The Democratic Socialist Republic of Sri Lanka (formerly Ceylon) lies in the Indian Ocean, southwest of the Bay of Bengal, and southeast of the Arabian Sea. The island country is separated from the Indian subcontinent by the Gulf of Mannar and the Palk Strait. It covers 65,600 square kilometers, largely made up of coastal plains in the north, and hills and mountains in the south-central interior. The main industries are the processing of agricultural produce largely rubber, tea, coconuts, and tobacco. Sri Lanka’s top trading partners are India, China, and the United States. A leading tea producer and exporter, Sri Lanka also exports apparel, coffee, and spices. The services sector is the leading employer (46%), followed by industry (30%), and agriculture (24%).
*Please note that the official currency is the currency of remuneration when employed through WorkMotion in Sri Lanka.
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Capital :
Colombo; Sri Jayawardenepura Kotte.
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Currency :
Sri Lankan rupee (Rs, LKR)
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Languages spoken :
Sinhala, Tamil
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Population :
22.17 million (2021 est.)
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Minimum wage 2023 :
LKR 16,000 per month
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Cost of Living index :
$$ (119 of 139 countries)
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Payroll Frequency :
Monthly
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VAT - standard rate :
8%
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GDP - real growth rate :
3.7% (2021 est.)
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The national holidays mentioned below are valid for the year 2024.
The approximate time for sharing the contract with an employee in Sri Lanka is 6 business days assuming no special requests or changes to our standard employment contract. Any such requests or changes would need to undergo internal and external review, directly leading to a time delay.
NOTE: This number is subject to change and is only an estimation of the Contract Sharing Time. The estimated Contract Sharing Time begins from the moment that WorkMotion has received all required information from both the client and the employee.
The normal working hours are eight hours per day and are not to exceed 45 hours per week. One-hour rest breaks must be given between the hours of 11.00am and 2.00pm where employees work during the daytime.
Overtime is not to exceed 12 hours in any one week. Overtime pay is 150% of the rate of ordinary pay.
There is no legislated probation period. The Act provides for the employer to clearly state the probation period, the terms governing it, and the circumstances under which the employee may be terminated during the probation period. In practice, probation periods are six months to a year.
There is no statutory notice period for individual dismissals. Individual notice periods, or payments in lieu of notice of dismissal, are stipulated in the contract of employment.
For collective dismissals, at least one month’s prior notice applies prior to retrenching employees that have served the employer for at least one year.
During the first year, an employee accumulates the following annual leave depending upon the time of commencement of their contract of employment:
| Employment Commencement | Leave Entitlement |
| On or after January 1 but before April 1 | 14 days |
| On or after April 1 but before July 1 | 10 days |
| On or after July 1 but before October 1 | 7 days |
| On or after October 1 but before December 31 | 4 days |
From the second year of employment onward, after completing 12 months of continuous service, an employee is entitled to 14 days of paid annual leave, of which no less than seven must be consecutive days.
A person who has completed a year of continuous service is entitled to sick leave of no more than seven days with full remuneration. The employer is responsible for paying the employee during sick leave.
There is no statutory provision for parental leave.
A female employee is entitled to 12 weeks of maternity leave, two weeks before and 10 weeks immediately after confinement if confinement results in the issue of a live child.
If confinement does not result in the issue of a live child, the employee is entitled to four weeks’ leave after confinement.
There is no statutory provision for paternity leave.
An employee that has been with the employer for 12 months is entitled to seven days of casual leave in a 12 month period. Casual leave is normally availed from one half day to one or more days at a time. Leave is taken on account of private business, ill-health, or other reasonable causes.
There is no statutory provision for unpaid leave in Sri Lanka.
| Benefits | Employer Contributions |
| Employee Provident Fund | 12% |
| Employee Trust Fund | 3% |
| Social security contributions on annual turnover exceeding LKR 120 million | 2.5% (effected from April 1, 2022) |
Access to health services in Sri Lanka is through two programs:
The employer contributes 3% of each employee’s salary (representing the total cost) to the Employees Trust Fund monthly before the last working day of the following month to enable members to access medical benefits.
Liability for work-related accidents rests with the employer. The total cost through either providing benefits directly to employees or paying insurance premiums ranges from 1% to 7.5% of payroll, depending on the assessed degree of risk.
Under the present social security scheme, there is no protection against unemployment.
The retirement age is 60 years as per the Minimum Retirement Age of Workers Act. The old-age pension is operated under a Provident Fund and Trust Fund system.
The employer contributes 12% of monthly payroll towards the Provident Fund and 3% of monthly payroll towards the Trust Fund.
The information contained in this Country Guide is provided for informational purposes only and should not be construed as legal advice on any subject matter. The contents of this Country Guide contain general information and may not reflect current legal developments or address your situation. You should not act or refrain from acting on the basis of any content included in this Country Guide without seeking the advice or representation of a licensed attorney. WorkMotion Software GmbH disclaims all liability for actions you take or fail to take based on any content included in this Country Guide.
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