With a workforce ready for greatness and a burgeoning tech sector, Sri Lanka stands out as an emerging destination. It’s critical to comprehend Sri Lanka’s employment market as companies look for ways to establish remote or distributed teams and leverage the nation’s technological talent. Sri Lanka, which is dedicated to fair employment practices, provides a favorable atmosphere for developing strong working relationships. This article explores the core principles of Sri Lankan employment laws, providing tech workers who work remotely and those wishing to establish compliant, productive distributed teams with valuable knowledge.

Main Sources of Employment Law in Sri Lanka

The employer-employee relationship is governed by a comprehensive framework established by Sri Lankan employment laws, which incorporate elements from multiple sources. The following are the primary sources of employment law in Sri Lanka:

1. Labour Legislation:
   The Shop and Office Employees Act, Industrial Disputes Act, Wages Boards Ordinance, and similar labor-related legislation outline the rights and obligations of employees and employers across various sectors.
2. Employment Contracts:
   Individual employment contracts play a crucial role in defining the terms and conditions of employment. These contracts typically cover aspects such as working hours, wages, benefits, and termination procedures.
3. Constitution of Sri Lanka:
   The Constitution of Sri Lanka contains provisions related to labor rights and freedoms. It emphasizes the importance of ensuring social justice, fair labor practices, and protection against unfair dismissal.
4. Collective Agreements:
   Agreements negotiated between employers and trade unions, known as collective agreements, can contribute to the establishment of employment terms and conditions. These agreements often address matters such as wages, working hours, and dispute resolution mechanisms.
5. Industrial Relations Act:
   The Industrial Relations Act provides a legal framework for the resolution of industrial disputes and the promotion of sound industrial relations. It outlines procedures for collective bargaining, dispute settlement, and the rights of trade unions and employees.
6. Workplace Policies and Regulations:
   Many organizations in Sri Lanka develop internal policies and regulations that complement statutory requirements. These may cover areas such as workplace conduct, anti-discrimination, and health and safety.
7. Minimum Wage Laws:
   Sri Lanka has laws governing minimum wages, ensuring that employees receive fair remuneration for their services. These laws are crucial in maintaining a baseline standard for wage levels across different industries.
8. Termination and Redundancy Laws:
   Specific laws and regulations govern the termination of employment contracts and redundancy procedures. Understanding these regulations is essential for both employers and employees to ensure fair and lawful termination practices.
9. Social Security Legislation:
   Social security laws address matters such as employees’ provident funds, employee trust funds, and other social security benefits, contributing to the overall welfare of employees.
10. Occupational Health and Safety Laws:
    Laws related to occupational health and safety establish guidelines for maintaining a safe and healthy working environment. These regulations aim to prevent workplace accidents and ensure the well-being of employees.

Understanding these diverse sources of employment law in Sri Lanka is crucial for employers, employees, and professionals involved in remote work arrangements. Compliance with these regulations is essential for fostering positive employer-employee relationships and creating a work environment that adheres to legal standards.

Employment Contracts in Sri Lanka

Employment contracts are fundamental agreements that specify the terms and conditions that regulate the relationship between employers and employees in Sri Lanka. Although these agreements can be tailored to meet the particular requirements of each party, they usually contain essential components that are necessary to comprehend the employment arrangement. In Sri Lanka, the principal elements of employment contracts consist of:

1. Job Description and Responsibilities:
   Employment contracts explicitly outline the job role, responsibilities, and duties expected of the employee. This clarity helps in establishing mutual expectations from the outset.
2. Working Hours and Overtime:
   Clear provisions regarding standard working hours, as well as any conditions related to overtime work, are specified in the employment contract. This ensures adherence to legal norms and fair compensation for additional work.
3. Compensation and Benefits:
   Details related to salary, allowances, bonuses, and any other fringe benefits are comprehensively covered. This includes aspects such as leave entitlements, medical benefits, and any special allowances.
4. Probationary Period:
   Employment contracts often include a probationary period during which the employer assesses the employee’s suitability for the role. The terms and conditions of this period, including its duration and evaluation criteria, are specified.
5. Termination Procedures:
   The conditions under which either party can terminate the employment relationship, as well as the notice periods required, are clearly outlined. This provides a transparent framework for both employer and employee.
6. Confidentiality and Non-Disclosure:
7. Employment contracts may include clauses pertaining to the confidentiality of company information and non-disclosure of proprietary data. This safeguards the intellectual property and business interests of the employer.
8. Dispute Resolution Mechanisms:
   Procedures for resolving disputes between the employer and employee are often detailed in employment contracts. This may involve internal grievance mechanisms or external mediation, contributing to a fair resolution process.
9. Non-Compete and Restrictive Covenants:
   In some cases, employment contracts include clauses restricting employees from engaging in certain activities that may be in direct competition with the employer or disclosing sensitive information post-employment.
10. Compliance with Labor Laws:
    Employment contracts explicitly reference compliance with relevant labor laws in Sri Lanka. This ensures that the terms and conditions align with legal requirements, promoting a fair and lawful employment relationship.
11. Renewal and Modification Terms:
    Clauses regarding contract renewal, modification of terms, or renegotiation are included to provide a framework for any necessary adjustments during the course of the employment relationship.

Comprehensive and well-drafted employment contracts in Sri Lanka contribute to a harmonious employer-employee relationship by establishing clear expectations and safeguarding the interests of both parties. It is imperative for organizations to regularly review and update these contracts to ensure continued compliance with evolving labor laws and business dynamics.

Minimum Employment Conditions in Sri Lanka

1. Working Hours:

• • The normal working week in Sri Lanka is typically 45 hours, spread over six days.
  • Overtime rates apply for work beyond the standard hours.

2. Minimum Wage:

• • Sri Lanka sets a national minimum wage, which may vary based on the sector and region.
  • Employers are required to pay wages that meet or exceed the minimum wage.

3. Leave Entitlement:

• • Annual Leave: Employees are entitled to a certain number of annual leave days based on their length of service.
  • Casual Leave: Some employers may provide a limited number of days for casual leave.
  • Sick Leave: Employers usually grant sick leave with pay for a specified period.

4. Public Holidays:

• • Sri Lanka observes several public holidays, and employees are generally entitled to paid leave on these days.

5. Maternity and Paternity Leave:

• • Female employees are entitled to maternity leave with pay.
  • Some employers may offer paternity leave for male employees.

6. Termination and Severance:

• • Termination procedures and severance pay may be outlined in employment contracts and are subject to labor laws.

7. Health and Safety:

• Employers are generally required to provide a safe working environment.
• Occupational health and safety regulations are in place to protect employees.

8. Social Security:

• • Employers may be required to contribute to social security schemes, providing benefits such as retirement and medical coverage.

9. Trade Unions:

• • Employees have the right to join trade unions, and collective bargaining is recognized in Sri Lanka.

10. Discrimination and Harassment:

• • Employment discrimination based on factors such as gender, race, religion, or disability is prohibited.
  • Policies against harassment should be in place, and employers should take measures to prevent and address workplace harassment.

Paid Leave in Sri Lanka

Paid leave entitlements in Sri Lanka are subject to labor laws and employment regulations. Here is a general overview of paid leave in Sri Lanka:

1. Annual Leave:

• • Employees are typically entitled to annual leave, the duration of which may vary based on their length of service.
  • The annual leave is usually granted with full pay, allowing employees to take a break from work while receiving their regular wages.

2. Sick Leave:

• • Sick leave is generally provided to employees to cover periods of illness or medical conditions.
  • Employers may offer a specified number of days of sick leave with full or partial pay.

3. Public Holidays:

• • Sri Lanka observes several public holidays, and employees are typically entitled to paid leave on these days.
  • Some businesses may require employees to work on holidays, in which case they may be entitled to additional compensation or compensatory time off.

4. Maternity Leave:

• • Female employees are entitled to maternity leave with pay. The duration of maternity leave may vary, and it is often linked to the period before and after childbirth.
  • Employers are generally required to provide a supportive environment for pregnant employees.

5. Paternity Leave:

• • While not universally guaranteed, some employers may offer paternity leave to male employees for the birth of their child.

6. Special Leave:

• • Some employers may provide special leave for unique circumstances, such as marriage, bereavement, or other significant life events.

7. Compensatory Time Off:

• • In some cases, if an employee works on a public holiday or during designated rest days, they may be entitled to compensatory time off or additional pay.

Protection Against Discrimination

Here’s a general overview of protection against discrimination in Sri Lanka:

Constitutional Protections:

The Constitution of Sri Lanka prohibits discrimination on grounds such as race, religion, language, caste, sex, political opinion, and place of birth.

Article 12 of the Constitution guarantees the right to equality and equal protection under the law.

Employment and Anti-Discrimination Laws:

The Shop and Office Employees Act, No. 19 of 1954, and the Industrial Disputes Act, No. 43 of 1950, include provisions aimed at preventing discrimination in the workplace.

The Employment of Women, Young Persons, and Children Act, No. 47 of 1956, contains provisions related to non-discrimination in employment.

Equal Remuneration:

Laws in Sri Lanka typically include provisions for equal remuneration for work of equal value, irrespective of gender, race, or other discriminatory factors.

Anti-Discrimination in Education:

Sri Lanka has laws and policies to prevent discrimination in educational institutions based on various factors such as race, religion, and gender

.Disability Rights:

The Protection of the Rights of Persons with Disabilities Act, No. 28 of 1996, provides protections against discrimination for persons with disabilities.

Sexual Harassment:

The Penal Code of Sri Lanka criminalizes sexual harassment, providing legal recourse for victims.

Trade Union Rights:

Workers in Sri Lanka have the right to join trade unions, and discrimination based on trade union membership is prohibited.

Legal Remedies:

Individuals who experience discrimination may seek legal remedies through the judicial system or relevant administrative bodies.

Human Rights Commission:

The Human Rights Commission of Sri Lanka plays a role in addressing human rights violations, including cases of discrimination.

Awareness and Education:

Efforts are made to promote awareness and educate the public about the importance of non-discrimination and equality.

Data Protection Act

Without a dedicated Data Protection Act, Sri Lanka may rely on its constitution, telecom regulations, and other pertinent laws to control the gathering, using, and archiving of personal data.

Termination of Employment

Here is a general overview of termination of employment in Sri Lanka:

Termination Process:

1. Termination Notice:
   Before terminating an employee, employers are typically required to give written notice to the employee. The terms of the employment contract and the cause for termination may affect the notice periods.
2. Reasons for Termination:
   • Termination can be for various reasons, including:
     • Redundancy
     • Misconduct
     • Poor performance
     • Breach of employment contract terms
3. Due Process and Fairness:
   When firing an employee, employers are usually expected to follow a fair and open procedure. This could entail opening an investigation or giving the worker a chance to address charges.
4. Redundancy:
   If the reason for the termination was redundancy, there might be more requirements, like offering compensation or an alternative job.
5. Notice or Payment in Lieu:
   Depending on the situation, employers may choose to give notice or accept payment in lieu of notice.

 Legal Considerations:

1. Labor Laws:
   The termination process must comply with Sri Lanka’s labor laws and regulations.
2. Industrial Disputes Act:
   The Industrial Disputes Act may provide guidance on matters related to termination, especially in cases of disputes.
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, especially if termination is not justified or is done without proper notice.
2. Access to Legal Remedies:
   Employees have the right to seek legal remedies if they believe they were unfairly terminated.
3. Severance Pay:
   In certain circumstances, employees may be entitled to severance pay.

Consultation and Professional Advice:

Employers and employees are encouraged to seek professional legal counsel in order to ensure compliance with applicable regulations and to understand their rights and obligations, given the complexity of employment termination laws.

 

Ensure Compliance in Sri Lanka with Marzuna

Considering the difficulties in setting up a subsidiary and navigating local employment laws, growing your company in Sri Lanka can be a challenging endeavor. Marzuna, however, provides a method that simplifies this procedure. Marzuna serves as the legitimate employer through our Global HR Platform, guaranteeing scrupulous adherence to Sri Lanka’s labor laws. Businesses can save time and money by doing away with the need to establish a local entity thanks to our automated hiring process. By selecting Marzuna, companies can grow internationally and quickly expand their workforce by skillfully navigating the complexities of Sri Lanka’s labor market. Set up a demo with Marzuna right now to see how to develop your team in Sri Lanka in a straightforward and legal manner.