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Undoubtedly, payroll is a critical process for any organization. The pay cycle in Sri Lanka refers to the period for which an organization pays its employees, which can vary depending on the pay frequency the organization chooses to adopt.

Wages in Sri Lanka can be paid on a daily, weekly, fortnightly, or monthly basis. However, a wage period cannot exceed a month.

13th-month payments are not mandatory.

The current minimum wage in Sri Lanka is LKR12,500.00 per month in 2023.

Overtime should not exceed 12 hours per week and must be compensated at 150% of the hourly rate.

Overtime in relation to any employment or work means employment or work in excess of the normal working hours. Overtime should not exceed an aggregate of 12 hours in any one week.

No employee is required to work overtime unless they are paid separately for such overtime work in respect of each hour, at a rate not less than 1.5 times the hourly rate of his ordinary remuneration.

The remuneration payable for any part of an hour of overtime work done by him/her will be determined in the proportion that part bears to the hour.

The hourly rate of remuneration for the purpose of computing overtime remuneration is as follows –

• where remuneration is payable at a daily rate, be one-eighth of the daily rate,
• where remuneration is payable at a monthly rate, be one-eighth of the monthly rate divided by thirty,
• where remuneration is payable at a fortnightly rate, be one-eighth of the monthly rate divided by fourteen, and,
• where remuneration is payable at a weekly rate, be one-eighth of the monthly rate divided by seven.

The Director of HR shall ensure that the personal files of employees after termination of employment are stored separately from those currently in service. The maximum retention period for such documents is six (6) years in Sri Lanka.

In Sri Lanka, the following procedure is followed while onboarding an employee:

1. The appointee shall be required to sign and accept the Letter of Appointment.
2. The appointee must provide the following documents: birth certificate, National Identity Card/Passport, educational certificates, school leaving certificate, Service Letters from previous employers, character certificate, a valid Grama Niladari Certificate, bank passbook, and any other relevant documents.
3. It shall be the employee's responsibility to provide all updated information about himself and his past employment records on the standard Application Form.

The probation period shall not exceed one year in the case of employees in supervisory or technical capacity and six months in the case of any other employee, which may be extended by a further period not exceeding three months. At the end of the probation period, the employee shall be confirmed in his post.

The employee is entitled to 9 Holidays out of the holidays declared by the gazette.

Every Full Moon Poya Day and every Sunday shall be a public holiday and a bank holiday.

Public Holidays include:

• January 6  - Duruthu Full Moon Poya Day B. P. 

• January 15 - Tamil Thai Pongal Day B. P. M. 

• January 16 - Special Bank Holiday (In lieu of Tamil Thai Pongal Day which falls on a Sunday) 

• February 4 - Independence Day B. P. M. 

• November 26 - Ill Full Moon Poya Day B. P. 

• December 25 - Christmas Day B. P. M. 

• December 26 - Unduvap Full Moon Poya Day B. P.

• August 30 - Nikini Full Moon Poya Day B. P. 

• September 28 - Milad-Un-Nabi (Holy Prophet's Birthday) B. P. M. 

• September 29, - Binara Full Moon Poya Day B. P. 

• October 28 - Vap Full Moon Poya Day B. P. 

• November 12 - Deepavali Festival Day B. P. 

• May 6 - Day following Vesak Full Moon Poya Day B. P. M. 

• June 3 - Poson Full Moon Poya Day B. P. 

• June 29 - Id-Ul-Alha (Hadji Festival Day) B. P. 

• July 3 - Adhi-Esala Full Moon Poya Day B. P. 

• August 1 - Esala Full Moon Poya Day B. P. 

• April 13 - Day prior to Sinhala & Tamil New Year Day B. P. M. 

• April 14 - Sinhala & Tamil New Year Day B. P. M. 

• April 22 - Id-Ul-Fitr (Ramazan Festival Day) B. P. 

• May 1 - May Day B. P. M. 

• May 5 - Vesak Full Moon Poya Day B. P. 

• February 5 - Navam Full Moon Poya Day B. P.  

• February 18 - Mahasivarathri Day B. P. 

• March 6 - Medin Full Moon Poya Day B. P. 

• April 5 - Bak Full Moon Poya Day B. P. 

• April 7 - Good Friday B. P. 

* B – Bank Holiday P – Public Holiday M - Mercantile Holiday 

* All Saturdays and Sundays are Bank Holidays 

In respect of each year of employment during which any person has been continuously in employment in or about the business of any shop or office, that person shall be entitled to take on account of private business, ill-health, or other reasonable cause, leave with full remuneration for a period or an aggregate of periods not exceeding seven days per year. The employer shall allow such leave and will be liable to pay such remuneration.

Women with no or one child are entitled to twelve weeks of maternity leave. Two weeks before the delivery date and ten weeks after the delivery date should be taken. Women with two or more children are entitled to six weeks of maternity leave. Two weeks before the delivery date and four weeks after the delivery date should be taken.

Adoption leave: 56 days for adopting 1 child and 70 days for multiple adoptions.

Casual Leave: Employees are entitled to 7 days' paid casual leave in any year except during the first year of employment. During the first calendar year of employment, the employee is entitled to 1 day's paid casual leave for every two months of working.

Paid Time Off: After completing a full year of service, employees are entitled to 14 days of annual leave. Annual leave is accrued based on the date the employee joined the company after the first year.

During the first year of employment during which an employee has been continuously in employment that person shall be entitled to take –

1. where the employment commences on or after the first day of January but before the first day of April, a holiday of 14 days with full remuneration
2. where the employment commences on or after the first day of April but before the first day of July, a holiday of 10 days with full remuneration
3. where the employment commences on or after the first day of July but before the first day of October, a holiday of seven days with full remuneration
4. where the employment commences on or after the first day of October, a holiday of 4 days with full remuneration, the employer shall allow such holiday and be liable to pay such remuneration.
5. For the second or any subsequent year of employment during which an employee has been continuously in employment, that employment shall be entitled to take a holiday of 14 calendar days with full remuneration, of which not less than seven days shall be consecutive. The employer shall allow such holiday and be liable to pay such remuneration.

Workers may be retrenched only after giving at least one month's notice. A worker is eligible for this one-month notice only after one year of service. A worker with less than one year of service is not entitled to any notice.

Any foreign nationals will need to obtain a visa to enter Sri Lanka. Choosing the right type of visa to apply for depends on the length of time the applicant plans to stay in Sri Lanka, as well as their reason for traveling.

Residence visa: This visa allows foreign nationals to stay in Sri Lanka for up to a year, during which they are free to work and study. Foreign nationals will need to renew their residence visa every year that they plan to stay in the country.

Any foreign employees who plan to move to Sri Lanka to work for your company must obtain a residence visa. Before securing this permit, employees must apply for an entry visa in their country of residence.

Background verifications and reference checks must be conducted before the employment contract is issued. It will be done for the purpose of obtaining information about the candidate’s behavior and work performance from prior employers.

The process of background verification of the candidates includes four main areas:

Public Utilities Commission of Sri Lanka

1. Verification of education details
2. Verification of Pre-employment details
3. Reference checks
4. Criminal verifications (obtaining Police Certificates)

Verification of a candidate’s education details and pre-employment details should be completed for all categories of employees.

Reference checking should be conducted via telephone call or email. The standard Reference Check Form must be used.

All verifications should be conducted upon the employee's consent, and all information acquired must be maintained with the strictest confidentiality.