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Gratuity calculator Sri Lanka
Enter the last drawn monthly salary and the dates of joining and leaving. Under the Payment of Gratuity Act No. 12 of 1983, an employee with five or more years of continuous service at an employer with 15 or more employees is entitled to half a month's salary for each completed year of service, payable within 30 days.
How it is calculated
- EligibilityFive completed years of continuous service, and the employer had 15 or more employees in the 12 months before termination.
- FormulaLast drawn monthly salary ÷ 2 × completed years of service.
- Last drawn salaryThe Act uses the salary at termination; many employers use the average of the last three months where pay varied. Enter the figure your policy uses.
- DeadlinePayable within 30 days of termination; late payment attracts a surcharge that rises with the delay.
Completed years only; part years are not counted in the basic formula. Employees who die, become incapacitated or retire on ill-health grounds before five years may still qualify. Gratuity may be taxed as a terminal benefit under IRD Table 3; check the current rules.
Rates used
| Item | Rate or amount | Applies to |
|---|---|---|
| APIT personal relief | LKR 1,800,000 per year (LKR 150,000 per month) | Resident employees, IRD Table 1 |
| APIT band | Next LKR 1,000,000 at 6% | Annual taxable income after relief |
| APIT band | Next LKR 500,000 at 18% | Annual taxable income after relief |
| APIT band | Next LKR 500,000 at 24% | Annual taxable income after relief |
| APIT band | Next LKR 500,000 at 30% | Annual taxable income after relief |
| APIT band | Balance at 36% | Annual taxable income after relief |
| EPF employee | 8% | EPF-liable earnings, deducted from employee |
| EPF employer | 12% | EPF-liable earnings, paid by employer |
| ETF employer | 3% | EPF-liable earnings, paid by employer |
| Gratuity | Half a month’s salary per completed year | After 5 years; employers with 15+ staff |
Sources: IRD APIT tax tables 2025/26, EPF, ETF Board, Payment of Gratuity Act No. 12 of 1983. Last reviewed 3 September 2026.
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See Humanised payroll softwareFrequently asked questions
Who is entitled to gratuity in Sri Lanka?
An employee who completes five years of continuous service with an employer that had 15 or more employees during the 12 months before termination, under the Payment of Gratuity Act No. 12 of 1983. Employees who die, become incapacitated or retire on ill-health grounds may qualify earlier.
How is gratuity calculated?
Half a month’s last drawn salary multiplied by the number of completed years of service. For a LKR 120,000 salary and eight completed years that is LKR 480,000.
Which salary is used for gratuity?
The last drawn monthly salary at termination. Where pay varies, many employers use the average of the final three months; the calculator uses the figure you enter.
Are part years counted?
The basic formula counts completed years only. Some employers pay pro rata for the final part year as policy, but the Act does not require it.
When must gratuity be paid, and what if it is late?
Within 30 days of termination. Late payment attracts a surcharge on a rising scale, from 10% for up to one month’s delay to 30% for more than twelve months.
Is gratuity taxable?
Gratuity is a terminal benefit and may be taxed under the IRD’s Table 3 rates rather than the regular APIT tables. Check the current IRD guidance for the applicable exemption and rates.
Does gratuity apply to resigned employees?
Yes. Entitlement depends on completed service and employer size, not on whether the employee resigned or was terminated.