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Positioned near burgeoning markets and boasting a skilled workforce, Sri Lanka offers numerous benefits and incentives for global investors. It has outpaced many South Asian counterparts in financial, human, and social development.
Over the past decade, Sri Lanka's economy has exhibited consistent growth, transitioning from a middle-income economy to a nation with an average economic growth exceeding 5%. The country is actively shifting from a predominantly rural economy to an urbanised one centred on manufacturing and services.
Despite the inherent investment risks in any location, Sri Lanka stands out as one of the leading economies in South Asia.
Tailored investment and export development policies align with national development goals, establishing Sri Lanka as an attractive destination for international buyers and investors.
In Sri Lanka, employment contracts can be either verbal or in writing. However, opting for written contracts, duly signed by both the employee and employer, offers greater clarity and evidentiary value. These contracts must encompass key terms, including but not limited to:
Sri Lanka's labour laws do not explicitly specify the duration of probationary periods. However, it is customary for the probationary period to be around 6 months. For senior employees, the probation period cannot exceed a year, and for other employees, it is limited to 6 months. In specific instances, the maximum probation period is capped at 3 months.
In Sri Lanka, the standard work week consists of 8 hours per day, totaling 45 hours per week. However, industry-specific regulations, such as the Factories Ordinance, impose restrictions on certain employees, prohibiting them from working on specific days.
Overtime in Sri Lanka is compensated at 150.00% of the regular pay rate, and the maximum allowable overtime hours are 12 per week. Certain exemptions from these restrictions may apply to executive or professional positions.
The minimum wage in Sri Lanka is 12,500 LKR per month, equivalent to 500 LKR per day.
There is no legal obligation to provide a 13th-month salary in Sri Lanka.
Income tax in Sri Lanka is determined based on progressive rates, with various additional factors influencing the overall rates, including household status and the number of children.
As per the Minimum Retirement Age of Workers Act in Sri Lanka, the retirement age is set at 60 years. The old-age pension is managed through a Provident Fund and Trust Fund system. The employer contributes 12% of the monthly payroll to the Provident Fund and 3% of the monthly payroll to the Trust Fund.
The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in Sri Lanka tailored to your needs.
In Sri Lanka, terminations may only occur through valid reasons such as:
The minimum statutory notice period in Sri Lanka varies based on the employee's job role and the terms outlined in the contract or agreement. However, the standard notice period typically extends up to 6 months.
Severance pay in Sri Lanka is applicable to employees with more than 5 years of service at the time of retirement, resignation, or dismissal. The employer is required to pay half a month's salary for each completed year of service.
Sri Lanka observes the following 24 public holidays, in addition to the paid annual leave entitlement for employees:
Sri Lanka provides a range of benefits to its employees, including:
Legal and compliance experts are readily available to provide guidance and case-by-case Q&A support.
By leveraging dedicated support from in-house legal and compliance experts for case by case questions and more.
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