot be reached at the LDSCB, the case should be transferred to the LDSAB. Either party (or both parties) can then submit a subsequent claim with the LDSAC if they are dissatisfied with the LDSAB's ruling. In addition, the labour laws allow a representative of the labour organisation, or the representative of the employee, to claim on their behalf.

In proceedings at the LDSAB and LDSAC, a dissatisfied employee terminated on the basis of redundancy can claim reinstatement to their former position or to another suitable position, and damages for the period of unemployment.

18. Is it common to use settlement agreements when making employees redundant?

In practice, settlement agreements are not commonly used when making employees redundant. However, once an employer and employee reach agreement regarding redundancy, it is typically reduced to writing.

To view the full article, click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.