Hire in Sri Lanka
Democratic Socialist Republic of Sri Lanka, 22 million population, $3,800 GDP per capita. Everything you need to know about employment law, tax, compliance and hiring in Sri Lanka.
Capital
Sri Jayawardenepura Kotte
Currency
Sri Lankan Rupee (LKR)
Languages
Sinhala, Tamil, English
Time zones
UTC+5:30 (SLST)
Hiring overview
- Typical time to hire
- 1-2 weeks for contractor, 2-4 weeks for full-time
- Entity requirement
- Sri Lankan company. Registration at Department of Registrar of Companies.
- EOR available
- Yes, from $399/employee/month through a Corpshore entity
- Contractor of record
- Yes, from $39/worker/month
Employment law
- Standard workweek
- 45 hours
- Maximum weekly hours
- 45 hours
- Minimum annual leave
- 14 days (Annual Holidays Act No. 3 of 1971)
- Public holidays
- 25 per year
- Maternity leave
- 84 working days (first 2 children), fully paid
- Paternity leave
- 3 days
- Notice period
- 1 month typical (contractual)
- Severance
- Gratuity: 0.5 month per year of service (after 5 years).
- Probation
- 3-6 months typical
- Overtime rules
- 1.5x (Shops and Office Act). Hours vary by industry.
Tax overview
- Income tax range
- 6% to 36% (reformed in 2022 crisis)
- Corporate tax
- 30%
- Social contributions
- EPF: 8% employee + 12% employer. ETF: 3% employer.
- VAT / GST
- 18% (increased during 2022 economic crisis)
- Tax year
- April 1 to March 31
- Treaty network
- Over 45 tax treaties
Compliance landscape
- Worker classification
- Multiple labour laws govern different sectors. Shops and Office Employees Act, Factories Ordinance, etc.
- Data protection
- Personal Data Protection Act No. 9 of 2022.
- Right to work
- Work visa required. Board of Investment (BOI) facilitates for BOI-registered companies.
- Non-compete
- Enforceable if reasonable.
- Collective bargaining
- Protected. Active in plantation, manufacturing, and public sectors.
Payment rails
LankaPay handles interbank clearing. CEFTS enables real-time transfers. Wise supports LKR. Post-2022 crisis, foreign exchange regulations have been tightened.
Key considerations for hiring
- Sri Lanka has 25 public holidays, one of the highest globally (reflecting Buddhist, Hindu, Muslim, and Christian calendars)
- 2022 economic crisis led to debt restructuring and IMF programme; economy is stabilising
- Strong English proficiency and high literacy rate (92%) for the income level
- Growing IT export sector (over $1.2B annually) with competitive developer talent
Business and cultural context: Sri Lanka
Business culture
Hospitable, hierarchical, and relationship-oriented. Tea (Ceylon tea culture) is an important social ritual. Multi-ethnic society (Sinhalese, Tamil, Muslim).
Key industries
Talent pool strengths
Historical context
Sri Lanka's IT export sector has grown despite economic challenges, reaching over $1.2B annually. The country's high literacy rate (92%), strong English skills, and competitive costs make it an attractive IT outsourcing destination. Companies like WSO2 (open-source middleware) and Virtusa were founded or significantly developed in Sri Lanka.
Ready to hire in Sri Lanka?
Use our EOR service from $399/month and we handle employment law, payroll, tax and compliance in Sri Lanka for you.