Hiring Talent And Managing Payroll In Sri Lanka

Agreements

• All employees are required to have a written contract of employment that specifies their terms and conditions of employment, such as working hours, wages, leave, and termination procedures. Employment contracts in Sri Lanka are written in a language that both employees and employers can understand, which can be Tamil, Sinhala, or English.
• Collective bargaining agreements (CBAs) can be made between employers and trade unions representing the employees to regulate working conditions and terms of employment. CBAs are legally binding on both parties and can cover areas such as wages, working hours, and leave entitlements.
• Fixed-term contracts are allowed in Sri Lanka, but they cannot exceed five years in duration. After five years, the contract is deemed to be a permanent contract, and the employee becomes entitled to all the benefits and protections of permanent employment.

Onboarding Process

• The onboarding process takes around 3 days once all the onboarding processes are complete.
• The employer is required to provide the employee with a written contract of employment that specifies the terms and conditions of their employment, including their role, responsibilities, remuneration, and benefits.
• The employer is also required to collect certain mandatory documents from the employee, such as their National Identity Card, birth certificate, and educational certificates, to verify their identity and eligibility to work in Sri Lanka.

Minimum Wage

Payroll Cycle

Annual Bonus

Health Benefits

• Medical insurance coverage for hospitalization and outpatient care
• Annual medical check-ups and preventive screenings
• Access to a company doctor or medical consultant
• Workplace wellness programs and initiatives

Working hours and overtime

• Work hours: Employees have to work 8 hours per day and in total 40 hours per week. However, employees can extend the workweek to 45 hours by working for 4 hours on Saturdays.
• Break: Employers are also required to provide their employees with a one-hour break for every 8 hours worked.
• Overtime: Paying for overtime is mandatory in Sri Lanka. Employees can give 12 hours of overtime in a week and will be paid 150% of their hourly wage.

Social Security

Taxes for Employees

Termination

• Terminations in Sri Lanka can happen through an employee's resignation or mutual agreement.
• Termination by the employer without cause requires approval from the Commissioner of Labour and severance pay.
• Termination with cause requires the employer to justify the reason in writing.

Severance Pay

• Employees who have served for 1 to 5 years are entitled to 2.5-month pay for every year of service.
• Those who have served for 6 to 14 years are entitled to 2-month pay for every year of service.
• Employees who have served for 15 to 19 years are entitled to 1.5-month pay for every year of service.
• Those who have served for 20 to 24 years are entitled to 1-month pay for every year of service.
• Finally, employees who have served for 25 to 34 years are entitled to 0.5-month pay for every year of service.

Employees or Contractors

• In legal terms, an employee is an individual who works for a company under an employment agreement that defines the terms of their work, such as hours, salary, benefits, and job duties.
• On the other hand, a contractor is an individual or business that provides services to a company under a contract that defines the scope of the work, payment terms, and deliverables. Contractors have more control over their work and how it is carried out.
• Misclassifying the contractor or employee can lead to fines in Sri Lanka.

Final Words