Employer guide
ETF for employers in Sri Lanka: the 3% contribution, R1 and R4 forms, Form II, deadlines and surcharges (2026 guide)
Every private-sector employer in Sri Lanka pays 3% of each employee’s total monthly earnings to the Employees’ Trust Fund. Nothing is deducted from the employee. The contribution is remitted with Form R1 (15 or more employees) or Form R4 (fewer than 15) on or before the last working day of the following month, R1 employers also file a half-yearly Form II, and late payment attracts a surcharge of 5% to 50%.
What the ETF is and who must contribute
The Employees’ Trust Fund was set up by the Employees’ Trust Fund Act No. 46 of 1980 to give employees a second, non-contributory savings and welfare fund alongside the EPF. All private-sector employees and public-sector employees who are not in the government pension scheme are members. Unlike EPF, only the employer contributes: 3% of the employee’s total earnings for the month, and no part of it may be deducted from the employee. The Board also runs a voluntary scheme for the self-employed and migrant workers.
ETF at a glance
| Item | Rule | Source |
|---|---|---|
| Contribution | 3% of total monthly earnings, paid by the employer; no deduction from the employee | ETF Act s.16(1), s.30 |
| Earnings base | Same as EPF: salary, regular allowances, holiday pay, commissions, piece-rate pay; not overtime, reimbursements or bonuses | ETF Board; EPF FAQ |
| Registration | No separate ETF registration: use the EPF employer number from the Department of Labour; a temporary number is issued by the ETF Board until it arrives | ETF Board |
| Remittance form | R1 for employers with 15 or more employees (and all government and semi-government bodies); R4 for fewer than 15 | ETF Board |
| Half-yearly return | Form II from R1 employers: January–June by 31 August; July–December by 28 February | ETF Board |
| Due date | On or before the last day of the month following the pay month (the Board accepts the last working day) | ETF Act s.16(1); ETF Board |
| Electronic payment | Compulsory for employers with 15 or more employees; see the note below | ETF Board notices |
| Surcharge for late payment | 5% to 50% by length of delay | ETF Act s.27; ETF Board |
Do this automatically
Humanised calculates ETF on the same earnings base as EPF every pay run, prints the R1 or R4 remittance advice and the Form II member details, and reminds you before the last working day of the month. From LKR 10,000/month for up to 15 employees.
See payroll softwareRegistration and the R1 / R4 remittance forms
An employer’s first duty is to register with the Commissioner General of Labour and obtain the employer registration number; the ETF uses that same number, so there is no separate ETF registration. If the EPF number has not yet arrived, the Board’s Contribution Section issues a temporary number so the first month’s contribution is not late. Employers that contribute to an approved private provident fund instead of the EPF are given a separate ETF number and must quote it on every form.
Which remittance form you use depends on headcount:
- Form R1: employers with 15 or more employees, and all government and semi-government institutions. R1 employers also file the half-yearly Form II with member details.
- Form R4: employers with fewer than 15 employees, listing member details on the form itself.
- Once you have started on R1 you stay on R1 even if headcount falls below 15. A change from R4 to R1 because headcount grows should begin in January or July, and the Board should be told in advance.
- Every form carries the employer’s signature, telephone number and e-mail, and the figures must agree with the cheque or transfer and with the member details file.
Paying: due date and the mandatory move to electronic payment
The contribution for a pay month must reach the Board on or before the last working day of the following month. Cheques must be crossed and drawn in favour of “Employees’ Trust Fund Board”; cash is accepted only at Bank of Ceylon Torrington Square, Bank of Ceylon Pettah (Super Grade) and People’s Bank Narahenpita; online payment is available through the corporate portals of nine participating banks and the Board’s own e-services at eservices.etfb.lk, with direct-debit arrangements for regular payers. A separate remittance form is used for each month when paying arrears.
Electronic payment is compulsory for larger employers. The Board first required employers with 15 or more employees to remit electronically from February 2023, and its current notice sets a final cut-off: from the July 2026 contribution (due 31 August 2026) manual payments and submissions by cash, cheque or money order are no longer accepted from those employers. Employers who pay electronically do not file the half-yearly Form II, because the member details arrive with the e-file.
Surcharges for late payment
The Board applies the same rising scale as the EPF:
| Delay after the due date | Surcharge on the contribution |
|---|---|
| Up to 10 days | 5% |
| 11 days to 1 month | 15% |
| 1 to 3 months | 20% |
| 3 to 6 months | 30% |
| 6 to 12 months | 40% |
| More than 12 months | 50% |
What members get, and the employer’s part in claims
Members claim their ETF balance when they retire or leave employment, and the Fund also provides welfare benefits financed from its income: life cover (LKR 100,000), permanent-disability benefit (LKR 300,000), heart and kidney surgery reimbursement (up to LKR 350,000), hospitalisation reimbursement (up to LKR 50,000), the Viyana housing loan (up to LKR 2.5 million) and scholarships for members’ children, each with its own claim form on the Board’s downloads page. When a member claims, the employer certifies the employment and contribution details on the form, so keep the R1 or R4 history and the Form II returns for every past employee.
Monthly ETF checklist for employers
- ETF earnings base equals the EPF base for every employee; 3% calculated on it.
- R1 or R4 completed (or the e-file generated) with member numbers matching the EPF register.
- Payment made electronically or at the bank on or before the last working day of the following month; acknowledgement filed.
- Form II due dates in the diary for R1 employers not paying electronically: 31 August and 28 February.
- New joiners added and leavers marked in the month of change.
- Any surcharge notice paid with its notice number and the cause fixed.
Do this automatically
Humanised calculates ETF on the same earnings base as EPF every pay run, prints the R1 or R4 remittance advice and the Form II member details, and reminds you before the last working day of the month. From LKR 10,000/month for up to 15 employees.
See payroll softwareFrequently asked questions
What is the ETF contribution rate?
3% of each employee’s total monthly earnings, paid entirely by the employer (ETF Act No. 46 of 1980 s.16(1)). Nothing is deducted from the employee (s.30).
When is ETF due?
On or before the last day of the month following the pay month; the Board accepts payment up to the last working day.
What is the difference between Form R1 and Form R4?
R1 is the monthly remittance form for employers with 15 or more employees (and all government and semi-government bodies); R4 is for employers with fewer than 15 employees and carries the member details on the form.
What is Form II and when is it due?
The half-yearly member-details return filed by R1 employers: January to June by 31 August and July to December by 28 February. Employers paying electronically do not file it separately.
Is ETF electronic payment compulsory?
Yes for employers with 15 or more employees. The Board’s final cut-off is the July 2026 contribution (due 31 August 2026), after which cash, cheque and money-order payments are not accepted from those employers.
Do I need a separate ETF registration?
No. The employer number issued by the Commissioner General of Labour for EPF is used for ETF. The Board issues a temporary number if the EPF number has not yet arrived.
What is the surcharge for late ETF payment?
5% up to 10 days, 15% up to one month, 20% up to three months, 30% up to six months, 40% up to twelve months and 50% beyond that (ETF Act s.27).
Is ETF calculated on the same earnings as EPF?
Yes. The Board applies the same earnings base: regular pay and allowances in, overtime, reimbursements and bonuses out.
Related guides and tools
Sources. ETF Board, payment of contributions; ETF Board, contact: Mehewara Piyesa, Kirula Road, Narahenpita, Colombo 05; +94 11 7747200; info@etfb.lk; ETF Board, employer details and notices; Employees’ Trust Fund Act No. 46 of 1980 (ETF Board PDF); ETF Board downloads (R1, R4, Form II, claim forms). This guide is general information for employers, not legal or tax advice; figures are checked against the sources on the review date shown above and again every 1 January and 1 April. See our editorial approach.