practice area articles

Sri Lanka

January 26, 2021

By John Wilson 

Back to International Employment Law

Sri Lanka



Tripartite Agreement reached to pro-rate wages

As a consequence of the spread of the COVID-19 outbreak in Sri Lanka and its inevitable effect on local enterprises, an agreement was reached on 4 May 2020 between the Employers' Federation of Ceylon, certain Labour Unions and the Government Task Force in relation to the pro-ration of employees' wages. The key features of the tripartite agreement are as follows:

  • The scheme will be applied to pro-rate wages of employees who are unable to attend work at the same time as others due to health restrictions (e.g., where Government guidelines dictate that only a given percentage or number of employees could be employed on a particular day).
  • It will apply to monthly paid employees in all sectors, and was initially to be limited in its application for the months of May and June 2020, but the period was later extended up until 31 December 2020.
  • Although the scheme is applicable to all sectors without exception, employers that cannot afford to pay employees based on this scheme can make representations to the Commissioner General of Labour.
  • It is only employees who have attended work, or those who were unable to do so because of the restrictions imposed by employers that are eligible to be considered under the scheme. Nonetheless, employees that are unable to report to work due to the restrictions imposed by other authorities may also be considered under this scheme and payments will be made on the basis that they have been 'benched'.
  • Employees who are absent from work despite being rostered and who fail to provide acceptable reasons for their absence should be placed on unpaid leave (in lieu of days of such absence). Employees who provide satisfactory explanations for their absence should be placed on paid leave, as appropriate.
  • Employers will apportion and pay employees' wages for the days they have worked, based on their basic salary. For any days not worked, wages will be apportioned and paid either at the rate of 50% of the basic wage, or Rs 14,500, whichever is greater.

Although the tripartite agreement is not legally binding, it is likely that officers of the Labour Department and/or arbitrators/industrial courts will be mindful of the terms of the agreement and may use it as a guideline in determining what is just and equitable.


Amendments to the Wages Boards Ordinance

Certain provisions of the Wages Boards Ordinance have recently been amended by Act no. 14 of 2019.

Section 59A of the Wages Boards Ordinance - which related to a situation where, by way of trade or for a commercial purpose, one person arranges to have work performed by another and the other person employs workers for the performance of such work has been replaced by a new section and provides statutory recognition to a principle that had already been established by judicial decision. The current statutory position is that where work is performed by other workers (as mentioned above) on a regular basis and where this work is integral to the business activities of the entity/individual who obtains the services, the contract/arrangement is deemed to be considered an employment relationship. If the Commissioner of Labour is satisfied that an employment relationship exists, the Commissioner has the power to put an end to the arrangement. A right of appeal to a Special Employment Relations Tribunal is provided for under section 59B.

In addition, further new sections providing for the hearing and determination of appeals (section 59C), and making failure to comply with the Commissioner's directive an offence (section 59D), have also been introduced.

Other amendments have also been introduced which relate to matters such as enhancement of penalties for non-compliance/contraventions (which has now been enhanced to a fine of not less than Rs. 20,000 or imprisonment of up to 12 months, or both), the increase of time limits for retention of records and instituting civil suit for recovery of payments due.

The enactment of the draft new Employment Act, which was released for public comment in 2019, appears to have been stalled and it is currently unclear whether the Government will pursue the enactment of this draft legislation into law.




The Shop and Office Employees (Regulation of Employment and Remuneration) Act and the Maternity Benefits Ordinance

The Shop and Office Employees (Regulation of Employment and Remuneration) Act and the Maternity Benefits Ordinance have been amended by Acts nos. 14 and 15, of 2018, respectively, both of which were certified on 18 June 2018 to include:

  • the removal of the limit of eighty-four working days paid maternity leave in respect of the first two children which will now be available regardless of the number of children the employee has at the relevant time;
  • under the Shop and Office Act the entitlement to two nursing intervals during the course of a normal working day for female employees who are nursing a child under one year of age; and
  • under the Maternity Benefits Ordinance the entitlement to twelve weeks’ paid leave regardless of the number of children the employee has at the time of the confinement, where the confinement results in a live birth and the additional provision that the maternity benefits/leave provided for is to be in addition to any holiday or leave to which the employee is entitled under any other law or regulation.


Amendments to minimum wages

There have also been several Wages Boards decisions amending minimum wages. In addition to amendments of minimum wages in nine trades notified during the course of July 2018, the Wages Boards have amended the minimum wages for a further nine trades (including but not limited to coconut growing, rubber export, nursing home etc.) who will see an increase in their wages as published in Gazette no. 2090/14 of 25 September 2018.

With thanks to John Wilson of John Wilson Partners for his invaluable collaboration on this update.


Image: Suzanne Horne
Suzanne Horne
Partner, Employment Law Department

Image: Kirsty Devine
Kirsty Devine
Associate, Employment Law Department

Image: Aashna Parekh
Aashna Parekh
Associate, Employment Law Department