Hire in Sri Lanka

For employees under the Shop and Office Employees Act No 19 1954, employers must provide the following details in writing:

• Employee’s name, job title, and type of employment
• Any appointed grade (if applicable)
• Basic salary and any structured pay scale
• Frequency of salary payments (weekly, fortnightly or monthly)
• Cost of living or other allowances (if provided)
• Duration and terms of any probationary period
• Employment and dismissal conditions
• Regular working hours
• Weekly holidays, annual leave and any other types of leave
• Overtime pay rate
• Availability of medical assistance (if provided)
• Terms of any provident, pension or gratuity schemes
• Potential for career advancement

There are no legal restrictions on performing background checks in Sri Lanka. Pre-employment background screening checks that involve checking an individual’s identity and address are generally permissible. Background investigations are frequently carried out, particularly in sectors like banking, finance and roles requiring high levels of confidentiality. Employers often request a “police clearance” from employees as part of the pre-employment process, especially in fields where security is paramount.

Experienced employees are exempt from the minimum probation period requirement. After 180 days of employment, the employee is covered by the law. Therefore, any extensions beyond six months must be clearly communicated and documented. It is essential for the period of probation to be explicitly outlined in the employee’s appointment letter. Additionally, employers have the discretion to terminate an employee’s services without providing reasons during the probation period.

The standard workday is eight hours, which can extend to nine hours inclusive of lunch and other short breaks. A normal working week is limited to 45 hours. Any work beyond this limit is classified as overtime, with a maximum allowable of 12 hours per week. Payment for work on holidays must not be less than the overtime rate.

Overtime is allowed up to a maximum of 12 hours per week, but this can be exceeded with proper compensation and mutual agreement between both parties. Employers are not allowed to force employees to work overtime beyond 12 hours per week.

Calculation of the overtime rates are at 1.5 times the hourly rate during normal hours. For work outside of normal hours and on public holidays, the rate increases to two times the hourly rate.

There is no legal requirement of a 13th-month pay, THR (Thirteenth Month Salary) or a festive bonus. Employers have the discretion to offer these bonuses or additional payments as part of the employment agreement or based on customary practices aimed at incentivizing and recognizing employees.

When resigning, an employee must provide one month’s notice. Regular or confirmed employees with over a year of service are entitled to one month’s notice before being laid off. Those with under 180 days of service are not entitled to any notice. Employment contracts typically specify notice periods or payments in lieu of notice for dismissal. If an employee believes their dismissal is unjust, they can challenge it. According to the Termination of Employment of Workmen Act of 1971, employers must give written notice with reasons for dismissal within two working days after termination, especially if the dismissal is for disciplinary reasons.

During probation, either party can end the employment contract at any time. After probation, notice periods for termination are defined in employment contracts. Employees of companies with 15 or more staff can seek relief under the Termination of Employment of Workmen (Special Provisions) Act No 45 of 1971 (TEWA), unless they have less than a year of service, were dismissed for disciplinary reasons, are government employees or are retiring. Others can seek recourse under the Industrial Disputes Act (IDA). Both TEWA and IDA require terminations to be either with employee consent, prior approval from the Commissioner of Labour or for valid reasons like misconduct or poor performance. Terminations during probation can be made without cause if done in good faith.

There is no mandatory severance. Employees can challenge dismissals they consider unfair and seek severance compensation within six months of termination. Half a month’s wages or salary for each completed year of service. This can be pursued through the Termination Unit of the Labour Department under the Termination of Employment of Workmen (Special Provisions) Act No 45 of 1971 (TEWA) or by filing a case with a Labour Tribunal under the Industrial Disputes Act No 43 of 1950 (IDA). TEWA sets compensation based on service length, capped at LKR1.25 million. IDA allows Labour Tribunals to award compensation they find “just and equitable” without a fixed formula.

Employees under the Payment of Gratuity Act No 12 of 1983 are entitled to gratuity benefits if eligible. They must be part of an organization with 15 or more workers in the past 12 months. They must also have served continuously for at least five years.

Restrictive covenants, typically in the form of non-solicitation and non-competition clauses, can be included in employment contracts and are generally enforceable during the period of employment. However, post-employment restrictive covenants are often viewed skeptically by courts. To enforce such covenants, the employer must demonstrate that they are reasonable and necessary to protect the employer’s interests. This includes ensuring the scope and duration of the restrictive covenant are reasonable. Courts are more likely to uphold these covenants if the employer continues to provide consideration (usually monetary) during the restricted period.

If a fixed-term employee has repeated contract renewals without interruption, it may be presumed they hold a regular position. Under Sri Lankan law, this entitles them to similar benefits as regular employees. This applies regardless of the fixed-term nature of their contracts. The law does not specify a set number of renewals required for this presumption to take effect. However, it commonly arises after the second renewal.

If a fixed-term contract is terminated prematurely and deemed unfair, the employer may need to compensate for the remaining period.

Sri Lanka’s Personal Data Protection Act mirrors the EU’s General Data Protection Regulation (GDPR). It regulates all personal data handling activities within Sri Lanka or by entities serving Sri Lankan individuals. The goal is to safeguard data subjects’ rights such as access, consent withdrawal, rectification and erasure. Controllers are obligated to address data subject requests within 21 business days. The PDPA governs cross-border data transfers and necessitates the appointment of data protection officers. It mandates reporting security breaches and imposes penalties up to ten million rupees for non-compliance.

Employees can choose to receive their salary daily, weekly or monthly. While salary reviews are allowed, any changes should not lead to a reduction in compensation compared to previous amounts. Salaries are generally paid in Sri Lankan Rupees but expatriates may request payment in a designated foreign currency.

Common items to be included into an employee’s salary slip:

• Company Name
• Full Name of Employee
• Employee Identification Number (also EPF Number)
• Employee Position/Title
• National Identity Card (NIC) Number of the Employee (optional)
• Detailed Salary Breakdown, comprising basic salary, allowances, deductions, and taxes (excluding items like no-pay, salary advances, EPF deductions, PAYE/APIT)
• Net Salary
• Employee and Employer Contributions to EPF and ETF
• Employee’s Signature Certifying the Payment.

Under Sri Lanka’s Shop and Office Employees (Regulation of Employment & Remuneration) Act (SOEA), employees working at least 28 hours per week are entitled to one-and-a-half days of paid leave weekly, 14 days of annual leave with full pay, and overtime pay at one-and-a-half times the regular rate for work on weekly holidays. They also receive seven days of paid casual leave annually, with different accrual rules in the first year. Approval is needed to work on statutory holidays. Otherwise, employees receive alternative time off or extra pay. Additionally, employees get a paid leave day on Full Moon Poya Day or are compensated at one-and-a-half times their regular wage if they work.

Workers falling under the jurisdiction of the Shop and Office Employees (Regulation of Employment & Remuneration) Act No. 19 of 1954 are eligible for seven days of paid casual leave annually. However, during their first calendar year of employment, they are entitled to one day of paid casual leave for every two months worked. Casual leave can be taken for personal reasons or in the event of the employee’s illness. The granting of unpaid time off is left to the discretion of the employer. There are no provisions for the recovery of sick pay from the state.

As per the Shop and Office Employees (Regulation of Employment & Remuneration) Act (SOEA), if childbirth leads to the delivery of a live child, the employee is granted 84 days of paid maternity leave. In cases where childbirth does not result in a live birth, 42 days of paid maternity leave are provided.

Under the Maternity Benefits Ordinance (MBO), female employees receive 14 days or two weeks of maternity leave before childbirth. They are also entitled to 70 days or ten weeks after childbirth. If childbirth does not result in a live child, the maternity leave period is 28 days or four weeks following the birth. Any unused maternity leave before childbirth must be added to the post-birth maternity leave.

Sri Lanka does not have specific legislation for paternity leave. However, some employers may offer it as part of their benefits package, with details varying by company.

There are no legally recognized surrogacy rights in Sri Lanka. Additionally, the maternity benefits provided under the Shop and Office Employees (Regulation of Employment & Remuneration) Act No 19 of 1954 (SOEA) and the Maternity Benefits Ordinance No 32 of 1939 (MBO) do not extend to situations of adoption. Therefore, Sri Lankan law does not contain provisions concerning adoption rights.