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Sri Lanka

Payroll and Benefits Guide

Last updated:
Dec 8, 2022

Table of contents

Overview Contributions Minimum Wage Payroll Working Hours Leave Termination Common Benefits VISA VAT

Overview

Capital
Colombo (executive and judicial capital) / Sri Jayawardenepura Kotte (legislative capital)
Currency
Sri Lankan Rupee (LKR)
Date Format
dd/mm/yyyy
Fiscal Year
1 January- 31 December
Payroll Frequency
Weekly, bi-weekly, or semi-monthly
Employer Taxes
15.00%

Contributions

Employer

Employer Payroll Contributions

12.00% Provident Fund (EPF)
3.00% Employee Trust Fund
15.00% Total Employment Cost

Employee

Employee Payroll Contributions

8.00% Provident Fund (EPF)
8.00% Total Employee Cost

Employee Income Tax

6.00% + 180,000 LKR on excess 0 – 3,000,000
12.00% + 540,000 LKR on excess 3,000,000 – 6,000,000
18.00% 6,000,000 – and above

Minimum Wage

General

10,000 Sri Lankan rupees per month.

 

Payroll

Payroll Cycle

Wages can be paid on a daily, weekly, fortnightly, or monthly basis. However, a wage period cannot exceed a month.

13th Salary

A 13th-month salary is not mandatory.

 

Working Hours

General

The normal working hours of a regular employee are 8 hours per day and 45 hours per week. Anything over is considered overtime.

Overtime

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

Working Week

Monday-Friday

 

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.

Sick Days

All employees are entitled to 7 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 shall give notice in writing of his decision on the application 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 generally, it is a period of six months. Notice periods, or payments in lieu of notice, should be stipulated in the contract of employment.

Probation Period

The probation period shall not exceed one year for employees in the supervisory or technical role and six months for all other employees. Probationary periods can be for a maximum of 3 months in some cases.

 

VISA

VISA

To work in Sri Lanka an employee needs to apply and receive 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 for as long as the employee needs.

Business Visas must be obtained prior to entering Sri Lanka since the change of visa class after arrival is not possible.

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