Payroll and Benefits Guide - Sri Lanka

Sri Lanka
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Currency

Sri Lankan Rupee (LKR)
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Capital

Colombo
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Employer Taxes

22.75% – 25.75%
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Date Format

dd/mm/yyyy
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Fiscal Year

1 Jan – 31 Dec

Fun Facts

Sri Lanka is an island country located in South Asia, surrounded by the Indian Ocean.

It is reffered as “Pearl of the Indian Ocean” due to its natural beauty and abundance of precious gems.

The country is famous for its tea production.

Sri Lanka is renowned for its rich biodiversity.

The country has numerous temples, mosques, and churches.

It is home to eight UNESCO World Heritage Sites

Sri-Lanka

Contributions

Employee Payroll Tax

Contribution TypeRate
Employees Provident Fund8.00%

Employer Payroll Tax

Contribution TypeRate
Social Security family allowance5.75%
Social Security (CNSS) work injury2.00% – 5.00%
Employees Trust Fund3.00%

Payroll

Payroll Cycle

The typical payroll cycle in Sri Lanka can be daily, weekly, fortnightly, or on a monthly basis.

13th Salary

There is no statutory requirement to provide a 13th salary.

Work Hours and Week

Standard working hours within Sri Lanka are 8 hours per day, 45 hours per week

Overtime

Overtime is paid at 150.00% of the standard salary rate. A maximum of 12 overtime hours can be worked in a week. Executive/professional positions might be exempt from overtime restrictions.

Sri-Lanka

Leave

Paid Time Off

It is outlined in the employment contract as a minimum of 14 days paid leave a year following completion of 1-year service

Public Holidays

Public holidays that fall on the weekend are usually lost.

Sick Days

Typically, employees who have completed one year of continuous service in either the public or private sector are entitled to 100% paid sick leave.

Maternity Leave

All female employees are entitled to a maternity leave of 12 weeks (84 days) excluding weekly holidays, Poya days, and statutory holidays for the birth of the first and second children. This is based on 14 days prior to the birth and 70 days after the birth.

This is reduced to 6 weeks (42 days) for the third and any subsequent children, based on 14 days prior to the birth and 28 days after the birth.

Paternity Leave

The father is entitled to mandatory paid paternity leave of a total of 3 days for the state sector only and the leave must be taken within 3 months of the birth.

Parental Leave

There are no provisions in the law regarding parental leave.

Termination

Termination Process

In Sri Lanka, employers have the right to terminate a fixed-term contract based on specific grounds, such as business reasons, personal reasons, or employee misconduct.

Notice Period

General notice periods are for a maximum of six months.

Severance Pay

Employers are required to pay a half month’s salary for each year of completion if the employee’s service exceeds 5 years at the time of retirement, resignation, or dismissal.

Probation Period

Probation Period

There is no clear provision in labor laws on the duration of the probation period in Sri Lanka.

Immigration

All foreign nationals planning to visit Sri Lanka are required to obtain visas before their arrival. For those intending to work in Sri Lanka, it is necessary to acquire both a residence visa and a work permit.

Residence visas are initially issued for one year and can be renewed annually.

To apply for a residence visa, foreign nationals should first obtain entry permits from Sri Lankan missions in their home countries and submit their applications within one month of arriving in Sri Lanka under entry visas.

It is crucial to obtain approval from the relevant ministry governing the specific activity or from the Board of Investment (BOI), as applicable, to secure a residence visa.

For Work Permits

Board of Investment (BOI) certificate

VAT

The standard rate of VAT in Sri Lanka is 8% (with a current proposal to increase to 12%).