Employer Of Record In Sri Lanka

Concerned about the complex legal and regulatory procedures yet looking to extend your company’s activities in Sri Lanka? The Sri Lanka EOR (Employer of Record) solution is the only option. You may grow your company without the inconvenience of establishing a physical presence abroad thanks to our cutting-edge technology. Our automated global HR platform offers a streamlined method for creating and managing a workforce that is spread out around the world, and our local specialists are available to provide immediate assistance while you work to understand the complexities of taxes, compliances, and employee perks. This gives you more time to concentrate on enhancing your business expansion plans and fostering growth. Count on us to assist you in expanding your company’s activities in Sri Lanka effectively and flawlessly.

Overview of Sri Lanka

• Population: 21.80 million
• Currency: Sri Lankan Rupee (LKR)
• Capital city: Colombo
• Languages spoken: Sinhala, Tamil, English
• GDP: $ 306.997 billion (2021)

Employment Landscape of Sri Lanka

This collection of tropical islands is renowned for its magnificent landscapes, rich cultural legacy, and welcoming people. With a developing economy and a wide range of sectors, Sri Lanka has plenty of work prospects.

The service industry, which includes businesses like IT, hospitality, and banking, dominates Sri Lanka’s labour market. The nation has experienced expansion in recent years in industries including manufacturing and construction, making it a desirable location for job seekers from a variety of backgrounds.

The cheaper cost of living in Sri Lanka compared to other affluent nations is one of the main benefits of working there.As a result, you may live comfortably while still saving money for the future. This implies that your pay can go farther.

The warm and pleasant behaviour of Sri Lankans is another benefit. You’ll discover that neighbours are kind and that integrating into your new neighbourhood and job is simple.

The Sri Lanka labour laws identify the following types of employment in the country:

• Probationary employment
• Regular employment
• Casual employment
• Seasonal employment
• Fixed-Term employment

Entitlements and Explanation

Statutory working hours:Sri Lankan labour laws mandate that employees work a maximum of eight hours per day and 45 hours per week.

Overtime Compensation:In Sri Lanka, the maximum overtime hours per week are capped at 12 hours, and employees who work overtime receive 150% of their regular hourly wage.

Annual paid leave:In compliance with Sri Lankan employment regulations, employees who have worked for 12 months are eligible for 14 days of annual paid leave, with the first seven days taken consecutively.

Casual leave:Sri Lanka’s employment regulations allow employees to take up to seven days of paid casual leave per year, but this entitlement only begins after the first year of employment. During the initial 12 months, employees are entitled to one day of paid casual leave for every two months worked.

Maternity leave:In compliance with Sri Lankan labour laws, female employees are entitled to 84 days of maternity leave, including nursing and rest breaks for their one-year-old child. However, the maternity leave period is reduced to 42 days for the second and third child.

Sick leave:According to Sri Lankan employment regulations, employees are entitled to seven days of paid sick leave per year, subject to the submission of a medical certificate.

Paternity leave:Unfortunately, there is no provision for paternity leave in Sri Lanka employment laws.

Duty leave:Sri Lankan labour laws provide duty leave to employees for several purposes, such as voting in local elections, attending language proficiency exams, taking medical examinations, and serving in the Armed Forces.

EPF:Sri Lankan employment regulations mandate that employees contribute 8% of their salary to the Employee Provident Fund, while employers must contribute 12% of the employee’s earnings

Retirals

Male employees in Sri Lanka must retire at age 55, while female employees must retire at age 50. Employees of both genders are eligible to receive a pension at the time they reach their respective retirement ages, however, the pension salary amount varies according to the employee’s job category and pay range.

In addition to pension benefits, the Employment Insurance System in Sri Lanka entitles all workers to insurance coverage, and the Shop and Office Act of 1954 stipulates that workers are entitled to healthcare benefits.

For businesses expanding into Sri Lanka, navigating the complicated system of employee benefits and legal requirements can be difficult. In addition, establishing a legal company is necessary before starting any business activity in the nation.

Contractors Vs. Full-Time Employees

Companies in Sri Lanka who are growing their operations must choose between recruiting contractors and full-time staff. While using contractors for short-term projects may be advantageous since it eliminates the need to handle employee benefits and compliance, long-term initiatives demand a different strategy.

It is preferable to recruit full-time workers for long-term projects in order to build a solid rapport and encourage consistency in project contributions. With this strategy, the business is able to invest in its employees, which may increase their job happiness and motivation and boost their productivity and work quality. Additionally, full-time workers may offer insightful information on regional traditions, cultures, and business practices that can be helpful while navigating the Sri Lankan market.

Recruiting in Sri Lanka

A successful company endeavour may involve a number of factors, but your employees will always be the most important one. As a result, you should concentrate on developing a passionate, motivated, and innovative team for your business. So, what are the various employment methods in Sri Lanka?

• Hiring in-house –Are you looking for new talent to grow your company in Sri Lanka? Accessing a large pool of individuals that are qualified and experienced may be made possible through job portals. Popular employment websites in Sri Lanka include www.manpower srilanka.com, www.latestjobs.lk/. A vast database of potential individuals from many sectors and employment types is available on these sites.

While using job portals might help you locate the appropriate individuals faster and with less effort, you should still proceed with care. On employment platforms, there have been instances of deceptive profiles. As a result, it’s essential to carry out exhaustive background investigations and confirm the applicant’s credentials and expertise before making a hiring choice.

• Opting for a conventional staffing firm- You may get help from a variety of recruiting companies locally as well as internationally when hiring staff in Sri Lanka. By working with such organisations, you can speed up the process and get effective outcomes. It is crucial to keep in mind that this option has a danger of non-compliance and hidden fees, which can make it a pricey alternative.
• Collaborating with a Global EOR – For recruiting in Sri Lanka, working through a professional employment organisation (PEO) may be your best bet. You can stay out of trouble with the law and comply with regulations by working with a PEO. All of your HR and administrative requirements, such as processing payroll, managing benefits, and handling employee contracts, will be handled by the PEO. By doing so, you can concentrate on your core company operations while making sure that everyone on your staff complies with all applicable local rules and regulations. Additionally, you’ll get access to a large pool of qualified applicants that match your particular requirements.

Probation & Termination

Probation

Companies in Sri Lanka might utilise a probationary term to assess the performance of new hires to ensure that they are a good match for the position. With technical and managerial professions having a maximum probationary duration of 12 months, and other employees being reviewed for up to 6 months, the probation time varies depending on the position of the individual. However, if further time is required to properly evaluate a candidate’s eligibility for the position, employers do have the option to extend the probationary term for up to three more months.

Termination

The notice period before termination may range from one week for employees who have worked for less than a year to one month for those who have worked for five years or more, depending on the length of service. However, if there are any disciplinary issues, the employer has the power to instantly invalidate the employee’s contract. Furthermore, it’s important to provide a compelling justification for the termination, and the Commissioner of Labor’s approval is required before a non-disciplinary termination may take place. If you want to be sure that your business complies with Sri Lankan employment laws while terminating employees, partnering with us can be a wise decision. We manage all responsibilities relating to human resources and ensure that all procedures adhere to Sri Lanka’s Employment Contract Law.

EOR Solution in Sri Lanka

Managing local labour rules and regulations can be particularly challenging when expanding your firm to a foreign nation. Your greatest option, if you want to extend your company’s activities in Sri Lanka may be to work with a reputable EOR solution supplier.

For companies that are unfamiliar with the local rules and regulations, an EOR may help you develop a compliant staff in a foreign country. With the help of our EOR solution, you can concentrate on expanding your company’s operations in Sri Lanka while we take care of all the administrative details including payroll processing, visa requirements, work permits, and taxes.

You can easily manage the full employment lifecycle with the aid of our integrated employment solution, enabling you to establish a remote workforce in Sri Lanka without being concerned about the associated administrative complexity. Our EOR solution may assist you in streamlining your worldwide expansion process and accelerating your growth, whether you are wanting to expand your business in Sri Lanka or other nations.

Different Categories of Sri Lankan Visas

Employees must get work visas and residency permits in order to be able to work and be paid in Sri Lanka. The two main types of visas available in Sri Lanka are visit visas and residency visas. Non-Sri Lankans who intend to travel there for a brief time must apply for a visit visa; those who want to live there permanently or for an extended amount of time must apply for a residency visa.

Categories of Entry Permits in Sri Lanka

• Transit Visa: For foreign people who are passing through Sri Lanka on their way to another location, a transit visa is a specific kind of entrance authorization. Visitors can stay in Sri Lanka for a maximum of 48 hours with this visa.
• Business Visa:You must get a business visa if you intend to open an office in Sri Lanka. This kind of visa is intended for brief visits and may be renewed for a maximum of three months. You may submit an application for a single, double, or multiple entry business visa in accordance with the Sri Lanka Work Visa rules.
• Tourist Visa:People who want to go to Sri Lanka must apply for a Tourist Visa, which has a 30-day validity period and allows for two entries. With a Tourist Visa, visitors travelling to Sri Lanka for yoga instruction can remain for up to three months, and the visa can be extended for a maximum of six months. All tourists who enter Sri Lankan territory through sea or air must abide by these rules.

Types of Residence Visa

• People who are travelling to Sri Lanka for job-related purposes must apply for an employment visa. Although it is only good for two years, you can renew it as needed.
• Investors Visa: The Investors Visa has a one-year validity period and is periodically renewable.
• Student Visa: This visa is for people who want to study in Sri Lanka at a college or institution that has received state approval. It is renewable and good for a year.
• Religious Visa: This type of visa is mostly for clergy.
• A Residence Visa is also available for the family members of a Sri Lankan who is a permanent resident.
• A residence visa is also available for former Sri Lankan citizens and their dependents.

Below are the required documents for obtaining a work visa in Sri Lanka:

• Visa application form
• Passport-size photographs
• Invitation letter from the hiring company confirming employment in Sri Lanka.
• Certificate of BOI – Board of Investment
• Entity Registration Certificate along with business project documents and employment contract
• A letter of recommendation from the concerned Ministry in Sri Lanka
• A copy of the Bio-Data page of your passport

The following steps are involved in applying for a work visa in Sri Lanka:

You must first get an entry visa in order to start the process of applying for a resident permit in Sri Lanka. For additional information on the application procedure, it is advised that you contact a Sri Lankan Consulate or Embassy. It’s crucial to indicate on your visa application that you want to get a residence permit once you get to Sri Lanka. You can go to Sri Lanka and start the process of applying for a resident visa after receiving your entry visa. You will be permitted to legitimately carry out business operations within Sri Lanka once you have been issued a Resident Visa by the Department of Immigration and Emigration.

Work Permits

In Sri Lanka, the Department of Immigration and Emigration is in charge of processing visas and work permits. It is crucial to secure a visa and work permit from the closest Sri Lankan Embassy before coming to the country if you intend to work there.

Sri Lanka EOR solution may help you manage all documentation requirements and sponsor work permits for international nationals. By utilising this platform, you may minimise any difficulties and hazards related to acquiring a work visa without a job offer while ensuring complete compliance with Sri Lankan labour laws.

Payroll & Taxes In Sri Lanka

As long as the salary term does not exceed one month, employers in Sri Lanka are free to pay their staff on a daily, weekly, fortnightly, or monthly basis. Employers must make sure that they pay their workers on a working day, nevertheless. It is significant to highlight that each assessment year, all people who work in Sri Lanka must pay income tax. Depending on their amount of income, people typically pay taxes at rates ranging from 4% to 24%. Under the Pay As You Earn (PAYE) program, employers are also liable for withholding taxes from their employees’ earnings; the maximum PAYE tax rate is 16% for each assessment year.

Employer Taxation

• Capital Gains Tax – 10%
• Corporate Income Tax – 28%
• Branch Tax – 14%
• Employees’ Provident Fund – 12%
• Employees’ Trust Fund – 3%

Employee Taxation

Employees’ Provident Fund – 8%

Initially, Sri Lankan payroll and tax compliance may appear simple and manageable. However, there are still a few less-discussed rules that, if disregarded, can result in sanctions.

There are several options available to you if you’re thinking about forming a legal entity in Sri Lanka, including a limited company, a sole proprietorship, a partnership, an offshore company, an overseas company, a joint venture, a franchise, wholly foreign-owned subsidiaries, a branch office, and a representative office. It is important to note that opening a subsidiary in Sri Lanka does not have a minimum capital requirement. However, a 10% branch tax is applied to the profits of branch offices.

How to Form a Holding Company in Sri Lanka: Steps

• Choose a distinctive name for your organisation, then register it online with the Sri Lankan Registrar of Companies.
• Get the company secretary and directors to sign the consent form in person.
• The articles of association and the permission form are delivered to the Registrar of Companies.
• After that, submit a notice of incorporation to the Daily Newspapers and the Government Publication Bureau.
• To get a Tax Identification Number for your organisation, you need also get in touch with the Taxpayer Service Unit.

The final step is to apply for a VAT and EFP number for your organisation