Sri Lanka

Employer of Record & PEO in Sri Lanka

Hire & manage teams remotely in Sri Lanka without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.

Native Language

Sinhalese, Tamil


$84.53 billion

Payroll Frequency


Capital city

Sri Jayawardenepura Kotte

GDP per capita





Sri Lankan Rupee (LKR)


UTC +5:30

English Speaking



21.56 Million

Employment Cost


Cost of Living


How NNRoad Employment & PEO Services Work?

NNRoad provides professional employment organization (PEO) & employer of record (EOR) services for companies looking to hire and manage teams in Sri Lanka. Registering a legal entity in Sri Lanka as a means for employment is an outdated practice that takes both time (months) and money (thousands of USD). NNRoad’s employer of record and PEO services enables companies to hire and manage employees in Sri Lanka in full accordance with local labor laws in under a week.

Employer of Record in Sri Lanka

Employer of Record (EOR) services are for companies who do not have a legal entity in Sri Lanka, but who want to hire in Sri Lanka. Employment and full liability are outsourced to NNRoad.

➊ You interview & select the candidates you want to hire in Sri Lanka.
➋ NNRoad arranges a local labor contract with your new employee.
➌ NNRoad arranges a service contract between your organization & NNRoad.
➍ NNRoad organizes, manages & processes  payroll in Sri Lanka in full compliance with local employment laws.
➎ You maintain a normal working relationship and manage your team in Sri Lanka while NNRoad manages payroll & HR liabilities.

Payroll & PEO in Sri Lanka

Professional Employment Organization (PEO) services are for companies who have a legal entity in Sri Lanka, and want to outsource their payroll. Employment liabilities are shared between your organization and NNRoad.

➊ You interview & select the candidates you want to hire in Sri Lanka.
➋ NNRoad organizes, manages, and processes payroll for your local employees in full compliance with local employment laws.
➌ You maintain a normal working relationship and manage your team in Sri Lanka while NNRoad manages payroll & HR compliance.

Advantages of NNRoad's Sri Lanka Employment Services

  1. With EOR/PEO solutions you can manage client meetings, sales, quality control, marketing, R&D and customer support without a local company in Sri Lanka.
  2. Pay as you go
  3. ​​Dedicated account manager – One point of contact for multiple locations
  4. Employment & termination processing
  5. Complete payroll solution and statutory benefit according to local laws
  6. With EOR/PEO solutions you can hire staff while waiting for the registration of your company in Sri Lanka.
  7. NNRoad only works with professional locally licensed partners
  8. GDPR compliant
  9. NNRoad manages employee record timekeeping, bonus and allowance, expenses claims and personal leaves according to local law.
  10. NNRoad provides foreigner VISA application services, if needed

Employment Compliance in Sri Lanka

Taxes & Payroll in Sri Lanka

Employee Income Taxes:

Resident individuals are subject to income tax on their worldwide income. Non-resident individuals are taxed only on their Sri Lanka-source income.

Tax Brackets

6%: 0 – 3,000,000 LKR
12%: 3,000,000 – 6,000,000 LKR
18%: Over 6,000,000 LKR

Employer Costs in Sri Lanka

Employer Contributions:

12% – Provident Fund (EPF)
3% – Employee Trust Fund

Total employment cost: 15%

Employee Contributions:

8% – Provident Fund (EPF)

Total employment cost: 8%

Working Hours and Overtime in Sri Lanka

The normal working hours of a regular employee shall not exceed 8 hours per day. In any one week, working hours shall not exceed 45 hours. Overtime shall not exceed an aggregate of 12 hours in any one week. 

No employee is required to work overtime, unless he is 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.

Mandatory Contributions in Sri Lanka

Employees Provident Fund (EPF)

The Employees’ Provident Fund (EPF) was established under the EPF Act No.15 of 1958 (Act) as a mandatory defined contribution retirement scheme for the private and semi-government sector employees who do not enjoy pension benefits.

It is required by the law that both employers and employees contribute the fund. The purpose of the fund is to give a pension for employees that retire. The retirement ages are 55 years old for males and 50 years old for females.

Termination Laws and Severance Pay in Sri Lanka

The IDA and the TEWA oversee the dismissal process in Sri Lanka, and termination of employment for non-disciplinary grounds usually necessitates clearance from the Commissioner of Labor. Non-disciplinary termination requires a notice period (typically one month) that is mutually agreed in the contract of employment.

Severance pay

Workers who have worked for an employer with fifteen or more employees for five years are entitled to severance pay at the following rates if the services are terminated (whether by the employer or the employee, or on retirement or death, or by operation of law, or otherwise):

  • Half a month’s wages or salary for each completed year of service for monthly rated workmen;
  • 14 days salary for each year of completed service for other workmen.

Holidays in Sri Lanka

Public Holidays in Sri Lanka

  • Tamil Thai Pongal Day – January 14
  • Duruthu Full Moon Poya Day – January 17
  • National Day – February 4
  • Navam Full Moon Poya Day – February 16
  • Mahasivarathri Day – March 1
  • Madin Full Moon Poya Day – March 17
  • Sinhala & Tamil New Year Day – April 13-14
  • Good Friday – April 15
  • Bak Full Moon Poya Day – April 16
  • May Day – May 1
  • Id Ul-Fitr – May 3
  • Vesak Full Moon Poya Day – May 15-16
  • Poson Full Moon Poya Day – June 14
  • Id Ul-Alha – July 10
  • Esala Full Moon Poya Day – July 13
  • Nikini Full Moon Poya Day – August 11
  • Binara Full Moon Poya Day – September 10
  • Milad un-Nabi – October 9
  • Vap Full Moon Poya Day – October 9
  • Deepavali – October 24
  • Ill Full Moon Poya Day – November 7
  • Unduvap Full Moon Poya Day – December 7
  • Christmas Day – December 25

Paid Leave in Sri Lanka

After completing a complete year of employment, employees are entitled to 14 days of yearly leave. Annual leave is accrued based on the date the employee joined the organization after the first year.

Employment Contract in Sri Lanka

Employment Contract

The written employment contract must include the following particulars: the name of the employee and designation and nature of the appointment; the date on which the appointment takes effect; the grade to which the person is appointed; basic remuneration and the scale of remuneration; probation period; working hours. 

Sri Lankan labor law allows for the hiring of fixed-term contract workers for long-term duties.

Probation Period

In Sri Lanka, there is no explicit provision in the labor rules regarding the length of a probationary period. Probation typically lasts six months.

Types of Leaves in Sri Lanka

Sick Leave

All employees are entitled to 7 days of sick leave per year.

Maternity Leave

Women with no or one child are entitled to twelve weeks of maternity leave. Two weeks prior to the due date and ten weeks after the due date should be taken.

Women with two or more children are entitled to six weeks of maternity leave. Two weeks prior to the due date and four weeks after the due date should be taken.

Immigration Laws in Sri Lanka

Foreigners that want to work in Sri Lanka need a working permit to enter the country. There are different types that allow to visit the country for tourism or business purpose but if foreigners want to stay for up to one year, they need to apply for the residence visa that they can use to work and study in the country.


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