What are the statutory contributions for employees and employers in Sri Lanka?
Employee Income Tax
The Sri Lankan tax system applies a progressive tax structure, with rates as follows:
0% tax rate applies to annual income up to LKR 750,000
6% tax rate applies to annual income between LKR 750,001 and LKR 1,200,000
12% tax rate applies to annual income between LKR 1,200,001 and LKR 1,800,000
18% tax rate applies to annual income between LKR 1,800,001 and LKR 2,400,000
24% tax rate applies to annual income over LKR 2,400,000
Employer Payroll Contributions
Employers are required to contribute 12% of their employees’ salary to the Employees’ Provident Fund (EPF) and 3% of their employees’ salary to the Employees’ Trust Fund (ETF).
Employee Payroll Contributions
Employees are required to contribute 8% of their salary to the Employees’ Provident Fund (EPF) and there is no contribution bracket. Additionally, employees are required to contribute 3% of their salary to the Employees’ Trust Fund (ETF).
What is the minimum wage in Sri Lanka?
Sri Lanka sets a minimum monthly wage of LKR 12,500 in 2023.
What is the payroll cycle in Sri Lanka?
The standard payroll cycle in Sri Lanka is monthly, with pay dates usually falling on the last working day of every month.
How long is the working hours in Sri Lanka?
Employees customarily work 45 hours per week; however, overtime is limited to 12 hours per week and must be compensated at a higher rate.
How many leaves are employees entitled to?
- Standard paid time off — employees in Sri Lanka are entitled to at least 14 days of paid annual leave after completing six months of continuous service, with the amount of leave increasing with tenure.
- Compulsory annual public holidays — there are 25 national public holidays in Sri Lanka.
- Minimum paid sick leave — employees in Sri Lanka are entitled to paid sick leaves; however, the amount of leave and pay may vary depending on the employer and length of contract.
How long is the maternity and paternity leave in Sri Lanka?
- Statutory maternity leave — female employees in Sri Lanka are entitled to up to 12 weeks of paid maternity leave.
- Statutory paternity leave — male employees in Sri Lanka are not entitled to any paternity leave.
- Statutory parental leave — there is no mandated parental leave in Sri Lanka.
What rights do employees have upon leaving employment due to certain conditions?
Employers can terminate employees for valid reasons such as poor performance or misconduct, but this must follow a fair evaluation process. When an employee’s service with a company is terminated for certain reasons, they are entitled to certain rights and benefits, including:
- Notice period — the minimum notice period for termination varies based on the length of service, ranging from two weeks to one month.
- Severance pay — employees with at least a year of service are entitled to severance pay, which varies based on the length of service.
- Probation period — employees can have six months of probation period at the maximum.
What is the type of visa for employees in Sri Lanka?
In order to be granted an employment visa in Sri Lanka, the applicant must have a valid job offer from a Sri Lankan employer while the employer must obtain a work permit from the Department of Immigration and Emigration.
Sri Lanka offers a variety of employment visas, including the Professional Visa, the Project Visa, and the Resident Guest Visa.
Standard VAT Rate
The standard VAT rate in Sri Lanka is 8%.