The main statutes at a glance
- Shop and Office Employees (Regulation of Employment and Remuneration) Act No. 19 of 1954: hours, overtime, leave and holidays for shop and office workers.
- Wages Boards Ordinance No. 27 of 1941: minimum terms for trades covered by a Wages Board, including plantations, manufacturing and many services.
- Factories Ordinance No. 45 of 1942: safety, health and welfare in factories.
- Industrial Disputes Act No. 43 of 1950: labour tribunals, arbitration, collective agreements and industrial courts.
- Termination of Employment of Workmen (Special Provisions) Act No. 45 of 1971, the TEWA: restrictions on non-disciplinary termination.
- Employees' Provident Fund Act No. 15 of 1958 and Employees' Trust Fund Act No. 46 of 1980: retirement contributions.
- Payment of Gratuity Act No. 12 of 1983: lump-sum payment on leaving after five years' service.
- Maternity Benefits Ordinance No. 32 of 1939, Employment of Women, Young Persons and Children Act No. 47 of 1956, Trade Unions Ordinance No. 14 of 1935, Workmen's Compensation Ordinance No. 19 of 1934 and the National Minimum Wage of Workers Act No. 3 of 2016.
A single consolidated Employment Act has been drafted and debated for several years. Until it is enacted, these separate statutes, each with its own definitions of "employee" and "workman", remain the law.
Hours, overtime and leave under the Shop and Office Act
For employees covered by the Shop and Office Act, normal working hours are eight a day and forty-five a week, with overtime paid at one and a half times the hourly rate and capped by regulation. Employees are entitled to a weekly holiday, statutory holidays, fourteen days of annual leave after the first year (pro-rated in the first year) and seven days of casual leave. The Act also regulates night work, meal intervals and the keeping of records.
Workers in trades covered by a Wages Board instead get the hours, overtime and leave set in the decisions of that board, which are published in the Gazette. Managerial and executive staff may fall outside both regimes, so the first question in any dispute is which statute, if any, covers the employee.
Wages, EPF, ETF and gratuity
The National Minimum Wage of Workers Act sets a monthly and daily minimum wage that has been revised upwards several times since 2016; check the current figure, and the Budgetary Relief Allowance Acts that add to it. Employers must contribute 12 per cent of earnings to the EPF, with the employee contributing 8 per cent, and a further 3 per cent to the ETF, paid monthly to the Central Bank and the ETF Board. Unpaid contributions attract surcharges and prosecution.
Under the Payment of Gratuity Act, an employer with fifteen or more employees must pay a worker who leaves after five years of continuous service a gratuity of half a month's wages for each completed year. Gratuity may be forfeited for fraud, misappropriation or wilful damage, but only in part and only on proof.
Termination and the TEWA
The Termination of Employment of Workmen (Special Provisions) Act is the feature of Sri Lankan labour law that most surprises employers. Where an employer has fifteen or more workmen, a workman with at least six months' service cannot be terminated for non-disciplinary reasons, such as redundancy or closure, without the workman's prior written consent or the prior written approval of the Commissioner General of Labour. Termination in breach is void and the worker is entitled to reinstatement with back wages. Where approval is granted, compensation is paid according to a published formula based on years of service.
Disciplinary dismissals fall outside the TEWA but must still be for just cause, follow a fair procedure and can be challenged before a labour tribunal. Fixed-term contracts, probation and retirement at the agreed age have their own rules and a large body of case law.
Labour tribunals and industrial disputes
A workman whose services have been terminated may apply to a labour tribunal under section 31B of the Industrial Disputes Act, within a short statutory time limit. The tribunal decides whether the termination was justified and may order reinstatement or compensation, giving a "just and equitable" award that is not bound by the strict terms of the contract. Appeals lie to the High Court on questions of law. Other disputes may be referred by the Commissioner for conciliation, arbitration or an industrial court, and trade unions have statutory rights to organise and bargain collectively.
Maternity leave, women and young workers
Female employees under the Shop and Office Act are entitled to eighty-four working days of paid maternity leave, and the Maternity Benefits Ordinance provides for other sectors. Dismissal because of pregnancy is prohibited, and nursing intervals must be allowed. The Employment of Women, Young Persons and Children Act sets the minimum age for employment, raised to sixteen in 2021, and restricts night work and hazardous work for young persons. The Shop and Office Act and the Penal Code both now address sexual harassment at work.
Researching labour law with Lex
Labour questions often turn on which statute applies and on the latest tribunal and appellate decisions. Ask Lex "does the TEWA apply to a company with ten employees" or "how is gratuity calculated for a daily-paid worker" and open the section, the Wages Board decision and the judgments cited. For how statutes and case law fit together, see our guide to the Sri Lankan legal system.
Questions and answers
What are the working hours under the Shop and Office Act in Sri Lanka?
Normal working hours for employees covered by the Shop and Office Employees Act are eight hours a day and forty-five hours a week. Work beyond that is overtime, paid at one and a half times the ordinary hourly rate, subject to the limits set by regulation.
What are the EPF and ETF contribution rates in Sri Lanka?
Employers contribute 12 per cent of an employee's earnings to the Employees' Provident Fund and the employee contributes 8 per cent. Employers also contribute 3 per cent to the Employees' Trust Fund. Both are paid monthly and late payment attracts surcharges.
Can an employer terminate an employee in Sri Lanka?
Disciplinary dismissal for just cause is permitted but must follow a fair procedure and can be challenged in a labour tribunal. Non-disciplinary termination, such as redundancy, by an employer with fifteen or more workmen requires the written consent of the worker or the prior approval of the Commissioner General of Labour under the Termination of Employment of Workmen Act. Termination in breach is void.
How is gratuity calculated in Sri Lanka?
Under the Payment of Gratuity Act No. 12 of 1983, an employee who has completed five years of continuous service with an employer of fifteen or more employees is entitled to half a month's wages for each completed year of service, calculated on the last month's wage, payable within thirty days of leaving.
How much maternity leave is there in Sri Lanka?
Female employees covered by the Shop and Office Employees Act are entitled to eighty-four working days of paid maternity leave. The Maternity Benefits Ordinance provides for other sectors. Dismissal on the ground of pregnancy is prohibited.
This guide is general information, not legal advice. Last updated 6 October 2026.