Notification 140/2017: Labor compliance and the statutory employment contract template

As Myanmar increasingly becomes a place to do business to both domestic entrepreneurs and foreign investors alike, Myanmar’s labor compliance framework has recently taken stimulus with the re-working of Notification 1/2015 on the Employment Contract Template. The result? Notification 140/2017 of 28 August 2017 (the “Notification”).

The Notification has new provisions dealing with how an employment contract is constructed. In this respect, every employment contract concluded between an employer and employee must follow a set of rules mandated by the Notification. These rules are largely inherited from Notification 1/2015, however, there are some nuanced changes which are worth knowing as an employer.

Flexibility

While the Notification appears to be a template on the one hand, by prescribing a mandatory form of clauses which the employment contract must include, it also appears to serve the dual purpose of setting out a roadmap. As such, the Notification recognizes that stipendiary clauses such as those relating to providing accommodation and a meal allowance may be provided (although there is no obligation on the employer to provide these).

In the event that the employer agrees to provide stipendiary incentives in the employment contract, such as those listed above, then the employer has freedom on how to draft the clause in the employment contract accordingly.

Termination of the employment contract

Of particular interest in the Notification is the re-working of the grounds for termination of the employment contract. In this respect, the Notification provides that the following reasons shall be used to terminate an employment contract:

1. Winding up of the business
2. Cessation of the business due to unforeseen event (i.e., force majeure)
3. Death of an employee

This is a change from the previous Notification 1/2015 which included both;

1. Failure to comply with the terms and conditions in the employment contract; and
2. The punishment of the worker for an offense,

as valid grounds for termination of the employment contract. These two grounds are no longer valid for terminating the employment relationship and their omission would appear to be influenced by considerations of fairness and encouragement to use fair procedures. The removal of these two grounds appears to be a relic from the employees’ side when the Notification was created.

Additionally, the Notification recognizes that the employment contract can be terminated by consent of the parties. This provision must be included in employment contracts.

Rules and procedures for infractions

Of particular interest in the Notification is that while the employer has some degree of flexibility in setting and agreeing on terms and conditions for employees, employers must now include in annexes to the employment contracts rules around a) taking actions for minor infractions and b) taking actions for major infractions.

Responsibilities

Finally, the Notification provides for a series of responsibilities incumbent upon both the employer and the employee. Such responsibilities on the employer include; non-discrimination on grounds of race, sex and age, but curiously not gender or sexual orientation.

Other responsibilities include a duty by the employer to keep the employees “well informed” of their rights and entitlements. Obligations incumbent upon the employee include an obligation of confidentiality and a prohibition on disturbing coworkers or causing danger in the workplace.

However, it is not clear from a reading of the Notification whether these responsibilities are meant to be embodied into the text of the employment contract or whether they are extra-textual principles of guidance.

Similarly, it is unclear whether if the responsibilities are to be construed as some sort of extra-textual compliance formulae, whether breach of them will void the contract or attract liability under the Notification.

Accordingly, it remains to be seen how the Notification will operate and be interpreted in practice.