Country Payroll Guide Sri Lanka

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Key Facts

Capital
Colombo
Date format
dd/mm/yyyy
Currency
Sri Lankan Rupee (LKR)
VAT
the standard rate is 8%

Contributions

Employers

Provident Fund (EPF)
Provident Fund (EPF) - 12%
Employee Trust Fund
Employee Trust Fund - 3%
Total Employment Cost
Total Employment Cost - 15%

Employees

Provident Fund (EPF)
Provident Fund (EPF) - 8%
Total Employee Cost
Total Employee Cost - 8%

Minimum Wage

Minimum Wage
The minimum wage in Sri Lanka is 10000 LKR per month.

Payroll

Payroll Cycle
Monthly
13th Salary

A 13th-month salary is not mandatory.

Income Tax

Employee Income Tax (1)
0 – 3,000,000 LKR - 6.00% + 180,000 LKR
Employee Income Tax (2)
3,000,000 – 6,000,000 LKR - 12.00% + 540,000 LKR
Employee Income Tax (3)
6,000,000 LKR and above - 18%

Working Hours

General Working Hours

45 hours per week.

Overtime

Weekly overtime should not exceed 12 hours. All overtime work is paid out at 150% of the hourly rate.

Leave

Paid Time Off

Employees receive 14 days of annual leave after completing a full year of service. After completing the first year, annual leave is accrued based on the date the employee joined the company.

Public Holidays

24 days.

Sick Days

All employees are entitled to seven days of sick leave per year.

Maternity Leave

Twelve weeks of maternity leave are given to women with no child or one child. Two weeks should be taken before the birth and ten weeks immediately following the birth. Six weeks of maternity leave are given to women with two or more children. Two weeks should be taken before the birth and four weeks immediately following the birth.

Paternity Leave

There are no statutory laws regarding paternity leave.

Parental Leave

There are no statutory laws regarding parental leave.

Termination

Termination Process

The dismissal process in Sri Lanka is governed by two principal statutes, the IDA and the TEWA, and termination of employment for non-disciplinary reasons normally requires approval from the Commissioner of Labor. The Commissioner supplies his decision in writing to both the employer and the employee. Non-disciplinary termination requires a notice period (typically one month) that is mutually agreed in the contract of employment.

Notice Period

There are no statutory laws regarding the probation period, but it is usually six months. Notice periods, or payments in lieu of notice, should be stipulated in the contract of employment.

Severance Pay
  • Employee with one to five years’ service: 2.5 months’ salary paid as compensation for each year of service competed (capped at 12.5 months’ salary).
  • Employee with six to 14 years’ service: 2 months’ salary paid as compensation for each year of service competed (capped at 30.5 months’ salary).
  • Employee with 15 to 19 years’ service: 1.5 months’ salary paid as compensation for each year of service competed (capped at 38 months’ salary).
  • Employee with 20 to 24 years’ service: 1 months’ salary paid as compensation for each year of service competed (capped at 43 months’ salary).
  • Employee with 25 to 34 years’ service: 0.5 months’ salary paid as compensation for each year of service competed (capped at 48 months’ salary).
Probation Period

One year maximum for supervisory and technical roles and six months for all other roles.

Visa

Employment Visa

To work in Sri Lanka an employee needs either a visitor visa or a residence visa.

  • Visitor Visa/Business Purpose Visa – A 30-day visa that allows for short business trips. This can be extended for up to 90 days.
  • Residence Visa/Employment Visa – A one-year-long visa for business or study. This can be renewed each year if needed. Business visas must be obtained prior to entering Sri Lanka since the change of visa class after arrival is not possible.