Sri Lanka is a mixed economy in which both the private and the state sectors engage. Foreign investments are encouraged, and several free zones have been established. Its economy is based on agriculture and services and endowed with natural resources. Sri Lankan imports include petroleum, consumables, machinery, capital equipment, and motor vehicles and its exports include garments, tea, rubber, coconut products, gems, and jewelry.
Currency: Sri Lankan Rupee (LKR) 1 LKR = 0.0053 USD
Economic Capital: Colombo
Spoken Language: Sinhala, Tamil, English
GDP: 2.3% growth rate (2019) (Source: World Bank)
Time Zone: UTC (+ 05:30)
Minimum Wage: Minimum monthly wage for all employees (irrespective of industry) is LKR 10,000, and the minimum daily wage is LKR 400.
Working Hours: Total hours worked, exclusive of meals and rest, don’t exceed 9 hours a day, or 45 hours in any week. Working hours of a person above the minimum age of employment (14 years) but less than 16 years shall not exceed 12 hours a day – and not before 6 am and after 6 pm.
Payroll Cycle: The wages are paid on a daily, weekly, fortnightly, or monthly basis. However, a wage period cannot exceed a month.
Pay Date: It has to be made on a working day.
Overtime Compensation: Overtime is paid at one and half times the average hourly rate of wage. The overtime hours in a week cannot exceed 12 hours.
With Saturdays and Sundays added to public holidays, people generally have around 125 days’ holidays per year.
|January 14||Thursday||Tamil Thai Pongal Day||Public Holiday|
|January 28||Thursday||Duruthu Full Moon Poya Day||Public Holiday|
|February 04||Thursday||National Day||Public Holiday|
|February 26||Friday||Navam Full Moon Poya Day||Public Holiday|
|March 11||Thursday||Mahasivarathri Day||Public Holiday|
|March 20||Saturday||March Equinox||Season|
|March 28||Sunday||Madin Full Moon Poya Day||Public Holiday|
|March 29||Monday||Holi||Hindu Holiday|
|April 02||Friday||Good Friday||Public Holiday|
|April 04||Sunday||Easter Sunday||Observance|
|April 13||Tuesday||Sinhala & Tamil New Year’s Eve||Public Holiday|
|April 14||Wednesday||Sinhala & Tamil New Year’s Day||Public Holiday|
|April 26||Monday||Bak Full Moon Poya Day||Public Holiday|
|May 01||Saturday||May Day||Public Holiday|
|May 13||Thursday||Eid Ul-Fitr||Public Holiday|
|May 26||Wednesday||Vesak Full Moon Poya Day||Public Holiday|
|May 27||Thursday||Day following Vesak Full Moon Poya Day||Public Holiday|
|June 21||Monday||June Solstice||Season|
|June 24||Thursday||Eid Ul-Alha||Public Holiday|
|July 20||Tuesday||Poson Full Moon Poya Day||Public Holiday|
|July 23||Friday||Esala Full Moon Poya Day||Public Holiday|
|August 22||Sunday||Nikini Full Moon Poya Day||Public Holiday|
|September 20||Thursday||Binara Full Moon Poya Day||Public Holiday|
|September 23||Thursday||September Equinox||Season|
|October 20||Wednesday||Vap Full Moon Poya Day||Public Holiday|
|November 04||Thursday||Deepavali||Public Holiday|
|November 18||Thursday||lll Full Moon Poya Day||Public Holiday|
|December 18||Saturday||Unduvap Full Moon Poya Day||Public Holiday|
|December 21||Tuesday||December Solstice||Season|
|December 24||Friday||Christmas Eve||Observance|
|December 25||Saturday||Christmas Day||Public Holiday|
Public holidays: An employee who works for not less than 28 hours (excluding overtime and rest breaks) in any one week must be allowed one-and-a-half days’ paid holiday in that week or the week immediately after that. This weekly holiday is provided as a half-day on Saturday and a full day on Sunday. Most establishments offer a full day’s holiday on Saturday. Any employee required to work on a weekly holiday is entitled to payment at the overtime rate.
Annual leave: It cannot extend beyond 14 days, irrespective of the employee’s tenure of service.
An employee is entitled to 14 days’ annual leave with full pay for every completed year of service. He/she is required to take seven days on a consecutive basis. In respect of the first year of employment, an employee is entitled to proportionate in the succeeding year leave calculated on the following basis:
Casual leave: Employees are entitled to 7 days’ paid casual leave in any year, except during the first year of employment. During the first calendar year of employment, the employee is entitled to 1 day’s paid casual leave for every two months working.
Maternity leave: A female employee can apply for 84 days’ maternity leave. She cannot be dismissed based on her pregnancy or of any illness consequent to her pregnancy. Women nursing children who are less than one year old are entitled to nursing breaks, in addition to the rest breaks provided by law. For the birth of a subsequent child or a third or a dead child, leaves totaling 42 working days will be granted.
Sick leave: Every worker certified by a doctor is entitled to sick leave for seven days a year.
Paternity Leave: It is limited to 3 days for the state sector. The employee must take this leave within three months from the date of birth of the child.
Marriage Leave: There is no provision for marriage leave. It is at the employer’s discretion.
Adoption Leave: No provisions concerning adoption under Sri Lankan law. It is at the employer’s discretion.
Childcare Leave: No provisions concerning childcare under Sri Lankan law. It is at the employer’s discretion.
Death Leave: There is no special provision for bereavement leave in Sri Lanka. It is at the employer’s discretion.
Work-Related Injury Leave: If an employee is absent from work due to injury sustained during work and under the circumstances specifically attributed to the nature of his duties, they are granted accident leave. The employer also pays the employee following the terms and conditions of the insurance policies.
Duty Leave: All staff members are granted duty leave for the following purposes:
Tax year: It is from April 1 to March 31 of the subsequent year. These are payable in quarterly installments in advance. Companies and trusts may apply for a different accounting period as the year of assessment (e.g., calendar year).
Residents: The income tax rate for an individual is between 4% and 24%, depending on the level of profits and income earned in a given year of assessment. For employees, the employer is required to deduct tax under a withholding scheme, termed as ‘PAYE’ (Pay As You Earn) tax.
|Installment||Time Period||Day of Payment|
|1st Installment||April to June||On or before August 15|
|2nd Installment||July to September||On or before November 15|
|3rd Installment||October to December||On or before February 15|
|4th Installment||January to March||On or before May 15|
Corporate taxation: The division and tax rates are as follows –
|Corporate income tax rate||28% (Tax rates of 14% and 40% also apply to profits from specific businesses)|
|Branch tax rate||14%|
|Capital gains tax rate||10%|
Employment Insurance System: Employees are given employment insurance cover. However, the kind of cover depends on the employer.
Bonus: There is no obligation imposed by law on employers to pay bonuses. In general, unless mentioned in the employment contract, bonus payments are entirely at the employer’s discretion and largely depend on the employer’s financial performance.
Retirement Age: An employee retires at the age of 55.
Pension: It is payable to men from 55 and women from the age of 50.
|Pension scheme||Responsible agency||Nature||Benefits|
|Public service pension scheme||Department of Pensions||Non-contributory. Public servants||Depends on salary|
|Widows/widowers and Orphans Pension Scheme||Department of Pensions||Contributory pensio.Spouse, unmarried children of public servants||Depends on salary|
|Public Assistance Monthly Allowance PAMA||National Secretariat for Elders of the Ministry of Social Services||Income transfer to elderly, aged 70 or above without income are entitled. Benefit amount is Rs 1000|
|Farmer's Pension and Social Security Benefit Scheme FMPS||Agriculture and Agrarian Insurance Board||Defined benefit, contributory, voluntary. Payments 1-time or periodically||Monthly pension of LKR 1,000 to 4,166 on the completion of 60 years of age, until death.|
|Fisherman's Pension and Social Security Benefit Scheme FSHPS||Ministry of Fisheries. Established by an Act of 1990.||Defined benefit, contributory, voluntary. Payments 1-time or periodically.||Monthly pension of LKR 1,000 to 4,166 on the completion of 60 years of age, until death|
|Pension and Social Security Benefit Schemes for other employees OPS||Ministry of Finance and Planning. Established by an Act of 1996||Defined benefit, contributory, voluntary. Payments 1-time or periodically.||Monthly pension of LKR 1,000 to 8,000 on the completion of 60 years of age, until death.|
|Migrant worker pension scheme MPS||Defined benefit, contributory, voluntary. Payments 1-time or periodically.|
Employee Provident Fund: The employers and employees contribute to the Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF). The minimum contribution should be 8% by employees and 12% by employers in EPF, and 3% by employers in ETF.
Notice Period: 1 month
Probation Period: The probation period shall not exceed one year in the case of employees in supervisory or technical capacity and six months in any other employee. The employer may further extend in some cases for a maximum of 3 months.
Severance Pay: Employees terminated by notice shall be entitled to severance payment, which is as follows:
Types of Business: Sole proprietorships, partnerships, limited companies, overseas companies, offshore companies, franchises, joint ventures or wholly foreign-owned subsidiaries, representative offices, and a branch office.
Co-working Cost: There are several co-working spaces in Colombo, Galle, Ahangama, Dehiwala-Mount Lavinia, Kandakliya. They have office-like amenities such as hot desks, private meeting rooms, good wifi speed, air conditioners, etc. Workers can book these places according to day, week, and month.
Visa: Types of visas that a foreign national needs to enter the country for work reasons are –
Validity of work visas: It is valid for one year or a period specified by the company. You can apply to renew each of these visas after a year. Company directors are given an initial two-year visa.
The cost of a visitor visa or a work visa is LKR 10,000.
Sources: Encyclopedia, World Bank, Sri Lanka government website, Reuters, KPMG, PricewaterhouseCoopers report, Coworker, Deloitte