Complete Guide to Employee Benefits and Compensation in Myanmar

What are Employee Benefits?

Employee benefits constitute indirect or non-cash compensation paid to an employee. These benefits are quality compensation packages that attract and retain employees in the company for a prolonged time.

Employee or fringe benefits are a way to appreciate and recognize employees and their hard work. These benefits are also intertwined with job satisfaction and allow companies to attract top talents in the market.

These benefits and compensation in Myanmar come in various forms, including incentives, insurance benefits, a 13th-month salary by employers, health insurance, and others. However, not all employee benefits are mandated by the law; some are optional and disbursed as per company policy.

Certain federally approved employee benefits and compensations are common in every country. They

• Provide time off during jury duty, elections, and military service
• Pay the state and federal taxes with unemployment insurance
• Contribute to short-term disability insurance
• Comply with the Family and Medical Leave Act (FMLA)

In this article, let’s find out the necessary details about the compensation package in Myanmar.

Compensation Laws  in Myanmar

Several compensation laws specified by the Myanmar government govern the compensation and benefits policy in Myanmar. These include:

1. The employees of Myanmar are entitled to statutory benefits according to Myanmar’s Workmen’s Compensation Act of 1923. It is interlinked with the Draft Employment Compensation Laws 2018, which states the rights and responsibilities of employees and employers. Employers must pay for medical treatment if an employee gets injured in the workplace.
2. Leave and Holidays Act (1951) mandates paid one day off per week and ten days off annually. Employees also get paid casual leave per year.
3. As per Minimum Wage Act (2013), all employees are entitled to  MMK 4.800 per day as minimum wage from their employers.
4. Employers need to provide basic occupational health and safety benefits as per Occupational Safety and Health Law (2019), Factories Act (1951) Amended in 2016, the Shops Establishment Law (2016), and Shops Establishment Rules (2018).
5. Female employees in Myanmar are entitled to paid maternity leave as per Leave and Holiday Act.

How to Design an Employee Benefits Program for Employees in Myanmar?

Here are some steps that would help create a compensation structure in Myanmar.

Step 1: Determine the company budgets & set clear goals

Start designing the compensation structure by finalizing the budget of the benefits program. It needs to be estimated along with payroll expenses, inventory requirements, and company taxes.

Furthermore, to design the compensation structure in Myanmar, one must focus on what they want from this structure – to retain existing employees, gain new ones, or both. Hence, employee benefits in Myanmar should focus on payroll expenses, logistics requirements, and company taxes. These would help to budget the benefits accordingly and not result in the company going bankrupt any further.

Step 2: Research the industrial standards and employee needs

Making a comprehensive set of rules for employee compensation and benefits in Myanmar requires extensive research on industrial standards. This determines the priority benefits for the job seekers and how it can further help in employee retention. These could be done via surveys and interviews of the employees in the nation.

Understanding what employee benefits companies offer to adhere to the nation’s by-laws is also integral.

Step 3: Create a flexible & customized package

Employers must prepare the main framework to create robust employee benefits in Myanmar. Next, ensure that the proposed compensation package in Myanmar is flexible  and customized to meet employees’ needs. They should be allowed to choose their supplementary benefits from the employee benefits program. This structure would be cost-effective and help ensure every worker receives their desired perks.

Step 4: Convey the benefits plan to the employees

Creating transparent communication is important for a proper employee compensation and benefits package in Myanmar. Employers should consult with their employees about the compensations and benefits they are ready to offer and take their feedback. Once they get their input, the compensation structure should be modified according to their proposed points. This shows how much the company values its employees’ opinions.

Employee feedback would help stimulate a sense of security and appreciation in the workforce. This would further result in an agile and productive workplace ready to aid employees during their time of need.

Step 5: Evaluation of benefits package

The final step is to understand the efficiency of the benefits package. The company can run daily evaluations and assess the result. This would help them review compensation packages and make necessary modifications. It would require regular monitoring of the country’s workforce, economic demographics, etc., to comply with the compensation package in Myanmar.

Types of Guaranteed Benefits in Myanmar

Following are the guaranteed benefits employees get under the compensation and benefits policy in Myanmar:

Overtime compensation

• The standard working hours in Myanmar are 8 hours a day and 48 hours a week.
• Employees working more than standard hours are entitled to overtime compensation at the rate of 200% of the regular pay rate.

Paid time off

• Employees working in Myanmar get ten days of paid leaves annually.

Leaves

• Employers have to provide 16 public holidays to employees.
• Employees are entitled to get 26 weeks of sick leave per year. Out of these, the first 30 days are compensated if they have worked with the same employer for over six months.
• Female employees are entitled to get maternity benefits in Myanmar. They get 14 weeks of paid maternity leave.
• Fathers also get paternity leave up to 15 days of paid leaves. If the mother is not covered under social security, the father will get 25% of their average salary during these leaves.

Severance pay

• Terminated employees are eligible to receive severance pay. It depends primarily on the length of employment.

Social security contribution

Employers and employees are entitled to pay for the social security in Myanmar.

• Employer’s contribution: 3%
• Employee’s contribution: 2%

Employee Benefits of Expatriates

Expatriates of Myanmar are liable for the same employee benefits as Myanmar employees. They also enjoy the same mandatory and optional benefits and compensation packages in Myanmar as Myanmar’s citizens. However, a subsisting foreign employment contract that would comply with Myanmar’s labor laws during their work duration needs to be signed. Expatriates working for the company with an endorsement from MIC or Myanmar Investment Commission in a Special Economic Zone must register their contracts under the One Stop Service Center Labor Section.

How are Employee Benefits Taxed in Myanmar?

Around 2015, the Attorney General clarified taxation specifically on housing benefits in Myanmar. For getting housing benefits in Myanmar, the tax authorities must apply through Circular No.2. This circular specifies that providing housing benefits is not taxable under personal income and should be provided by the employer instead.

Moreover, Myanmar follows a progressive tax rate, which increases with the increase in employee salary. All employees have to pay a tax ranging from 5-25%.

Restrictions for Myanmar Benefits and Compensation

Companies need to establish a subsidiary in the country to hire employees before drafting compensation and benefits structures in Myanmar. The procedure is time-consuming and should comply with Myanmar labor laws, compensations, and employee regulations.

In addition, companies should get a relevant license before starting operations in the country. Businesses must give the statutory minimum wage to their employees in addition to these benefits.

Supplemental Benefits for Employees in Myanmar

In addition to the above mandatory benefits and compensation package in Myanmar, the employees can also enjoy certain optional benefits. This completely depends upon the employer’s prerogatives. They are:

• Paid vacations
• Childcare centers
• Performance bonuses
• Additional allowances for housing and transport
• Retirement plans
• Dental insurance or vision plans (this should be inclusive of the rules and regulations of the medical benefits in Myanmar)
• Stock options
• Tuition reimbursements

How Multiplier Can Help with Benefits Management in Myanmar

Multiplier is the one-stop solution for any challenge businesses face while setting up comprehensive employee benefits and compensations. Multiplier offers the company to hire talents in the country without any prior subsidiary. They also test new markets, set up teams in different third-world countries, and attract talent at a subsidized rate. The trained team of Multiplier is efficient and complies with International Labor Laws and local labor laws.