Sri Lanka is an emerging location with a workforce eager for greatness and a growing tech industry. Understanding Sri Lanka’s job market is essential as businesses try to figure out how to set up remote or distributed teams and take use of the country’s technological expertise. Strong working ties can be developed in Sri Lanka, a country committed to fair workplace standards. This essay examines the fundamentals of Sri Lankan employment regulations, offering useful information to remote IT workers and those looking to create legally compliant, effective distributed teams.

Main Sources of Employment Law in Sri Lanka

The relationship between employers and employees in Sri Lanka operates within a comprehensive legal framework that draws from various sources. The primary foundations of employment law in Sri Lanka include:

1. Labour Legislation:
   Acts like the Shop and Office Employees Act, Industrial Disputes Act, and Wages Boards Ordinance delineate the rights and responsibilities of both employees and employers across diverse sectors.
2. Employment Contracts:
   Individual employment contracts are pivotal in defining the terms and conditions of employment, covering essential aspects such as working hours, compensation, benefits, and termination procedures.
3. Constitution of Sri Lanka:
   The country’s constitution contains provisions safeguarding labor rights and freedoms, emphasizing social justice, fair labor practices, and protection against unjust dismissals.
4. Collective Agreements:
   Negotiated between employers and trade unions, collective agreements contribute to establishing employment terms, addressing matters like wages, working hours, and dispute resolution.
5. Industrial Relations Act:
   Providing a legal framework for resolving industrial disputes and promoting sound industrial relations, this Act outlines procedures for collective bargaining, dispute settlement, and the rights of trade unions and employees.
6. Workplace Policies and Regulations:
   Many organizations develop internal policies and regulations complementing statutory requirements, covering areas like workplace conduct, anti-discrimination measures, and health and safety protocols.
7. Minimum Wage Laws:
   Sri Lanka enforces laws determining minimum wages, ensuring employees receive fair remuneration. These laws establish a baseline standard for wage levels across various industries.
8. Termination and Redundancy Laws:
   Specific laws and regulations govern the termination of employment contracts and redundancy procedures, requiring understanding for fair and lawful employment cessation.
9. Social Security Legislation:
   Addressing matters like employees’ provident funds and employee trust funds, social security laws contribute to overall employee welfare.
10. Occupational Health and Safety Laws:
    Regulations related to occupational health and safety provide guidelines for maintaining a secure and healthy working environment, aiming to prevent workplace accidents and ensure employee well-being.

Comprehending these diverse sources of employment law in Sri Lanka is essential for fostering positive employer-employee relationships and maintaining work environments that adhere to legal standards, especially in the context of remote work arrangements.

Employment Contracts in Sri Lanka

Employment contracts form the cornerstone of agreements delineating the terms and conditions governing the employer-employee relationship in Sri Lanka. While these contracts can be customized to meet specific needs, they typically encompass crucial components essential for understanding the employment dynamics. In Sri Lanka, the key elements of employment contracts include:

1. Job Description and Responsibilities:
   Clearly specifying the employee’s role, responsibilities, and duties, employment contracts establish mutual expectations from the outset.
2. Working Hours and Overtime:
   Defining standard working hours and conditions related to overtime work ensures adherence to legal norms and fair compensation for additional work.
3. Compensation and Benefits:
   Comprehensive details about salary, allowances, bonuses, and fringe benefits, including leave entitlements and medical benefits, are covered.
4. Probationary Period:
   Many contracts include a probationary period with specified terms, including duration and evaluation criteria.
5. Termination Procedures:
   Clearly outlining conditions for termination, notice periods, and procedures provides a transparent framework for both parties.
6. Confidentiality and Non-Disclosure:
   Contracts may include clauses safeguarding company information and prohibiting the disclosure of proprietary data.
7. Dispute Resolution Mechanisms:
   Procedures for resolving disputes, either internally or through external mediation, contribute to a fair resolution process.
8. Non-Compete and Restrictive Covenants:
   Some contracts restrict employees from engaging in activities in direct competition with the employer or disclosing sensitive information post-employment.
9. Compliance with Labor Laws:
   Explicit references to compliance with Sri Lanka’s labor laws ensure alignment with legal requirements.
10. Renewal and Modification Terms:
    Clauses addressing contract renewal, modification, or renegotiation provide a framework for adjustments during the employment relationship.

Minimum Employment Conditions in Sri Lanka

1. Working Hours:
   Typically, the standard workweek in Sri Lanka encompasses 45 hours distributed over six days, with overtime rates applicable for work beyond these standard hours.
2. Minimum Wage:
   Sri Lanka establishes a national minimum wage, which may vary according to the sector and geographic region. Employers are mandated to remunerate their employees with wages meeting or surpassing the stipulated minimum wage.
3. Leave Entitlement:
   Annual Leave: Employees are entitled to a specified number of annual leave days based on their tenure of service.
   Casual Leave: Some employers may allocate a limited number of days for casual leave.
   Sick Leave: Employers typically grant paid sick leave for a designated period.
4. Public Holidays:
   Sri Lanka observes several public holidays, and employees generally receive paid leave on these occasions.
5. Maternity and Paternity Leave:
   Female employees are entitled to maternity leave with compensation.
   Some employers may extend paternity leave benefits to male employees.
6. Termination and Severance:
   Employment contracts may delineate termination procedures and severance pay, subject to adherence to labor laws.
7. Health and Safety:
   Employers are obligated to ensure a safe working environment for their employees, with occupational health and safety regulations in place to safeguard their well-being.
8. Social Security:
   Employers may have to contribute to social security schemes that offer benefits such as retirement and medical coverage to employees.
9. Trade Unions:
   Employees possess the right to join trade unions, and collective bargaining is acknowledged and supported in Sri Lanka.
10. Discrimination and Harassment:
    Employment discrimination based on gender, race, religion, or disability is prohibited by law.
    Employers should implement policies against harassment and take proactive measures to prevent and address instances of workplace harassment.

Paid Leave in Sri Lanka

Paid leave entitlements in Sri Lanka are governed by labor laws and employment regulations. Here is a comprehensive overview of paid leave in the country:

1. Annual Leave:
   • Employees are typically granted annual leave, the duration of which is contingent on their length of service.
   • Annual leave is generally provided with full pay, allowing employees to take a respite from work while receiving their regular wages.
2. Sick Leave:
   • Sick leave is commonly offered to employees to cover periods of illness or medical conditions.
   • Employers may specify a certain number of days of sick leave with either full or partial pay.
3. Public Holidays:
   • Sri Lanka observes multiple public holidays, and employees usually enjoy paid leave on these days.
   • Some businesses may necessitate employees to work on holidays, and in such instances, additional compensation or compensatory time off may be provided.
4. Maternity Leave:
   • Female employees are entitled to maternity leave with pay, and the duration may vary, often encompassing the period before and after childbirth.
   • Employers are generally expected to create a supportive environment for pregnant employees.
5. Paternity Leave:
   • While not universally guaranteed, some employers may extend paternity leave benefits to male employees for the birth of their child.
6. Special Leave:
   • Certain employers may offer special leave for unique circumstances like marriage, bereavement, or other significant life events.
7. Compensatory Time Off:
   • In specific cases, if an employee works on a public holiday or during designated rest days, they might be entitled to compensatory time off or additional pay.

Protection Against Discrimination

Here is a broad overview of safeguards against discrimination in Sri Lanka:

Constitutional Protections:

The Constitution of Sri Lanka explicitly forbids discrimination based on factors such as race, religion, language, caste, sex, political opinion, and place of birth. Article 12 of the Constitution ensures the right to equality and equal protection under the law.

Employment and Anti-Discrimination Laws:

In the workplace, the Shop and Office Employees Act, No. 19 of 1954, and the Industrial Disputes Act, No. 43 of 1950, incorporate provisions aimed at preventing discrimination. The Employment of Women, Young Persons, and Children Act, No. 47 of 1956, includes clauses related to non-discrimination in employment.

Equal Remuneration:

Sri Lankan laws typically incorporate provisions for equal remuneration for work of equal value, regardless of gender, race, or other discriminatory factors.

Anti-Discrimination in Education:

Laws and policies in Sri Lanka are in place to prevent discrimination in educational institutions, considering factors such as race, religion, and gender.

Disability Rights:

The Protection of the Rights of Persons with Disabilities Act, No. 28 of 1996, safeguards against discrimination for individuals with disabilities.

Sexual Harassment:

Sexual harassment is criminalized under the Penal Code of Sri Lanka, providing legal recourse for victims.

Trade Union Rights:

Workers in Sri Lanka possess the right to join trade unions, with discrimination based on trade union membership explicitly prohibited.

Legal Remedies:

Individuals facing discrimination can seek legal remedies through the judicial system or relevant administrative bodies.

Human Rights Commission:

The Human Rights Commission of Sri Lanka actively addresses human rights violations, including cases of discrimination.

Awareness and Education:

Ongoing efforts are dedicated to raising awareness and educating the public on the significance of non-discrimination and equality.

Data Protection Act

In the absence of a specific Data Protection Act, Sri Lanka may rely on its telecom regulations, other relevant legislation, and the country’s constitution to regulate the collection, use, and retention of personal data.

Termination of Employment

Terminating an employee involves several key considerations in Sri Lanka:

1. Termination Notice:
   Employers are generally obligated to provide written notice to employees before termination, and the specific notice periods may be influenced by the terms of the employment contract and the reasons for termination.
2. Reasons for Termination:
   Termination can occur for various reasons, such as redundancy, misconduct, poor performance, or a breach of employment contract terms.
3. Due Process and Fairness:
   Firing an employee should follow a fair and transparent procedure, which may involve investigations or providing the employee with an opportunity to address charges.

4. Redundancy:
   If termination is due to redundancy, additional requirements may apply, such as offering compensation or an alternative job.

5. Notice or Payment in Lieu:
   Depending on the circumstances, employers may opt to give notice or accept payment in lieu of notice.

Legal Considerations:

1. Labor Laws:
   The termination process must align with Sri Lanka’s labor laws and regulations.
2. Industrial Disputes Act:
   The Industrial Disputes Act may offer guidance, especially in cases of disputes related to termination.
3. Unlawful Termination:
   Wrongful or unlawful termination may lead to legal consequences for the employer.

Employee Rights:

1. Compensation:
   Employees may be entitled to compensation, particularly if the termination lacks justification or is conducted without proper notice.

2. Access to Legal Remedies:
   Employees have the right to pursue legal remedies if they believe they were unfairly terminated.

3. Severance Pay:
   In certain circumstances, employees may be eligible for severance pay.

Consultation and Professional Advice:

   Both employers and employees are strongly encouraged to seek professional legal counsel to ensure compliance with applicable regulations and to comprehend their rights and obligations within the intricate landscape of employment termination laws.

Ensure Compliance in Sri Lanka with EOR Services

Expanding your business in Sri Lanka can be very challenging, especially when taking into account the obstacles of setting up a subsidiary and dealing with local employment regulations. However, EOR Services offer a way to simplify this procedure. By utilizing our Global HR Platform to assume the role of the lawful employer, EOR Services guarantees strict compliance with Sri Lanka’s labor regulations. Thanks to our automated hiring procedure, businesses can save time and money by streamlining the hiring process and avoiding the need to form a local corporation. By using EOR Services, businesses may expand globally and hire more people more effectively while managing Sri Lanka’s labor market’s complexities. To learn more about how to legally and simply expand your staff in Sri Lanka, set up a demo with EOR Services right now.