Employ Candidates Compliantly in Sri Lanka

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  1. Overview: Sri Lanka
  2. Global HR Compliance
  3. Global PEO and payroll
  4. Work permit for hiring expats via PEO
  5. Expand without a company set up
  6. Contractor vs. employee: which is better?
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Global HR Compliance in Sri Lanka

If you hire international workforce, or plan to hire, then Hiring and Firing Workforce in Sri Lanka Guide below will help you understand the nuances of labor legislation in the country.

There are two main reasons for companies hiring foreign workforce:

  • Expanding into foreign markets to sell company product or products there. In this case, companies hire sales representatives who would exclusively represent their product in the target market and sell it to their local client base.
  • Hiring the right foreign talent with a unique expertise, often related to IT sphere that cannot be found in the home country or that costs less compared to local specialist with similar skills.

After you have found the right candidate, the question is how to hire and provide compensation to this person so you as a business remain 100% compliant when working with global workforce. Another thing to consider is whether you want to keep the talent long-term and how you can do that.

If you need to hire foreign workforce in Sri Lanka so you can expand there, then our Global Employer of Record solution may be of help. We help you legally hire and reward your foreign workforce by making them employees via a global employment outsourcing service. This is simple as employ your in-house workforce with the only difference that workers can live anywhere in the world and Acumen International would be their legal employer on your behalf. This means we would bear all employment risks, not you. Also, we manage bonuses, vacations, sick leave and can rent the office and a car for your foreign sales representatives if that is what you need.

With our solution, you can test new foreign markets before deciding whether you are going to get established there. You gain flexibility and expand with reduced costs, and easily withdraw from the unattractive countries.

We are experts in global workforce employment in Sri Lanka, and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.

Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.

With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Sri Lanka.

See Hiring and Firing Workforce in Sri Lanka Guide below for a general overview of labor rules and regulations in the country. Or contact us if you need to employ workers in Sri Lanka or would like to get more details.

Hiring and Firing Workforce in Sri Lanka Guide

# Employment contracts
A contract of employment can be formed in writing or orally. The terms of the contract can be expressed or implied. Under the Shop & Office Employees (Regulation of Employment & Remuneration) Act, it is a legal requirement that the contract of employment should be reduced to writing and shall include certain information as specified.

The making of an employment contract is the result of an agreement between the employer and employee. The contract envisages reciprocal obligations between the parties. The contract could be oral or in writing and the terms are express or implied. The terms of the contracts vary depending on the type of employment.

The types of employment are permanent, temporary, casual, probationary, seasonal, fixed term & pprentices/trainees.

# Minimum (Statutory) Employment Rules and Regulations in Sri Lanka

# Hours of work:
Under the Shop & Office Employees Act, the number of working hours constituting a normal working week shall not exceed 45 hours and a normal working day shall not exceed 8 hours, exclusive of an interval for a meal or rest.
The Factories Ordinance includes general conditions as to hours of employment of women and young people, but no specific provisions regarding other workers.

The total hours worked, exclusive of intervals for meals and rest, for women and young people shall not exceed 9 hours in any day nor exceed 48 hours in any week.

The working hours of a person above the minimum age for employment (14 years) but less than 16 years shall not exceed 12 hours per day. Their work shall not commence before 6 a.m. and not continue after 6 p.m.

The working hours of those below 18 years, cannot go beyond 8 p.m. and not beyond 1 p.m. on one day of the week.
Both women and young people cannot be employed continuously for a spell of more than four and a half hours without an interval of at least half an hour.

# Probation period:
It is a common practice to recruit new employees on a trial or probationary period of 3 to 6 months. It is not a legal requirement. However, if employees covered under the Shop & Office Employees Act are to be placed on a period of probation such requirement shall be expressly stated in the letter of appointment/contract of employment setting out the period of probation and conditions governing such probation.

# Annual leave:
The Shop & Office Employees Act provides for 14 days annual leave to be granted from the second year of employment and beyond. 7 out of the 14 days shall be availed of consecutively.

In addition, employees are entitled to 7 days casual leave and 8 days of Statutory Public holidays.

Full moon (Poya) days are non-working days. Employees are entitled to an interval of half an hour if they are employed continuously for 4 hours.

# Parental leave:
Under the Shop & Office Employees Act, 84 working days of maternity leave is permitted. Women workers who are not covered under the Shop & Office Employees Act and who are not in casual or seasonal work are entitled to benefits in terms of the Maternity Benefits Ordinance. There is no Paternity leave.

# Sick leave:
There are no specific provisions relating to illness/disability.

# Overtime:
An employee who works not less than 28 hours a week excluding overtime work if any, shall be allowed one and a half days holiday in respect of that week.

# State minimum salary:
Sri Lanka’s minimum wage rate is 10,000 rupees per month. Sri Lanka’s minimum wage was last changed in January 2016.

# Employee dismissal:
Termination of a contract of employment is subject to the terms of the contract. Under the provisions of the Termination of Employment of Workmen’s Act, which applies to those declared as employed in scheduled employment, termination of an employee on non-disciplinary grounds is conditional to either the prior consent in writing of the employee or prior written approval by the Commissioner of Labour, where the employee has worked under the employer for more than 180 days for a continuous period of 12 months and where the employer has employed 15 or more employees on average during the 6 months preceding the month the termination of service was sought.

In the event of a termination of an employee on disciplinary reasons, an inquiry into the alleged misconduct should be conducted as a preliminary step to justify such termination.

In instances of gross misconduct or other circumstances, the employers exercise the option of instant dismissal without notice. Even in a situation warranting instant dismissal, it is expected that a hearing is given to the employee to explain why such action should not be taken.

The employee is free to terminate the contract by resignation subject to the period of notice to be given.

An employee can terminate the contract on notice. For an employer to terminate the contract of a permanent employee, it is necessary to have the written consent of the employee without which there could be claims of unfair dismissal. If an employee’s services are terminated on disciplinary grounds, the reasons for termination shall be communicated to the employee by the employer in writing before the expiry of the second day from the date of termination.

The parties can agree freely to terminate the contract.

Acumen International can help you fast-track your possibilities of entering and expanding your business in Sri Lanka by providing you with our Employer of Record services. Our unique mix of PEO/EOR solutions will enable you to jumpstart your global operations almost immediately, cost-effectively and compliantly without any need to set up a legal entity first or afterwards.

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