Employment law, Dispute Resolution and Arbitration
We facilitate and advise on individual and corporate Dispute Resolution including, Litigation at all courts, Arbitration at all forums. We also advise on arbitration and regulatory matters, as well as on risk management, standard employment contracts for employers including disciplinary and grievance procedures, consultancy agreements, written terms of employment and employee handbooks.
People can be the hardest asset to manage and laws can sometimes make that challenge even harder. Our strategy is to help you understand and minimize the risks around every corner. We offer clear, practical suggestions for achieving your business objectives and maintain a calm and resolute defense of your interests in the face of any struggles, disagreements and targets.
We will help you find the right course to steer through legislation that changes regularly and is often complex and confusing. Our aim is to help you manage risk effectively, implement change and capitalize on key business opportunities by providing accurate and unmatched commercially focused assistance.
We assist you with
- Employment dismissals
- Handling industrial relations and cooperative issues.
- The protection of businesses through restrictive agreements and confidentiality and seeking court remedies such as injunctions, enjoining orders.
- Consulting and conducting contractual negotiations when an employer is looking to appoint or dismiss an employee.
- Handling the employment issues that arise when corporate transactions and restructurings take place, including outsourcings, both on a domestic and international basis.
- Handling employee litigation matters in the supreme court and employment tribunals.
Employment Law – FAQs
General Employment Law
What is employment law in Sri Lanka?
Employment law in Sri Lanka governs the relationship between employers and employees, covering recruitment, working conditions, wages, termination, and dispute resolution under national labour statutes.
Which laws regulate employment in Sri Lanka?
Key laws include the Shop and Office Employees Act, Wages Boards Ordinance, Industrial Disputes Act, Termination of Employment of Workmen Act (TEWA), EPF Act, and ETF Act.
Who is considered an employee under Sri Lankan law?
An employee is a person engaged under a contract of service, whether written or oral, excluding independent contractors.
Are employment contracts required to be in writing?
While not mandatory under all statutes, written employment contracts are strongly recommended and required for certain categories of employment.
Can foreign nationals be employed in Sri Lanka?
Yes, foreign nationals may work in Sri Lanka subject to valid work visas and approval from relevant authorities.
Recruitment & Employment Contracts
What should an employment contract include?
A contract should state job title, duties, wages, working hours, leave entitlements, termination terms, and disciplinary procedures.
Are probationary periods legal in Sri Lanka?
Yes, probationary periods are allowed, but termination during probation must still comply with labour laws and principles of fairness.
Can an employer change employment terms unilaterally?
No. Material changes require employee consent and must comply with applicable labour laws.
Are fixed-term contracts allowed?
Yes, fixed-term contracts are permitted, but repeated renewals may be treated as permanent employment.
Is casual or temporary employment recognised?
Yes, but statutory benefits may still apply depending on the nature and duration of employment.
Wages, Working Hours & Leave
How is minimum wage determined in Sri Lanka?
Minimum wages are set by Wages Boards for specific industries under the Wages Boards Ordinance.
What are normal working hours?
Generally, 45 hours per week for shop and office employees, excluding overtime.
Is overtime payment mandatory?
Yes, eligible employees must be paid overtime at prescribed statutory rates.
Are employers required to pay salaries on time?
Yes, wages must be paid within the timeframes prescribed by law.
What types of leave are employees entitled to?
Employees may be entitled to annual leave, casual leave, sick leave, maternity leave, and public holidays, depending on the applicable law.
Maternity & Special Leave
What maternity benefits are available in Sri Lanka?
Female employees are entitled to paid maternity leave under the Maternity Benefits Ordinance and Shop and Office Employees Act.
Can an employer terminate a pregnant employee?
Termination due to pregnancy is unlawful and may amount to unfair labour practice.
Are male employees entitled to paternity leave?
Paternity leave is available mainly in the public sector; private sector entitlement depends on company policy.
Are employees entitled to sick leave?
Yes, sick leave is recognised, subject to medical certification and statutory limits.
Can unused leave be carried forward?
This depends on the applicable statute and employment contract.
Termination & Retrenchment
Can an employer terminate an employee at will?
No. Termination must comply with statutory requirements and principles of natural justice.
What is TEWA in Sri Lanka?
The Termination of Employment of Workmen (Special Provisions) Act requires employer consent or government approval for termination of certain employees.
When does TEWA apply?
TEWA applies to employees who have completed 180 days of service in establishments employing 15 or more workers.
What is wrongful termination?
Wrongful termination occurs when an employee is dismissed without lawful grounds or due process.
Is notice required for termination?
Yes, notice or payment in lieu of notice is generally required.
Retrenchment & Redundancy
What is retrenchment under Sri Lankan law?
Retrenchment refers to termination due to redundancy, restructuring, or closure of business.
Is government approval required for retrenchment?
Yes, under TEWA, approval from the Commissioner General of Labour may be required.
Are retrenched employees entitled to compensation?
Yes, compensation is calculated based on statutory formulas and length of service.
Can employers offer voluntary retirement schemes?
Yes, voluntary retirement schemes are permitted subject to labour law compliance.
Can employees challenge retrenchment?
Yes, employees may file complaints with the Labour Department or Labour Tribunal.
Social Security & Statutory Contributions
What is the Employees’ Provident Fund (EPF)?
EPF is a mandatory retirement savings scheme funded by employer and employee contributions.
What is the Employees’ Trust Fund (ETF)?
ETF is an employer-funded benefit scheme providing additional retirement and welfare benefits.
Are EPF and ETF mandatory?
Yes, most private sector employers must contribute to both EPF and ETF.
What happens if EPF or ETF is not paid?
Non-payment is a legal offence and may result in penalties and prosecution.
Can employees check EPF balances?
Yes, employees may check balances through the Central Bank-managed EPF system.
Disciplinary Procedures & Misconduct
Can an employee be dismissed for misconduct?
Yes, but only after a proper domestic inquiry and adherence to due process.
What is a domestic inquiry?
A formal disciplinary process where allegations are investigated before disciplinary action.
Is suspension allowed during an inquiry?
Yes, suspension with or without pay may be permitted depending on circumstances.
What are minor vs major disciplinary offences?
Minor offences attract warnings, while major offences may justify dismissal.
Can employees challenge disciplinary action?
Yes, through Labour Tribunals or higher courts.
Labour Disputes & Remedies
What is an industrial dispute?
A dispute between employer and employee relating to employment, non-employment, or terms of employment.
What is the role of the Labour Tribunal?
Labour Tribunals adjudicate wrongful termination and other employment disputes.
Can employees file complaints without lawyers?
Yes, Labour Tribunals allow employees to appear personally.
What remedies can Labour Tribunals grant?
Reinstatement, compensation, back wages, or other appropriate relief.
Is mediation available for employment disputes?
Yes, mediation and conciliation are encouraged by the Labour Department.
Practical & Compliance Issues
Are employers required to maintain employee records?
Yes, statutory records on wages, attendance, and leave must be maintained.
Are workplace policies legally required?
Certain policies such as disciplinary procedures and safety rules are strongly recommended.
Can employment disputes be settled out of court?
Yes, settlements may be recorded before Labour Officers or tribunals.
Are employment laws applicable to the private sector only?
No, some laws apply to both public and private sectors.
Why should employers seek legal advice on employment law?
Employment laws in Sri Lanka are complex, and non-compliance can lead to penalties, litigation, and reputational risk.