Revision to Law on Misconduct and Disciplinary Action

During the second half of 2017, the Ministry of Labor, Immigration and Population issued Notification 140/2017 together with a revised Standard Employment Contract (SEC 2017), which repeals and replaces the previous template, SEC 2015. As a result, entities with more than five employees in Myanmar must follow SEC 2017 and register executed employment contracts with the labor office in the relevant township.

Employers must include the terms and conditions in annexes by which they expect employees to abide. This includes the responding disciplinary action to be taken in the event of any misconduct, i.e., Annex (A): minor offenses and employer’s responsive actions; and Annex (B): serious offenses and employer’s responsive action. Per SEC 2017, the “Ethical Code” issued in the Industrial Zone can be referenced as a sample, and can be amended in accordance with the nature of the work in a particular workplace.

Every workplace is required to have appropriate rules reflecting the nature of the business activities, organizational requirements, and unique characteristics of the working environment. The example standards of behavior set out in the annexes can help employers set expectations for employees at the beginning of the employment relationship and notify employees of the sanctions to expect in cases of misconduct.

The following are some subjects of possible misconduct that may be included in Annex A (minor offenses):

• punctuality;
• identification and uniforms;
• duties and assignments;
• safety and equipment;
• workplace behavior;
• restricted work areas; and
• workplace property.

If an employee commits misconduct in one of these areas, the employer must implement a three-warning system whereby it gives the employee a verbal warning, followed by a written warning, and lastly a final written warning if the misconduct continues. Any misconduct in which the employee engages beyond the final warning may lead to termination of employment without severance pay. Warnings are valid for 12 months.

Examples of serious misconduct that may be included in Annex B are:

• stealing, misusing, or destroying work property;
• injuring another employee
• corruption;
• drinking alcohol, gambling, or using drugs in the workplace;
• violating confidentiality or intellectual property rights;
• criminal arrests or sanctions; and
• abandonment for three days (or five days in a single month).

Serious misconduct can result in termination of employment without severance pay for a first offense. The employer is not required to give warnings for serious misconduct.

Neither of the above lists is exhaustive.

Comment

It is of the utmost importance that all expectations are made clear within the employment agreement, including the annexes, and the workplace internal rules. This will mitigate any risk of misunderstandings and increase the likelihood of a well-functioning employment relationship. Setting expectations is particularly important considering the developing legal framework in Myanmar.

Written by Danyel Thomson and Mya Myintzu of DFDL and Roger James of Ogletree Deakins