Introduction to payroll in Myanmar
The key to retaining top talent in the Republic of the Union of Myanmar is compliance with local employment practices. This means paying remote workers accurately and on time to keep them engaged, and complying with local labor laws to avoid potentially costly penalties. The compliance issue, in particular, can be complex to handle without genuine in-country expertise — this is where Skuad can support you with local Myanmar payroll services. Skuad’s up-to-date local legal expertise in Myanmar lets you pay remote workers hassle-free so you can focus on scaling your business.
Employee compensation, benefits, and taxes in Myanmar
Skuad navigates the complexities of Myanmar employment legislation that spans every aspect of labor practices: employee salary requirements, tax laws and other deductions, expected benefits and bonuses, and more:
- Taxes, whether income, regional, or corporate
- Social security, health insurance, unemployment benefits, and pension
- Different types of leaves and holiday compensation
- Other taxes and employee deductions
Payroll process in Myanmar
While the payroll process remains generally the same around the world, what makes it complicated to implement are the specifics of employment law that need to be applied therein. Generally, however, regardless of how a country’s local labor laws impact the details, there are three overarching steps to the payroll process.
A preparatory phase that ensures business readiness to process payroll, conducts input gathering and validation, and fulfills internal HR policies related to payroll. It is critical to perform due diligence in this initial phase.
Setting up the organization
Each organization will have its own unique philosophies, approaches to employee management, and overall work culture. All of this affects payroll processing in one way or another—be it through company policy or employee experience. Therefore, the first step in standardizing payroll processing is setting clear policies regarding important aspects such as:
Your business profile is the unique set of identifications and registered business numbers you need for the submission of required forms and documentation, such as pay slips, tax forms, and invoices.
It is considered best practices to implement location-specific policies not just for payroll but for HR in general, even if those locations are all within the same country.
Company policy on attendance, holidays, and leaves typically form the basis of all wage calculations. Leave policy, specifically, takes into account the various rates and nuances of different types of leaves.
Meanwhile, attendance policy dictates how base pay is calculated and how much is garnered via overtime, half-day, or other on-duty requests. In addition, any tools or processes used to support attendance policy need to be carefully documented and integrated into pre-payroll input gathering — these include timesheets and biometrics, sick slips, written permissions from direct line supervisors, and more.
Myanmar’s labor laws comprehensively cover every aspect of employment practice, from definitions to implementation to nuanced penalties for noncompliance. It is crucial to secure the local legal expertise required to not only understand but implement all of Myanmar’s statutory labor requirements.
Myanmar’s nationally mandated minimum wage is 4,800 Myanmar Kyat or MMK ($2.60) daily. However, that does not mean you only need to meet that minimum. Best practice dictates that compensation is based on a delicate balance of local labor law minimums, industry-specific norms, cost of living, and internal company policy. Additionally, a compensation package includes not just base pay, but also deductions and benefits — and for many companies who employ remote workers, diversified pay structures.
In Myanmar, workers typically receive their pay monthly. Company size influences payout schedule, and larger companies are obliged to pay workers five to 10 days before the month ends.
As mentioned earlier, the pre-payroll phase involves a lot of input gathering and validation, and most of these inputs refer to employee information and supporting documentation of employee activities that can impact compensation.
Payroll calculation phase
The payroll calculation phase focuses solely on the computation of salaries. While straightforward, it is far from simple: compensation packages differ individually, and rate changes may occur in real-time via performance bonuses and the like, or permanently after set employee tenure rate hikes. Software and integrated systems help automate much of the computation and inclusion of relevant data inputs, but only if due diligence is performed during the pre-payroll phase.
Majority of the post-payroll phase is spent working on the actual payout. This is when your organization sends the advice to your bank or payment processor to perform the salary disbursement. Here, too, software can make the work more cost efficient through direct deposit features and the like.
For internal purposes, you will need to account for all salaries paid out — worker wages are highly significant business costs, after all.
Payroll reporting and compliance
For purposes of compliance, you need to adhere to local employment laws detailing what and how to submit any relevant tax forms, invoices, and other documentation.
Request a demo and our experts at Skuad can show you how to implement all phases of payroll processing smoothly.
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Payroll processing in Myanmar
Partnering with an in-country expert like Skuad is highly recommended to successfully implement payroll in Myanmar.
Payroll processing company in Myanmar
As a leading global HR platform that also provides payroll in Myanmar, Skuad can offer the local legal expertise as well as the advanced software systems for you to perform payroll seamlessly and compliantly. Skuad handles the intricate details of payroll so you can focus on growing your business.
Payroll management in Myanmar
Myanmar payroll management requires the maintenance of financial records and other supporting documentation relevant to the task of payroll processing, as required by labor law. Skuad’s payroll processing solution includes payroll management under one platform.
Payroll compliance in Myanmar
Myanmar’s labor laws, patterned after ILO standards, are meant to serve as protections for workers and safeguards for healthy employment practices.
Myanmar adheres to the 1998 Declaration on Fundamental Principles and Rights at Work commits International Labor Organization (ILO) Member States. This means that the country espouses the standards set out by ILO aside from implementing its own specific sets of employment legislation.
Many different Acts and Laws apply to labor in Myanmar, including:
- Minimum Wage Law
- Payment of Wages Law
- Income Tax Law
- Social Security Law
- Leave and Holidays Act
- Workman’s Compensation Act
- Law Relating to Overseas Employment
- Employment Restriction Act
- And other sector-specific laws that contain regulations that influence labor
Many of these same Acts and Laws directly impact payroll in Myanmar. With so many sources of labor-related legislation — and with many of them directly or indirectly impacting payroll — companies looking to hire Myanmar workers are opening themselves up to a lot of potential avenues for noncompliance, which is why expert partners like Skuad are highly recommended.
Payroll components in Myanmar
A significant part of staying compliant with these legal frameworks related to payroll in Myanmar is understanding its various components and how the country’s labor laws might apply to them.
Payroll is generally composed of the base pay and the pluses and minuses — namely, the bonuses and benefits, and the taxes and other deductions. The details of all of these are affected by various parts of Myanmar labor law.
The base salary rate is often the fundamental unit that dictates the bulk of compensation. This payroll component is decided by looking at other factors and not simply meeting mandated minimums. As an example, if you use average salaries in Myanmar as a reference, that works out to MMK 534,000 per month, a far cry from the mandated minimum that goes to around MMK 138,000 a month.
In Myanmar, employees work eight hours per day or a total of up to 44 or 48 hours every week. Some specific industries like commerce and manufacturing have additional guidelines regarding work hours.
Overtime is limited to 12 hours every week, though for special needs this can be extended to 16 hours. Overtime rendered entitles employees to double their hourly pay.
Unless exempt under the law, employers with five or more workers are required to pay into Myanmar’s Social Security Fund for their employees. The total contributions are capped at a maximum amount of MMK 15,000, and are set at 5% of the total salary—3% and 2% between employer and employee respectively.
Employees in Myanmar are entitled to up to 30 days of paid medical leave.
New mothers are entitled to up to 14 weeks of paid maternity leave. They may take their leave six weeks before and eight weeks after giving birth. New fathers can take 15 days of paternity leave after their child is born.
In Myanmar, there are between 16 to 18 public holidays, for example, and those who work during those holidays are paid double their rate plus a cost of living allowance:
- January 1 - New Year's Day
- January 2 to 3 - Kayin New Year
- January 4 - Independence Day
- February 12 - Union Day
- March 2 - Peasants' Day
- March 16 - Full Moon Day of Tabaung
- March 27 - Armed Forces Day
- April 9 to 16 - Thingyan Water Festival
- April 17 - Myanmar New Year
- May 1 - Labor Day
- May 14 - Full Moon Day of Kasong
- July 12 - Full Moon Day of Waso
- July 19 - Martyrs' Day
- October 8 to 10 - Full Moon Day of Thadingyut
- November 6 to 7 - Full Moon Day of Tazaungmone
- November 17 - National Day
- December 22 - Kayin New Year
- December 25 - Christmas Day
In Myanmar, personal income is taxed at a progressive rate based on pay from 0% to 25%, up to a maximum of :
- MMK 1-2 million: 0%
- MMK 2,000,001-5 million: 5%
- MMK 5,000,001-10 million: 10%
- MMK 10,000,001-20 million: 15%
- MMK 20,000,001-30 million: 20%
- MMK 30,000,001 above: 25%
Other important regulations include details of probation and termination. The probation period for Myanmar workers cannot exceed three months, and the usual notice for termination is one month. Local employment legislation provides guidance on how to approach payroll processing relevant to both.
Need more information? Request a demo and Skuad can discuss all the details you need.
Outsourcing Myanmar payroll processing
With how comprehensive Myanmar’s labor laws are, companies looking to access the country’s top talent for outsourcing and remote work can approach their payroll processing in-house or via partner service providers. For many of these businesses, remote workers form an integral part of their global growth strategy, so aside from maintaining compliance to Myanmar’s labor laws, they also need to abide by the employment legislation of other countries in which they want to hire workers.
This is where a global HR and payroll processing partner like Skuad becomes invaluable. Skuad can take over payroll processing in Myanmar, for example, alleviating compliance concerns and automating most of the process with cutting edge software so you can continue to scale your business. Better yet, Skuad can also do the same for your teams in other countries, and can even extend its services to cover hiring and management.
Learn more about how Skuad can help you scale your business internationally now.
Myanmar’s exchange rate currently stands at $1 for every MMK 1,855.34.