When is gratuity payable in Myanmar?
Statutory severance under ESDL 2013 / Notification 84/2015 is payable on employer-initiated termination after at least 6 months service. It is not owed on resignation, fixed-term contract expiry, or gross-misconduct dismissal. Contractual gratuity (per company policy) may also trigger on retirement, long service, or death-in-service. Pay within 7 days of last working day.
What Myanmar law says
Statutory severance under ESDL 2013 and Notification 84/2015 is payable when:
- The employer initiates termination for a reason other than gross misconduct, and
- The employee has completed at least 6 months of service (probation does not count).
It is not payable on employee resignation, fixed-term contract expiry, or termination for gross misconduct (with documented cause). Contractual gratuity — paid in addition to or instead of severance — may also trigger on retirement, completion of a long-service threshold, or death-in-service, depending on the contract or policy.
Trigger matrix
| Event | Statutory severance? | Contractual gratuity? |
|---|---|---|
| Employer-initiated termination (no fault) | Yes (after 6 mo) | Per contract |
| Redundancy / restructure | Yes | Per contract |
| Resignation | No | Per contract (e.g., 5+ year long-service) |
| Gross misconduct dismissal | No | Typically excluded |
| Fixed-term contract expiry | No | Per contract |
| Retirement at agreed age | No | Common |
| Death-in-service | No | Common (paid to nominee/family) |
Documentation requirements
- Termination letter stating ground (no-fault, redundancy, etc.).
- Final settlement statement: severance, leave encashment, notice pay, contractual gratuity.
- Pay within 7 days of last working day (Payment of Wages Law).
- Record retention: at least 7 years.
Edge cases
- Mutual separation — typically treated as employer-initiated for severance purposes if the employer initiated the conversation.
- Gross misconduct contested — the township labour office can rule severance is owed if the cause is unsubstantiated.
- Fixed-term contract auto-renewed twice — generally deemed permanent; severance applies on subsequent termination.
- Probation — under 6 months service triggers no severance; probation termination requires only 2 weeks notice / pay in lieu.
- Death-in-service — pay contractual death gratuity to nominated beneficiary; SSB survivors' benefit also applies.
- Foreign workers — same severance rules as locals (see foreign worker pay).
Employer takeaway
Pay severance on employer-initiated termination after 6 months service, except for gross misconduct. Pay contractual gratuity per the contract on retirement, death, or long service. Issue the full final settlement within 7 days of the last working day, withhold PAYE on the payment month, itemise on the settlement statement, and retain records 7 years. Cannot be withheld pending exit clearance.
Common payroll mistakes
- Paying severance on resignation when no statutory or contractual basis exists.
- Using "gross misconduct" as a label without documented cause and losing the claim.
- Missing the 7-day final settlement window.
- Withholding settlement pending exit clearance (see final settlement timeline).
- Forgetting that contractual gratuity is separate from statutory severance (see what gratuity is).
- ESDL 2013 — severance triggers and exclusions
- Notification 84/2015 — severance schedule
- Payment of Wages Law — final settlement timing
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