How to Write a Leave Policy in Sri Lanka
Start a Sri Lankan leave policy from the statutory floor: 14 days annual, 7 casual, maternity and Poya days. Then set what the Act leaves to you.
On this page
- What the law fixes and what you choose
- Leave year, accrual and the first-year rules
- Notice, approval and refusal rules
- Carry-forward, encashment and expiry
- No-pay leave and its knock-on effects
- Special leave: bereavement, study, paternity
- Publishing the policy and getting acknowledgements
- Frequently asked questions
- Does a leave policy need to be in writing?
- Can a policy give more than the statutory minimums?
- Do factory or retail-trade staff use this same policy?
- How often should the policy be reviewed?
- What happens if the policy conflicts with the Act?
Start from the law, not a blank page. The Shop and Office Employees Act already fixes annual leave, casual leave, maternity leave and holidays. Your policy only needs to set the parts the Act leaves open. That means the leave year, how staff apply, and what happens to an unused balance. Write those choices down once, and payroll stops guessing every month.
What the law fixes and what you choose
The leave entitlements in Sri Lanka guide sets out every statutory number. Your policy cannot go below these:
| Leave | The Act sets | You decide |
|---|---|---|
| Annual leave | 14 days a year from the second year of continuous employment, full pay | Application process, blackout dates |
| Casual leave | 7 days a year, full pay | Half-day units, what counts as urgent |
| Sick leave | Not a separate entitlement | Whether to grant medical leave, and how many days |
| Maternity leave | 84 working days, full pay, per live birth | Handover process, return-to-work steps |
| Poya and mercantile holidays | Paid; rates if worked | Rostering around them |
| Bereavement, study, paternity | Not required by the Act | Whether to offer them, and how much |
Write both columns into the policy. Staff need to see the legal floor and your company’s choices in one place.
Leave year, accrual and the first-year rules
Set the leave year first. The calendar year is the statutory default, so use 1 January to 31 December unless there is a good reason not to.
Annual leave for a new joiner depends on the quarter they start:
| Joined between | Annual leave, first year, taken the following year |
|---|---|
| 1 January – 31 March | 14 days |
| 1 April – 30 June | 10 days |
| 1 July – 30 September | 7 days |
| 1 October – 31 December | 4 days |
Casual leave builds up differently: 1 day for every 2 completed months of service, usable in that same first year. From year two, both settle into the full 14 annual and 7 casual days. See annual leave vs casual leave for how the two entitlements differ day to day.
Notice, approval and refusal rules
The Act lets an employee take at least 7 of the 14 annual leave days in a row, at a time agreed with you. Beyond that, notice periods are your choice. Set a notice period for annual leave, and say whether casual leave can be requested on the day.
The Act does not give you a right to refuse casual leave outright. You cannot simply refuse leave that is genuinely for illness or urgent private business. You can ask staff to confirm cover is arranged when several people request the same day. Write down what counts as “urgent” so refusals are rare and consistent. See short leave and half-day rules for how to handle requests under a full day.
Carry-forward, encashment and expiry
Carry-forward past the year after leave is earned is not required by the Act. It is your call. A workable policy: allow up to 5 unused annual leave days into the next year, and let the rest lapse. Casual leave has no statutory carry-forward and lapses at year end unless your policy is more generous.
Cash payment for untaken leave while someone is still employed is also a policy choice, not a legal requirement. On termination, though, the rule is fixed. The employee gets the previous year’s balance, plus one day for every completed month worked that year, up to 14 days. If notice is too short to take it, the employer pays for those days instead. See whether unused annual leave carries forward for how to set caps and cut-off dates that hold up.
No-pay leave and its knock-on effects
Once statutory and policy leave is used up, further absence is unpaid. State your no-pay deduction method in the policy so it is not decided case by case. No-pay days lower that month’s earnings, which lowers EPF and ETF for the same month, since both are worked out on actual monthly earnings.
Special leave: bereavement, study, paternity
The Act does not require any of these in the private sector. Paternity leave is 3 working days only in the public sector, under the Establishments Code. If you offer bereavement or study leave, name it, set the number of days, and say whether it is paid. An unwritten “special leave” invites disputes about who got what.
Publishing the policy and getting acknowledgements
Put the finished policy in the appointment letter or staff handbook, not a separate memo that gets lost. Get a signed or emailed acknowledgement from every employee when it is issued, and again after any change. Keep the leave and overtime register the Act requires. A Labour Officer can ask for it.
Do this automatically in Humanised. Once the policy is agreed, a leave management system lets you set the accrual rate from each joining date, and routes approvals so nothing sits in a WhatsApp thread. There is a free 7-day assisted trial, set up by the Humanised team on your own data.
This is general payroll guidance. Every case is different. For your own case, speak to a payroll practitioner or a lawyer.
Frequently asked questions
Does a leave policy need to be in writing?
Written particulars of employment are due on day one under the Shop and Office Employees Act (s.17). A leave policy is not named separately, but including it in the appointment letter or handbook protects both sides if a dispute comes up.
Can a policy give more than the statutory minimums?
Yes. The Act sets a floor, not a ceiling. You can offer more annual leave, more casual leave, or extra paid leave types, as long as you do not go below the statutory numbers.
Do factory or retail-trade staff use this same policy?
Only shop and office employees are covered by these figures. Factory and other Wages Board trades (garment manufacture, hotels and catering, security and around 40 others) follow their own Wages Board decision instead.
How often should the policy be reviewed?
Review it whenever the law changes, and at least once a year. Carry-forward caps and first-year tables are easy to apply wrong after staff turnover.
What happens if the policy conflicts with the Act?
The Act wins. A policy term below the statutory minimum does not remove the employee’s statutory entitlement.
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