Sri Lanka

Overview

Sri Lanka, with a per capita GDP of around $10,566 (Purchasing Power Parity), has a steady annual growth averaging nearly 6% over the last 5 years. Major economic sectors include tea export, tourism, textile, apparel, rice, and agricultural products. Sri Lanka has made a notable transition to relative stability and continues to focus on fiscal reforms, improved financial management, increased public and private investment, and better service delivery. Economic transformation and political reconciliation have helped support competitiveness and long-term development.

Currency: Sri Lankan Rupee

Principal language: Sinhalese and Tamil

Government: Semi-presidential Representative Democratic Republic

Capital City: Colombo

Major Cities: Dehiwala-Mount Lavinia, Kandy, Dehiwala-Mount Lavinia

Employment Contracts

The Shop and Office Employees (Regulation of Employment and Remuneration) Act No. 19 of 1954, as amended (SOEA) is a key labor law that regulates work schedules, holidays, and leave entitlement. Though there are no clear provisions in labor laws regarding the duration of probation periods, the usual duration of probation periods are 6 months in Sri Lanka.

Work/Time Regulations

The regular work schedule comprises 8 hours per day and 45 hours in a week. Any work done beyond these schedules is considered overtime and is paid at 150% of regular pay. Employees can’t perform overtime work for more than 12 hours in a week. Overtime does not apply to individuals working in an executive capacity.

Leave

Holidays
The following public holidays are observed in Sri Lanka:

  • Tamil Thai-Pongal
  • National Day
  • Milad-Un-Nabi (Holy Prophet’s Birthday)
  • Day preceding the Sinhala and Tamil New Year
  • Sinhala and Tamil New Year Day
  • May Day
  • Day after the Vesak Full Moon Poya Day
  • Christmas Day

Annual Leave
Employees are entitled to 14 days’ annual leave after completing 1 year of employment. Out of these 14 days, 7 days must be taken on consecutive days.

Maternity Leave
Women employees are entitled to 84 days’ maternity leave for the birth of their 1st or 2nd child. The leave can be taken for 14 days before the expected date of delivery and 70 days after that. For the birth of the 3rd child, employees are entitled to 42 days’ maternity leave out of which 14 days can be taken before the expected date of delivery and 28 days after that.

Casual leave
Employees are entitled to 7 days’ casual leave for reasons including ill health and reasonable causes.

Benefits

Pension and Social Security

Old-age Pension

  • Old-age Benefit (Provident Fund)
    A consolidated amount based on contributions from employees and employers along with accrued interest is paid as an old-age benefit. The interest is paid at 11% annually.
    The Monetary Board of the Employees' Provident Fund adjusts the interest rate periodically which cannot be less than 2.5%.
  • Old-age Benefit (Trust Fund)
    A consolidated amount based on contributions from employees and employers plus accrued interest is paid. The benefit is paid after a 5-year waiting period if an employee changes job.

Permanent Disability Benefits

  • Disability Benefit (Provident Fund): A consolidated amount based on contributions from employees and employers plus accrued interest is paid as a disability benefit. The interest is paid at 11% per annum.
    The Monetary Board of the Employees' Provident Fund adjusts the interest rate periodically which cannot be less than 2.5%.
  • Disability Benefit (Trust Fund): A consolidated amount based on contributions from employees and employers plus accrued interest is paid.

Survivor Benefits

  • Survivor Benefit (Provident Fund): A consolidated amount based on contributions from employees and employers plus accrued interest is paid to eligible survivors. The interest is paid at 11% per annum.
    The Monetary Board of the Employees' Provident Fund adjusts the interest rate periodically which cannot be less than 2.5%.
  • Survivor benefit (Trust Fund): A consolidated amount based on contributions from employees and employers plus accrued interest is paid.

How GPS can Help

With our Global PEO/Employer of Record services, companies can expand into Sri Lanka and hire their employees without having to establish a branch office or subsidiary in Sri Lanka.

  • Your candidate is hired via our Sri Lanka PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
  • Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Sri Lanka laws.
  • Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
  • With no contractor risks, pass on the compliance burden to Global PEO Services.

Spin Off/M&A Support

  • Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.

24/7 Support in 100+ Countries

  • Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
  • We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.

Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and management. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcount.

Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Learn more about our end-to-end international expansion services.