Hire employees and contractors in Sri Lanka

Remote’s guide to employing in Sri Lanka.

  • Capital city

    Sri Jayawardenepura Kotte (legislative) Colombo (executive and judicial)

  • Currency

    Sri Lankan rupee
    (Rs, LKR)

  • Population size

    21,803,000
    (est. 2019)

  • Languages spoken

    Sinhala, Tamil, English

  • Availability

    Remote-Owned Entity
    Coming in Q3 2022

    We own our own entity in the countries where we operate to shield your company from risk and provide you and your employees with the signature Remote experience.

Facts & Stats

The Democratic Socialist Republic of Sri Lanka is an island nation just off the coast of India famous for its rich cultural heritage, unique biodiversity, and a rich history of tea production. The natural beauty of Sri Lanka is becoming more of a magnate for tourists and digital nomads as the cost of living is relatively low, especially when you factor in the allure of the pristine beaches in the nation’s south. Sri Lanka has one of Asia’s most literate populations and English is widely spoken, so global employers should consider this country’s top talent.

  • Capital city

    Sri Jayawardenepura Kotte (legislative) Colombo (executive and judicial)

  • Currency

    Sri Lankan rupee
    (Rs, LKR)

  • Languages spoken

    Sinhala, Tamil, English

  • Population size

    21,803,000 (est. 2019)

  • Ease of doing business

    Medium

  • Cost of living index

    31.18 (2021)

  • Payroll frequency

    Monthly

  • VAT - standard rate

    8%

  • GDP - real growth rate

    2.3% (2019)

Grow your team in Sri Lanka with Remote

To employ in Sri Lanka, companies must own a local legal entity in the country or work with a global employment solution. Managing payroll, benefits, taxes, and compliance in Sri Lanka can get complicated, especially without established local relationships. 

Remote’s global employment solution makes it easy for your company to employ workers in Sri Lanka quickly, efficiently, and in full compliance with all applicable labor laws. We take on the responsibility and legal risks of international employment so you can focus on hiring great talent and growing your business.

Risks
of misclassification

Like many other countries, Sri Lanka treats self-employed individuals or contractors and full-time workers differently and there are risks associated with misclassification.

Employing in Sri Lanka

Provisions for employee protections and workers’ rights in Sri Lanka are spelled out across several government statutes, such as:

  • The Shop and Office Employees Act of 1956
  • The Factory Ordinance
  • The Minimum Wage Ordinance, and
  • The Maternity Benefits Ordinance

Employees in Sri Lanka enjoy protection against discrimination based on age, religion, gender expression, and race.

Common questions that could come up during the hiring process include the minimum wage, overtime rates, and guaranteed paid time off. Remote can help you offer a complete, competitive, and compliant benefits package to your employees in Sri Lanka.

Competitive benefits package in Sri Lanka

At Remote, we’re obsessed with helping you craft the best possible employee experience for your team. We are leading the way in practicing “fair equity,” which means making sure employees everywhere have access to both the required and supplemental benefits they need to thrive (and that will allow you to attract the best local talent).

Our benefits packages in Sri Lanka are tailored to fulfill the local needs of your employees. Typically, our packages contain some or all of the following benefits:

  • Health Insurance
  • Dental Insurance
  • Vision Insurance
  • Mental Health Support
  • Pension or 401(K)
  • Life and Disability Insurance

Taxes in Sri Lanka

Learn how employment taxes affect your payroll and your employees’ paychecks in Sri Lanka.

  • Employer

    • 12%: Provident Fund

    • 3%: Employee Trust Fund

  • Employee

    • 8%: Provident Fund

  • Income taxes

      • 6% + 180,000 LKR on excess: Up to 3,000,000 LKR ($15,000)
      • 12% + 540,000 LKR on excess: 3 - 6 million LKR ($15,000 - $30,000)
      • 18%: Above 6 million LKR (Above $30,000)

Types of leave

Paid time off

Employees are entitled to 14 days of paid annual leave after they’ve worked an entire year with an employer.

Public holidays

Sri Lanka has up to 26 public holidays annually since employees are entitled to take time off work every full moon, in addition to religious and national celebrations.

Sick leave

7 days of sick leave annually.

Maternity leave

Female employees are entitled to 12 weeks of maternity leave for the first and second births and just six weeks off for any subsequent childbirth.

Paternity/parental leave

There are no provisions for parental or paternity leave under Sri Lankan law for non-government employees.

Other leave

  • Duty leave: Employers are obligated to permit workers to attend language examinations, attend medical checkups, vote during elections, and perform reservist duty in the military.

Employment termination

Termination process

Employees can either be dismissed summarily - if just cause if provided - otherwise, termination must be in accordance with the terms stipulated in the employment contract. A decision to let an employee go must be approved by the Labour Commissioner.

Notice period

There is no prescribed notice period. The general period followed in practice is 1-3 months.

Severance pay

Probation periods

There is no specified maximum. Generally, probation period is 3 or 6 months.

Build your team,
anywhere in the world.

Get started today