Hire and pay employees in
Sri Lanka, hassle-free

With Deel, your business can easily hire employees in Sri Lanka. No more worrying about local laws, complex tax systems, or managing international payroll. Deel takes care of everything in 150+ countries.

The average onboarding time frame in Sri Lanka is 3 days with Deel.

Currency

Sri Lankan Rupee - LKR

Capital

Sri Jayawardenepura Kotte and Colombo

Official Language

Sinhala, Tamil & English

Payroll Cycle

Monthly

Onboard, pay and manage employees in Sri Lanka with Deel.

Usually, to hire in Sri Lanka, your business needs an entity. That means a local office, an address registered as a subsidiary, and an account with a local bank. All of this, plus navigating regional benefits, payroll, tax, and HR laws, can take months.

Deel lets you hire employees in Sri Lanka quickly, easily, and compliantly. We even automate tax document collection, payroll, benefits, and more. For your existing direct employees, we can manage your entire payroll operation from end-to-end.

Download the Guide

All the necessary benefits for Sri Lanka
built right in

Deel allows you to provide localized benefits for employees in Sri Lanka within minutes. All in one manageable online dashboard.

  • Gratuity Payment
  • Private Healthcare - Unisure (optional)
  • Private Healthcare - Allianz (optional)

Our quickstart guide to hiring in Sri Lanka

Navigate the tabs below to learn everything you need to know about hiring an employee in Sri Lanka

Minimum Wage Requirements

Sri Lanka's minimum wage rate is LKR 12,500 per month.

Individual Income Tax

The individual income tax ranges from 6% to 18%. Income tax is calculated according to progressive rates. Multiple additional factors may impact overall rates, such as household status and the number of children.

Gross Annual Income Tax Rate (%)
Up to currency - LKR 3,000,000 6%
Up to currency - LKR 6,000,000 12%
Over LKR 6,000,000 18%

Payroll Cost

The employer cost is generally estimated at 15% of the employee salary.

  • EPF Employer contribution - 12%
  • Employees Trust Fund contribution - 3%

These costs are provided as estimates and are intended solely for general informational purposes. To fully comprehend all associated costs and fees related to the terms of any employment agreement for this country, please contact our Sales team for a quote.

Overtime Pay & Maximum Hours

Standard working hours are 8 hours per day and 40 hours per week. The standard workweek is from Monday to Friday. However, extending the workweek to 45 hours working for 4 hours on Saturdays is possible.

Overtime payment is mandatory and is not included in the salary. Hours outside of standard work hours are considered overtime and before working them, the employee needs to get approval from the employer. Employees can work a maximum of 12 hours of overtime per week and get paid 150% of the hourly rate.

Maternity Leave

Pregnant employees who have worked for 150 consecutive days for the actual employer are entitled to 84 days, excluding holidays, of paid leave. 14 days must be taken before the child's birth and the following days after the birth. The employee will receive 100% of the salary during this period, and the employer will be responsible for this pay.

There are no regulations to extend maternity leave, the length and payment conditions should be arranged with the employer.

Paternity Leave

There is no paternity leave currently required by law.

However, it is best practice to grant 7 business days paid by the employer.

Parental Leave

In Sri Lanka, there are no laws that cover parental leave. However, employees may be entitled to maternity leave and paternity leave.

Sick Leave

Sick leave entitlement is not covered by the law. However, employees can use their 7 business days of casual leave when being sick. Additional leave can be taken and paid by the employer if it's agreed by both parties.

Termination Requirements

Terminations must respect complex rules and the rules of an employee’s employment country. The off-boarding is always handled by the Employer with the primary stakeholders. It may include ad-hoc fees as well as required or recommended steps on specific termination cases.

Terminations in Sri Lanka can happen under four scenarios:

  • The employee decides to resign.
  • By mutual agreement: both parties agree on the conditions and the employee will provide a resignation letter.
  • Termination by the employer without cause: the employer will need approval from the Commissioner of Labour (“COL”) and severance should be paid.
  • Termination with a cause: the employer will have to justify in writing the reason.

Notice Period

The notice period is not specified by law and will depend on what's agreed on in the employment contract. The usual length is one month. During the probationary period, there is no notice period.

Severance for Employees

In Sri Lanka, all employees terminated without cause or who have been working for more than five years are entitled to severance pay. Terminations without cause must be approved by the Commissioner of Labour (COL) and can request higher payments based on each case.

  • Employees who worked for between 1 to 5 years served - 2,5 months per year.
  • Employees who worked between 6 to 14 years served - 2 months per year.
  • Employees who worked for between 15 to 19 years served - 1,5 months per year.
  • Employees who worked for between 20 to 24 years served - 1 month per year.
  • Employees who worked for between 25 to 34 years served - 0.5 months per year.

To protect you from unforeseen financial risks arising from terminations, Deel applies a Severance Accrual to all employment agreements in this country.  Deel has extensive expertise in managing litigation risk globally and our Severance Accrual calculation is based on the prevailing common-law or statutory entitlements and local best practices. In the event your employee resigns or is not entitled to severance, all unused amounts will be returned to you.

Paid Time Off

Part-time employees are entitled to 12 days and full-time employees to 14 days of paid time off (PTO) a year. PTO can only be taken on the following calendar year of employment. The number of holidays accrued will depend on the quarter the employee joined.

Casual leave: employees are also entitled to seven additional days generally used for sick leave and personal matters.

The calendar year is calculated from January 1st to December 31st.

Start date of the employee PTO
January 1st - March 31st 14 days
April 1st - June 30th 10 days
July 1st - September 30th 7 days
October 1st - December 31st 4 days

Public Holidays

Sri Lanka celebrates over 20 national holidays. Some of them are:

  • Tamil Thai-Pongal Day (2 days).
  • National Day.
  • Milad-Un-Nabi (Holy Prophet's Birthday).
  • Day Prior to Sinhala and Tamil New Year Day.
  • Sinhala and Tamil New Year Day.
  • May Day.
  • Day Following Vesak Full Moon Poya Day.
  • Christmas Day (2 days).

In Sri Lanka, Poya Holidays are non-working days. As 70% of the residents are religious, the government takes these days as public holidays, as well as the ones listed above.

Onboarding

Onboarding takes 3 business days. Wet ink for the Employment Provident Fund is required. EPF form will be done after singing the EA.

Employment Contract Details

Contracts can be in English. They must be in writing and signed by both parties.

A contract must include:

  • Name
  • Start date
  • Length of the employment
  • Job description
  • Termination conditions.

Probation Period

Probation periods are not mandatory. The maximum probation period is 365 days (12 months).
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Hiring in Sri Lanka, hassle-free

With Deel, your business can easily hire employees in Sri Lanka with our EOR solution. If you have an entity, our Global Payroll solution takes care of payroll and compliance for your direct employees. Our 250+ in-house experts handle everything from managing local laws, complex tax systems, or your payroll in Sri Lanka and 150+ countries.

Group (8)

Starting at 599 USD

Management fee

Group (9)

15%

Estimate Employer Cost

*of employee salary

Want to learn the cost of hiring an employee in Sri Lanka?

View our Employee Cost Calculator

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