Understanding Employment Norms in Sri Lanka: A Comprehensive Guide
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Hiring in Sri Lanka? Read on to find out the employment norms (like taxes, payroll and benefits) and EOR (Employer on Record) norms in Sri Lanka.

Employment Norms in Sri Lanka

Sri Lanka is an island nation located in South Asia with a population of approximately 21 million. The country has a mixed economy and a diverse workforce that is involved in various industries, including agriculture, manufacturing, and services. Employment norms in Sri Lanka are influenced by the country's culture, economy, and legal framework. This article will provide an overview of the employment norms in Sri Lanka.

General Information:

  • The Sri Lankan currency is the Sri Lankan rupee (LKR).
  • Sri Jayawardenepura Kotte, commonly referred to as Kotte, is the administrative and legislative capital of Sri Lanka, while Colombo is the commercial and financial capital of the country.
  • Sinhala and Tamil are the official languages of Sri Lanka, while English is also widely spoken and used for business and government communication.
  • The GDP in Sri Lanka was worth 260 billion US dollars in 2022. Sri Lanka's labor laws and regulations cover areas such as minimum wage, working hours, leave, and termination of employment.
Sri Lanka's labor laws and regulations cover areas such as minimum wage, working hours, leave, and termination of employment.
Sri Lanka map

Table of Contents

  • Agreements
  • Onboarding Process
  • Visa
  • Minimum Wage
  • Payroll Cycle
  • Annual Bonus
  • Health Benefits
  • Working hours and overtime
  • Leaves
  • Social Security
  • Taxes for Employers
  • Taxes for Employees
  • Probation
  • Termination
  • Severance Pay
  • Employees or Contractors
  • Final Words


  • 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

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.


Sri Lanka has several types of work permits and visas for foreign nationals who wish to work or reside in the country. Here are some of the most common visa types and their applicability:
  • Business visa: It is for individuals visiting Sri Lanka for business-related activities, such as attending meetings, conferences, or training programs.
  • Employment visa: Given to foreign nationals who have been offered a job in Sri Lanka and are sponsored by their employer.
  • Residence visa: It is for foreign nationals who wish to reside in Sri Lanka for a period of over six months.
  • Dependent visa: Given to the spouse and dependent children of a foreign national who holds an employment or residence visa in Sri Lanka.

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Minimum Wage

Minimum Wage

The monthly minimum wage in Sri Lanka is fixed at 12,500 LKR per month.
Payroll Cycle

Payroll Cycle

In Sri Lanka, the payroll cycle is typically monthly, with employees receiving their salaries at the end of each month.
Annual Bonus

Annual Bonus

There is no specific provision that mandates the payment of an annual bonus in Sri Lanka. If an employer voluntarily provides the bonus the amount of the same may vary depending on the company's performance and the individual's performance during the year.
Health Benefits

Health Benefits

Health benefits provided by employers to employees in Sri Lanka typically include:
  • 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

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.


Sick Leave

  • Sick leaves are not granted by law in Sri Lanka. Employees can take casual leave of 7 business days if they are sick

Parental Leave

  • There isn't any provision for parental leave in Sri Lanka, but employees can take paternity and maternity leaves.

Maternity Leave

  • Female employees after working continuously for 150 days can take 84 days of paid maternity leave. Out of 84, 14 days of leave should be taken before the birth of the child and the remaining can be after the child's birth.

Paternity leaves

  • No paternity leave is provided in Sri Lanka to employees who are in non-governmental services

Annual Leaves

  • Employees are entitled to 14 days of annual leave after completing one year with the same employer.

Duty Leave

  • Employers have a responsibility to allow their employees to participate in certain activities such as taking language exams, attending medical appointments, voting in elections, and fulfilling their obligations as reservists in the military.

Public Holidays (for the Calendar year 2023)

  • Duruthu Full Moon Poya Day (6th January)
  • Tamil Thai Pongal Day (15th January)
  • National Day (4th February)
  • Navam Full Moon Poya Day (5th February)
  • Madin Full Moon Poya Day (7th March)
  • Bak Full Moon Poya Day (5th April)
  • Good Friday (7th April)
  • Day Before Sinhala and Tamil New Year (13th April)
  • Sinhala and Tamil New Year (14th April)
  • Id-Ul Fitr (22nd April)
  • May Day (1st May)
  • Vesak Full Moon Poya Day (5th May)
  • Day Following Vesak Full Moon Poya Day (6th May)
  • Poson Full Moon Poya Day (3rd June)
  • Esala Full Moon Poya Day (3rd July)
  • Nikini Full Moon Poya Day (1st August)
  • Adhi Nikini Full Moon Poya Day (30th August)
  • Milad Ul-Nabi (28th September)
  • Vap Full Moon Poya Day (28th October)
  • Deepavali (12th November)
  • Ill Full Moon Poya Day (26th November)
  • Christmas Day (25th December)
  • Unduvap Full Moon Poya Day (26th December)

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Social Security

Social Security

In Sri Lanka, the social security system is administered by the Employees' Provident Fund (EPF) and the Employees' Trust Fund (ETF). Employers are required to contribute a percentage of their employees' salaries to these funds, which provide retirement benefits, disability benefits, and other forms of social security. Social Security paid by employers in Sri Lanka is 15%.
Taxes for Employers

Taxes for Employers

Employers in Sri Lanka are required to contribute to two main funds on behalf of their employees.
  • The first fund is the Employees' Provident Fund (EPF), to which employers must contribute 12%.
  • fund is the Employees' Trust Fund (ETF), to which employers must contribute 3%.

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Taxes for Employees

Taxes for Employees

  • Employees in Sri Lanka are required to contribute 8% of their salary to the Employees' Provident Fund (EPF).
The income tax rate in Sri Lanka varies based on income level:
  • Up to 3,000,000 LKR income, 6% tax rate plus 180,000 LKR on income above the first 750,000 LKR.
  • Between 3,000,000 LKR and 6,000,000 LKR income, 12% tax rate plus 540,000 LKR on income above first 3,000,000 LKR.
  • Above 6,000,000 LKR income, 18% tax rate on all income above that amount.


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  • 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

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

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

Final Words

Sri Lanka has a well-established legal framework that governs employment norms, including minimum wage, working hours, and employment contracts. The country has a growing economy with diverse opportunities in various sectors, such as tourism, manufacturing, and technology. However, the labor market still faces challenges, such as informal employment, gender inequality, and inadequate enforcement of labor laws.

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