Step-by-step severance calculation for 10 years of service
Walk-through assumes an employee on indefinite contract, post-probation, on employer-initiated termination at the 10-year mark. All amounts in MMK.
Step 1 — Confirm severance entitlement at 10 years of service
| Tenure | Severance entitlement |
|---|---|
| 5 – 6 years | 5 × month's salary |
| 6 – 8 years | 6 × month's salary |
| 8 – 10 years | 7 × month's salary |
| 10+ years (base) | 9 × month's salary |
| Beyond 10 years | +1 month per additional year (capped per current notification) |
An employee at exactly 10 years of service receives the 10+ year 9 months' salary base.
Step 2 — Apply the rate to last drawn monthly salary
| Item | Value |
|---|---|
| Last drawn monthly basic salary | e.g. MMK 1,500,000 |
| Multiplier (10 years of service) | × 9 |
| Severance payable | MMK 13,500,000 |
Step 3 — Combine with notice and final settlement components for 10 years of service
At 5+ years of tenure the notice period is 3 months. Combined severance + notice can equal up to 12 months of salary.
- Outstanding wages — pro-rated to last working day.
- Leave encashment — accrued earned leave × daily rate (see leave encashment).
- Notice pay — 3 months if not served.
- Severance — 9 × month's salary (10+ year base).
- Other contractual benefits — gratuity, pro-rata bonus.
- Timeline — within 7 days of last working day.
Tax treatment of severance at 10 years of service
Severance is part of assessable income for PIT and taxed in the year of payment at ordinary bracket rates. A large lump sum in one month can push the employee into a higher band — withhold PAYE conservatively in the payment month and reconcile at year-end. Use the QHRM calculator to model the marginal-band impact.
Employer takeaway
For an employee with 10 years of service, pay 9 months' last salary as severance (the 10+ year base) plus 3 months' notice pay if notice is not served. Add leave encashment and outstanding wages. Pay within 7 days. Withhold PIT on the lump sum and remit to IRD by the 15th of the following month. Retain final settlement records 7 years post-exit.
Variations on 10 years of service
- Resignation — no severance; employee serves 3 months' notice or forfeits.
- Gross misconduct — no severance; due process required.
- Mutual separation / VRS — typically pays severance per ESDL or a higher negotiated package.
- 11 years of service — 9 + 1 = 10 months (subject to current notification cap).
- See 20+ years of service.
Common severance mistakes at 10 years of service
- Using the 8-10 year band (7 months) instead of the 10+ base (9 months) at exactly 10 years.
- Skipping notice pay and assuming severance covers it.
- Failing to gross-up PAYE in the lump-sum month.
- Not issuing relieving + experience letters.
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