Employer guide
Labour law in Sri Lanka: the employer’s map of every Act that applies (2026)
A private-sector employer in Sri Lanka answers to about a dozen statutes: the Shop and Office Employees Act or a Wages Board decision for hours, leave and pay; the National Minimum Wage Act; the EPF and ETF Acts for retirement contributions; the Inland Revenue Act for APIT; the Payment of Gratuity Act; the Termination of Employment of Workmen Act and the Industrial Disputes Act for dismissals and disputes; the Maternity Benefits Ordinance; the Holidays Act; and the Factories, Workmen’s Compensation and Trade Unions Ordinances. This page says what each one obliges you to do and links to the detailed guide.
Labour law and employment law: the same thing in Sri Lanka
Sri Lanka has no single employment code. What people call labour law or employment law is a set of Acts and Ordinances, most dating from 1934 to 1983, each administered by the Commissioner General of Labour, the Central Bank’s EPF Department, the ETF Board or the Inland Revenue Department. The Labour Department enforces them through inspections and prosecutions, and the Labour Tribunal decides disputes about dismissal. The table below is the map: what each law requires and where the detail lives.
The map: every Act a private-sector employer meets
| Law | What it obliges the employer to do | Detailed guide |
|---|---|---|
| Shop and Office Employees Act No. 19 of 1954 | Hours (8/45), overtime at 1.5×, intervals, weekly holidays, 14 annual and 7 casual leave days, 84 days’ maternity leave, written terms, pay within 10 days, deductions capped at 60%, records | Shop and Office Act guide |
| Wages Boards Ordinance No. 27 of 1941 | For trades with a Wages Board (about 44), pay at least the gazetted trade minimum and follow that decision’s hours, overtime and leave | Who is not covered |
| National Minimum Wage of Workers Act No. 3 of 2016 as amended in 2025 | Pay at least LKR 30,000 a month or LKR 1,200 a day from 1 January 2026; Budgetary Relief Allowances consolidated | Minimum wage guide |
| Employees’ Provident Fund Act No. 15 of 1958 | Register within 14 days of the first hire, deduct 8% and contribute 12% of earnings, remit with Form C before the last working day of the following month | EPF guide |
| Employees’ Trust Fund Act No. 46 of 1980 | Contribute 3% of earnings, employer-only, with Form R1 or R4 by the end of the following month; electronic payment mandatory for 15 or more employees | ETF guide |
| Inland Revenue Act No. 24 of 2017 | Deduct APIT on employment income using the IRD tables and remit by the 15th of the following month; T10 and annual statement by 30 April | APIT guide |
| Payment of Gratuity Act No. 12 of 1983 | With 15 or more workmen, pay half a month’s wage per completed year to anyone leaving after five years, within 30 days; surcharge 10% to 30% if late | Gratuity calculator |
| Termination of Employment of Workmen (Special Provisions) Act No. 45 of 1971 | With 15 or more workmen, no non-disciplinary termination of anyone employed 180 days or more without the workman’s written consent or the Commissioner’s written approval; compensation by the gazetted formula | This page, below |
| Industrial Disputes Act No. 43 of 1950 | A dismissed workman may apply to the Labour Tribunal within six months; the Tribunal can order reinstatement or compensation regardless of the contract | This page, below |
| Maternity Benefits Ordinance No. 32 of 1939 (as amended 2018) | Maternity leave and benefits for women outside the Shop and Office Act, on the same 84-day basis for every live birth | Leave guide |
| Holidays Act No. 29 of 1971 | Every Full Moon Poya day and Sunday is a public holiday; the Act inserted the Poya provisions into the Shop and Office Act | Holidays 2026 |
| Factories Ordinance No. 45 of 1942 | Register factory premises and meet the safety, health and welfare standards for factory workers | — |
| Workmen’s Compensation Ordinance No. 19 of 1934 | Compensate employees for injury or occupational disease arising out of employment, at the scheduled rates | — |
| Employment of Women, Young Persons and Children Act No. 47 of 1956 (as amended 2021) | No employment under 16; restrictions on hazardous work and night work for young persons and, in factories, women | — |
| Trade Unions Ordinance No. 14 of 1935 | Recognise registered unions; a union with 40% membership can demand collective bargaining under the Industrial Disputes Act | — |
| Stamp Duty (Special Provisions) Act No. 12 of 2006 | LKR 25 stamp duty on each salary payment above LKR 25,000, compounded and remitted quarterly | Stamp duty guide |
Do this automatically
Humanised handles leave, holidays, contracts, EPF, ETF and APIT under Sri Lankan labour law from one system, with the statutory rules updated when the law changes. From LKR 10,000/month for up to 15 employees, no setup fee.
See HR softwareHiring: the first employee
- Register with the Labour Department on Form D within 14 days of the first hire; the number serves EPF and ETF.
- Obtain a TIN from the Inland Revenue Department for APIT and stamp duty.
- Issue written particulars of employment on the first day (Shop and Office Act s.17); an appointment letter covers it.
- Check the employee is 16 or over and, for a trade with a Wages Board, that the pay meets the trade minimum.
- Set up attendance and leave records from day one; the Commissioner can call for two years of records.
Ending employment: TEWA and the Labour Tribunal
Two Acts make dismissal the most regulated act in Sri Lankan employment law. The Termination of Employment of Workmen (Special Provisions) Act applies to employers with 15 or more workmen and to any workman employed for 180 days or more. Under section 2, a non-disciplinary termination (redundancy, closure, restructuring, poor performance without misconduct) needs the workman’s prior written consent or the Commissioner General of Labour’s prior written approval; a termination without either is void and the employer must pay wages until it is regularised. Where the Commissioner approves, compensation follows the Order in Gazette Extraordinary No. 1384/07 of 15 March 2005:
| Years of service | Months’ salary per year | Cumulative ceiling |
|---|---|---|
| 1 to 5 | 2.5 | 12.5 months |
| 6 to 14 | 2.0 | 30.5 months |
| 15 to 19 | 1.5 | 38.0 months |
| 20 to 24 | 1.0 | 43.0 months |
| 25 to 34 | 0.5 | 48.0 months |
Disciplinary dismissal for misconduct is outside TEWA but must follow a fair procedure: a charge sheet, a chance to explain, an inquiry, and written reasons. Any dismissed workman, whatever the employer’s size, may apply to a Labour Tribunal under section 31B of the Industrial Disputes Act within six months; the Tribunal decides what is “just and equitable” and can order reinstatement or compensation regardless of the contract. Employers with fewer than 15 workmen face gratuity claims in the Tribunal too. Use the termination letter format and the warning letter format to build the record.
Paying: the monthly statutory calendar
- By the 10th: salaries for the previous month (Shop and Office Act s.19), with a payslip.
- By the 15th: APIT to the IRD with the monthly schedule.
- Before the last working day: EPF (Form C) and ETF (R1 or R4) for the previous month.
- Quarterly, within 15 days of quarter end: stamp duty return for compounding employers.
- Annually: T10 certificates and the Annual Statement of Employer by 30 April; ETF Form II by 31 August and 28 February for paper filers.
What changed recently, and what is coming
Since 2018: maternity leave extended to every live birth (2018); minimum employment age raised to 16 in shops, offices and factories (2021); women permitted to work at night in IT and BPO offices (2024); the minimum wage raised to LKR 27,000 in April 2025 and LKR 30,000 in January 2026 with the Budgetary Relief Allowances consolidated (2025); mandatory ETF e-payment for employers with 15 or more staff (final cut-off August 2026). Coming: the Ministry of Labour’s expert committee is drafting a unified labour code intended to replace these Acts, targeted for the end of 2026, with a draft to be published for comment. This page will be rewritten within a week of any new law being certified.
Where to get authoritative answers
The Department of Labour (labourdept.gov.lk) publishes the Acts and circulars and its district Labour Offices answer employer queries; the EPF Department of the Central Bank and the ETF Board handle contribution questions; the Inland Revenue Department handles APIT and stamp duty. The Employers’ Federation of Ceylon advises member companies. Nothing on this page is legal advice: for a dispute, a termination under TEWA or a Wages Board question, take the specific facts to the Labour Office or a lawyer.
Do this automatically
Humanised handles leave, holidays, contracts, EPF, ETF and APIT under Sri Lankan labour law from one system, with the statutory rules updated when the law changes. From LKR 10,000/month for up to 15 employees, no setup fee.
See HR softwareFrequently asked questions
What are the main labour laws in Sri Lanka?
The Shop and Office Employees Act, the Wages Boards Ordinance, the National Minimum Wage of Workers Act, the EPF and ETF Acts, the Inland Revenue Act (APIT), the Payment of Gratuity Act, the Termination of Employment of Workmen Act, the Industrial Disputes Act, the Maternity Benefits Ordinance, the Holidays Act, and the Factories, Workmen’s Compensation and Trade Unions Ordinances.
Is there a difference between labour law and employment law in Sri Lanka?
No. Both terms describe the same set of Acts and Ordinances administered by the Department of Labour, the EPF Department, the ETF Board and the Inland Revenue Department.
Can an employer terminate an employee in Sri Lanka?
For misconduct, yes, after a fair inquiry. For any other reason, an employer with 15 or more workmen needs the workman’s written consent or the Labour Commissioner’s written approval under the Termination of Employment of Workmen Act, with compensation by the gazetted formula.
How is termination compensation calculated?
Under the 2005 Order: 2.5 months’ salary per year for the first five years, 2 months for years 6 to 14, 1.5 for 15 to 19, 1 for 20 to 24 and 0.5 for 25 to 34, capped at 48 months and a rupee ceiling set by Gazette.
How long does a dismissed employee have to go to the Labour Tribunal?
Six months from termination, under section 31B of the Industrial Disputes Act.
What is the minimum age of employment in Sri Lanka?
16, since the 2021 amendments to the Shop and Office Employees Act and the Employment of Women, Young Persons and Children Act.
Is there a new Employment Act in Sri Lanka?
Not yet. The 2023 draft was never enacted. The Ministry of Labour has a committee drafting a unified labour code targeted for the end of 2026; until it is certified the existing Acts apply.
What must an employer do when hiring the first employee?
Register with the Labour Department within 14 days (Form D), obtain a TIN, issue written terms on day one, check the employee is 16 or over and paid at least the minimum wage, and start attendance and leave records.
Which laws apply to a factory rather than an office?
The Wages Board decision for the trade for pay and hours, the Factories Ordinance for safety and welfare, and the Employment of Women, Young Persons and Children Act for night work and young workers. The factory’s clerical staff remain Shop and Office Act employees.
Related guides and tools
Sources. Department of Labour, labour code downloads; Shop and Office Employees Act, consolidated (NIOSH); Termination of Employment of Workmen (Special Provisions) Act No. 45 of 1971 and the 2005 compensation Order (Department of Labour); Payment of Gratuity Act No. 12 of 1983 (Parliament); National Minimum Wage of Workers (Amendment) Act No. 11 of 2025 (Parliament); Employees’ Provident Fund Act No. 15 of 1958 (Central Bank); Employees’ Trust Fund Act No. 46 of 1980 (ETF Board); Inland Revenue Act No. 24 of 2017 consolidated to 2025 (IRD); Employment of Women, Young Persons and Children (Amendment) Act No. 2 of 2021 (Parliament). 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.