Employer of Record (EOR) in Sri Lanka

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Employer Of Record In Sri Lanka

Skuad’s Sri Lanka EOR (Employer of Record) solution offers you a hassle-free business expansion experience in Sri Lanka. By partnering with Skuad, you can scale up your business without setting up a physical entity in another country. Skuad’s unified and automated global HR platform helps you build and manage a globally distributed team. But, there’s more to it. Skuad’s in-country experts also offer you real-time support in navigating through the complexities of taxes, compliances, and employee benefits. This leaves you with ample time to refine your business augmentation strategies. Click here to know more.

Sri Lanka At A Glance

Population: 21.80 million

Currency: Sri Lankan Rupee (LKR)

Capital city: Colombo

Languages spoken: Sinhala, Tamil, English

GDP: $ 306.997 billion (2021)

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Employment In Sri Lanka

Employers are not legally bound to enter into an employment agreement in Sri Lanka with their employees. Verbal confirmation can do in most cases. The Sri Lanka labor laws identify the following types of employment in the country:

  • Probationary employment
  • Regular employment
  • Casual employment
  • Seasonal employment
  • Fixed-Term employment

Entitlements and Explanation

Statutory Working Hours

According to Sri Lankan employment laws, the total working hours cannot exceed eight hours in a day and 45 hours a week.

Overtime Compensation

The overtime working hours cannot exceed 12 hours in a week. Moreover, employees working overtime get 150% times their average hourly wage rate.

Annual Paid Leave

Employees are eligible for 14 days of annual paid leaves after completing 12 months of employment. However, it is mandatory to avail of the first seven days of leave on a consecutive basis.

Casual Leave

Employees get seven days of paid casual leaves in a year. However, they can avail of this benefit only from the second year of their employment. During the first 12 months of employment, they only get one day of paid casual leave after every two months of work.

Maternity Leave

Female employees get 84 days of maternity leave in Sri Lanka. Apart from this, they also get nursing breaks and rest breaks for their one-year-old child. However, maternity leave is cut short to only 42 days for the second and third children.

Sick Leave

Employees working in Sri Lanka get seven days of paid sick leaves. They are required to produce a sickness certificate from the doctor to avail their sick leaves.

Paternity Leave

There is no provision for paternity leave in the Sri Lankan employment laws.

Duty Leave

Employees get duty leave for the following.

  • Casting votes in local elections
  • Attending examinations of language proficiency
  • Attending medical examinations
  • Volunteering in the Armed Forces

Employees Provident Fund

Employees contribute 8% of their salary toward the Employee Provident Fund. On the other hand, the employer’s contribution is 12% of the employee's earnings


The retirement age of male and female employees is 55 and 50 in Sri Lanka, respectively. Both categories of employees are eligible to receive a pension from their respective retiring ages. However, the pension pay depends upon the employment category and payscale of the workers.

It is important to note that every employee working in Sri Lanka is eligible to get insurance coverage under the Employment Insurance System. Moreover, The Shop and Office Act, 1954 provides all the employee health benefits in Sri Lanka.

The biggest hurdle for employers expanding operations in a country like Sri Lanka is understanding the complex employee benefits and laws. But, that’s not all; they also need to have a legal entity to start commercial operations in Sri Lanka. You won’t have to worry about all of this if you collaborate with Skuad. Skuad’s unified employment platform handles all employee benefits and compliances. Click here to get more details.

Contractors Vs. Full-Time Employees

Companies planning to expand their business in Sri Lanka have to choose between hiring contractors or full-time employees. Ideally, hiring contractors would be a good idea for short-term business diversification projects as this incurs no liabilities for employee compliances and benefits management.

However, employers who are planning to have long-term projects in Sri Lanka should always choose full-time employees. Why so? Because it will help in fostering long-term relationships with the employees. It will also guarantee continuous productive contribution to the project.

Companies should connect with a global HR partner such as Skuad to understand the right option for them. With operations in over 150 countries, Skuad’s solution has an excellent hold on all the local laws and regulations of Sri Lanka. Book a demo to understand more about Skuad’s extensive network.

Hiring In Sri Lanka

There might be several elements of a successful business venture, but the most crucial will always be your workforce. Hence, you should focus on creating a dedicated, hardworking, and dynamic workforce for your company. So, what are the different ways of hiring in Sri Lanka?

Hiring in-house – Do you want to hire fresh talent for your business expansion project in Sri Lanka? If yes, this can be the right hiring option for you. Many job boards available in Sri Lanka have an outstanding database of qualified and experienced candidates. TopJobs, JobUp, CareerFirst, and JobPal are some of the top job portals in Sri Lanka. However, there have also been instances wherein employers have come across misleading profiles.

Going for a traditional recruitment agency – Several national and international recruitment agencies can help you hire employees in Sri Lanka. Collaborating with them will give you faster results in less time. However, compliance risks are pretty high with this option. Moreover, hidden charges can also make it an expensive choice for you.

Collaborating with a Global EOR - Partnering with reliable hiring companies in Sri Lanka is the best way to hire the right workforce for your project in Sri Lanka. Skuad’s EOR solution will handle all your HR and administrative requirements. It will not only save your internal resources but also ensures 100% local law compliance and safe hiring for you. Book a demo today to know more about Skaud’s EOR solutions.

Probation & Termination


According to the Sri Lankan Employment Laws, the standard probation period in Sri Lanka for technical and supervisor band employees cannot exceed 12 months. On the other hand, the probationary period in Sri Lanka for other employees cannot exceed 6 months. The employer has the authority to extend this for 3 more months.


Employers are obliged to give a 1 month’s notice and a logical explanation for terminating employment contracts in Sri Lanka. Any termination of the agreement for non-disciplinary reasons needs prior approval from the Commissioner of Labor. Workers with five years of service are also eligible to receive severance pay from their employers. Such employees will receive half a month’s salary for every year of service per the Employment Contract Law in Sri Lanka.

Companies that want to focus on their business expansion projects solely should join hands with Skuad. Skuad enables management of all your employee-related functions, including probation and termination compliances. Moreover, everything Skuad does for you in Sri Lanka will be well within the Sri Lankan Employment Laws. What more can you ask for a smooth business expansion? Find out more about Skuad here.

EOR Solution

As per the law, a  company cannot hire employees in Sri Lanka if it does not have a legal entity in Sri Lanka. But what if you still want to expand your commercial operations there? Well, in this case, you should consider partnering with a reliable EOR solution provider for revving up your business augmentation process. An EOR can help you in creating a compliant workforce in a foreign land. This can prove to be a boon for employers who are new to the global markets and do not have enough knowledge about the area.

Going for an EOR is also a wise decision when diversification is crucial for your business, but you are not familiar with the local labor laws. An EOR becomes the need of the hour for employers who want to develop a remote team in a foreign country but cannot invest their internal resources to manage taxation, payroll, and other HR functions.

Skuad’s EOR solution sets you free by offering an effective employment lifecycle management solution. Skuad’s unified employment solution will handle regulatory compliance, payroll processing, visa formalities, work permits, and taxes for you. This leaves you with ample time to explore more business opportunities in Sri Lanka and boost your ROI. Click here to know everything about Skuad’s EOR Solution.

Types Of Visas In Sri Lanka

Work visas and residential permits are a must for all the employees who want to work, reside, and receive a salary in Sri Lanka. There are two major categories of visas in Sri Lanka: Visit Visa and Residency Visa. The Visit Visa allows non-Sri Lankans to visit the country for a short duration. On the other hand, a Residence Visa allows them to stay here permanently or for an extended duration.

Types of Work Visa or Visit Visa

  • Transit Visa – It is an entry permit for a foreign national traveling to another destination and will pass through the territory of Sri Lanka. Transit Visa allows the visitor to stay in Sri Lanka for 48 hours.
  • Business Visa – People who want to expand their business operations in Sri Lanka need to apply for a Business Visa. It is a short-term visa that can be extended to three months. According to Sri Lanka Work Visa regulations, you can get this visa for single, double, or multiple visits.
  • Tourist Visa – Bona-fide tourists who intend to explore the beauty of Sri Lanka need to apply for a Tourist Visa. It is a double-entry visa that is valid for 30 days only. However, people coming to Sri Lanka for yoga training can stay here for up to three months with a Tourist Visa. Additionally, visa extension is also permitted for a maximum of six months. All these norms are also applicable to the people entering Sri Lanka’s territory by water mode.

Types of Residence Visa

  • Employment Visa – The people who are entering Sri Lanka for employment projects need to obtain this visa. It is valid for two years, but you can renew it as per your requirement.
  • Investors Visa – Investors Visa is valid for one year and can be renewed from time to time.
  • Students Visa – This visa is for the students who are planning to pursue an academic course from a State-approved institute or university in Sri Lanka. It is valid for a year and is renewable.
  • Religious Visa – Religious Visa is mainly for the members of the clergy.
  • The family members of a permanent resident of a Sri Lankan can also get a Residence Visa.
  • Ex-Sri Lankans and their dependents also can obtain a Residence Visa.

The list of mandatory documents for getting a work visa in Sri Lanka is as below:

  • Visa application form
  • Passport-size photographs
  • Invitation letter from the hiring company confirming employment in Sri Lanka.
  • Certificate of BOI - Board of Investment
  • Entity Registration Certificate along with business project documents and employment   contract
  • A letter of recommendation from the concerned Ministry in Sri Lanka
  • A copy of the Bio-Data page of your passport

The process of applying for a Work Visa In Sri Lanka is as follows:

  • The first step is to obtain an Entry Visa. Consult a Sri Lankan Consulate or Embassy for more details.
  • If you want to gain a residence permit upon arriving in Sri Lanka, make sure you mention it in your visa application. You can travel to Sri Lanka once you get the Entry Visa and then apply for a Resident Visa.
  • You can legally start commercial operations in Sri Lanka once you get a Resident Visa from the Department of Immigration and Emigration.

Complex visa formalities and regulations can derail your business augmentation projects. Therefore, you need a trustworthy ally that can offer you the best employer of record service. This is where Skuad comes into the picture. Skuad’s in-country experts are well-versed with Sri Lankan visa regulations and they will take care of all your Sri Lanka work visa requirements, offering you an uncomplicated business expansion experience. Book a demo to understand more. 

Work Permits

The DI&E - Department of Immigration and Emigration handles visa processing and work permits in Sri Lanka. People who intend to come to Sri Lanka for employment purposes should get a prior visa and work permit from the nearest Sri Lankan Embassy.

Skuad’s Sri Lanka EOR solution can help you sponsor Sri Lanka work permits for foreigners and complete documentation formalities. By utilizing Skuad platform, you are assured of 100% compliance with the local labor regulations in Sri Lanka and work towards mitigating challenges and risks that come in the way of getting a Sri Lanka work permit without a job offer. Click here to know more about it.

Payroll & Taxes In Sri Lanka

Payroll compliances are quite straightforward in Sri Lanka. The employer can choose to pay salary on a daily, weekly, fortnightly, or monthly basis. But this wage period cannot exceed one month in any case. As far as the pay date is concerned, the employers must pay the salary only on a working day.

Every individual working in Sri Lanka has to pay income tax every assessment year. The tax rate usually ranges from 4% to 24%, depending on their income and level of profits. Moreover, employers are also responsible for deducting tax from employees' salaries under PAYE – Pay As You Earn scheme. PAYE tax rate cannot exceed 16%, in any case, for any assessment year.

Employer Taxation

Capital Gains Tax - 10%

Corporate Income Tax - 28%

Branch Tax - 14%

Employees’ Provident Fund - 12%

Employees’ Trust Fund - 3%

Employee Taxation

Employees’ Provident Fund - 8%

Payroll and taxation compliances in Sri Lanka might seem easy and doable initially. But there are still several less-talked-about regulations that, if overlooked, can invite penalties.

In such a case, opting for Skuad’s payroll outsourcing in Sri Lanka will prove to be a wise decision. Skuad’s unified employment platform will take all the payroll and taxation compliances off your shoulders. Connect with Skuad here to know everything about it.


Are you planning to create a legal entity in Sri Lanka? If yes, you have several options such as a limited company, sole proprietorship, partnership, offshore company, overseas company, joint venture, franchise, wholly foreign-owned subsidiaries, branch office, and representative office to choose from.

It is important to note that there is no minimum capital requirement to establish a subsidiary unit in Sri Lanka. As far as taxes are concerned, branch offices have to pay 10% branch tax on their profits.

Steps to Incorporating a Holding Company in Sri Lanka

  • Reserve a unique name for your entity and register it online with the Registrar of Companies, Sri Lanka.
  • Get the consent form signed personally by the directors and company secretary.
  • The consent form along with the Articles of Association are submitted to the Registrar of Companies.
  • Then file a note of incorporation with the Government Publication Bureau and Daily Newspapers.
  • Additionally, contact the Taxpayer Service Unit to get a Tax Identification Number for your entity.
  • The last step is to register your entity for VAT and EFP numbers.

The entire process might take around 10 days to complete. However, if you plan to set up a remote team in Sri Lanka without a subsidiary establishment, you should collaborate with a local EOR like Skuad. Skuad’s unified employment platform enables employee hiring and onboarding. Click here to know everything about it.


A Professional Employer Organization (PEO) handles a majority of HR functions for their clients. When associating with a PEO, you will continue to be in charge of hiring your employees, but the PEO will handle all other responsibilities like benefits management, payroll, and compliances. To be precise, a professional employer organization in Sri Lanka will become a co-employer that will manage HR functions for the principal employer. This arrangement is great for employers with a limited presence and cannot handle all employee needs alone.

On the other hand, an EOR will offer the same HR services as PEO. However, they go one step further to hire employees on your behalf and become their legal entity. EORs will enter into a service agreement with you. Moreover, all the major employee decisions will largely lie in the hands of the EOR. All the employment contracts will stay between the EOR and the employees, setting you free from all employee liabilities and responsibilities.

Employers who cannot afford to divert their time and resources away from business diversification in Sri Lanka should opt for EOR solutions. Skuad’s EOR solutions offer a seamless mix of workforce management and compliance adherence. In addition, Skuad’s professionals follow a 360° approach to offer you a hassle-free business scale-up experience. Find out more about Skuad here.


Sri Lanka’s geographical proximity to India, low cost of living, investor-friendly compliances, and excellent international likes make it one of the most attractive options for business diversification. But despite all these, there are still several challenges that can act as a roadblock in your business expansion process. That’s why it is worth seeking assistance from one of the best employers of record companies in Sri Lanka, Skuad.

What makes Skuad stand out from the crowd? Well, Skuad’s platform will not only onboard employees for you but will also help in exploring exceptional global talent. Skuad’s tech-enriched HR platform will remove every obstacle and, thus, give mileage to your business augmentation process.

It will also spare you from the hassles of establishing entities in Sri Lanka, managing compliances, taxes, and payrolls. You name it and Skuad’s Sri Lanka employers of record EOR does it for you. 

peach illusgreen illus
Employ and pay

global talent

starting at $199

Employ contractors and employees in 160+ countries

Get started
peach illusgreen illus
Employ and pay

global talent

starting at $199

Employ contractors and employees in 160+ countries

Table of Content

Building a remote team?

Employ exceptional talent, anywhere, anytime!

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Looking to employ talent in another country? Skuad's EOR platform can help!

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