Employer Of Record In Sri Lanka

Are you planning to expand your company’s operations in Sri Lanka but are worried about the intricate legal and regulatory procedures? The sole choice is the Marzuna Sri Lanka EOR (Employer of Record) solution. Thanks to our state-of-the-art technology, you may expand your business without having to deal with the hassle of opening a physical location overseas. While you try to comprehend the complexity of taxes, compliances, and employee benefits, our local professionals are accessible to give rapid support. Our automated global HR platform provides a simplified approach for building and maintaining a workforce that is dispersed around the world. This frees up more time for you to focus on developing your strategies for business development and expansion. You can rely on us to help you grow your business’s operations in Sri Lanka in an efficient and legal manner.

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 cluster of tropical islands boasts magnificent landscapes, a rich cultural heritage, and a warm, welcoming population. Sri Lanka offers a plethora of opportunities with its growing economy and diverse range of industries.

The service sector, encompassing IT, hospitality, and banking, dominates the labor market in Sri Lanka. Recent years have seen significant growth in sectors like manufacturing and construction, making the country an attractive destination for job seekers from various professional backgrounds.

One of the major advantages of working in Sri Lanka is the lower cost of living compared to more affluent nations. This allows you to lead a comfortable life while also saving for the future, making your income go further.

Sri Lankans are known for their warm and friendly nature, adding to the benefits of living and working in the country. You’ll find that your neighbors are kind and welcoming, making it easy to integrate into your new community and workplace.

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.

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

Contractors Vs. Full-Time Employees

Companies expanding their operations in Sri Lanka face the decision of whether to hire contractors or full-time employees. While contractors are a suitable choice for short-term projects as they eliminate the need to manage employee benefits and compliance, a different approach is required for long-term initiatives.

Long-term projects are best served by recruiting full-time employees, which helps establish a strong working relationship and encourages consistency in project contributions. This approach allows the company to invest in its employees, potentially increasing their job satisfaction, motivation, and overall productivity and work quality. Moreover, full-time employees can provide valuable insights into local customs, cultures, and business practices, which can be invaluable when 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 and Termination in Sri Lanka

Many companies in Sri Lanka utilize a probationary period to evaluate the performance of new hires and determine if they are a good fit for the role. The duration of the probation period varies based on the position, with technical and managerial roles having a maximum probationary period of 12 months, and other positions typically reviewed for up to 6 months. If more time is needed to make a thorough assessment of a candidate’s suitability, employers have the option to extend the probationary period for up to an additional three months.

When it comes to termination, the notice period varies depending on the length of an employee’s service. Employees with less than a year of service typically have a one-week notice period, while those with five years or more of service may have a notice period of up to one month. However, in cases of disciplinary issues, employers have the authority to immediately terminate an employee’s contract. It’s crucial to provide a valid reason for termination, and non-disciplinary terminations require the approval of the Commissioner of Labor.

To ensure that your business complies with Sri Lankan employment laws during the termination process, partnering with us can be a wise decision. We handle all human resources responsibilities and ensure that all procedures adhere to Sri Lanka’s Employment Contract Law. This can help you navigate the complexities of probation and termination while ensuring legal compliance.

EOR Solution in Sri Lanka

Navigating the intricacies of local labor regulations when expanding your business to a foreign country can be quite challenging. To ensure a smooth and compliant expansion of your company’s operations in Sri Lanka, partnering with a reputable Employer of Record (EOR) solution provider might be your best choice.

EOR services can be invaluable for companies that are unfamiliar with the local rules and regulations. With our EOR solution, you can focus on growing your business in Sri Lanka while we take care of all the administrative details. This includes handling payroll processing, visa requirements, work permits, and taxes, ensuring your business operates in full compliance with local laws.

Our integrated employment solution makes it easy to manage the entire employment lifecycle, allowing you to establish a remote workforce in Sri Lanka without the administrative complexities. Whether you are looking to expand your business in Sri Lanka or other countries, our EOR solution can help streamline your global expansion process and accelerate your growth.

Types of Residence Visa

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.
• 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.

If you’re considering establishing a legal entity in Sri Lanka, you have several options to choose from. These options include forming a limited company, sole proprietorship, partnership, offshore company, overseas company, joint venture, franchise, wholly foreign-owned subsidiary, branch office, or representative office. It’s important to note that there is no minimum capital requirement for opening a subsidiary in Sri Lanka. However, branch offices are subject to a 10% branch tax on their profits.

Here are the steps to form a holding company in Sri Lanka:

• Choose a unique name for your organization and register it online with the Sri Lankan Registrar of Companies.
• Have the company secretary and directors sign the consent form in person.
• Submit the articles of association and the consent form to the Registrar of Companies.
• Publish a notice of incorporation in both the Daily Newspapers and the Government Publication Bureau.
• Contact the Taxpayer Service Unit to obtain a Tax Identification Number for your organization.
• Finally, apply for a VAT (Value Added Tax) and EFP (Economic Freedom Pass) number for your organization.