A contract of employment can be formed in writing or orally. The terms of the contract can be expressed or implied.
Under the Shop and Office Employees (Regulation of Employment & Remuneration) Act, No. 19 of 1954, (as amended) (“Shop and Office Employees Act”), it is a legal requirement that an employer furnishes an employee with certain prescribed particulars relating to the conditions of the employee’s employment; these include, appointment date, remuneration, allowances, hours of work, conditions of employment, etc.
It is a common practice to recruit new employees on a trial or probationary period of 3 to 6 months; however, this is not a legal requirement.
Further, if employees covered under the Shop and Office Employees Act are to be placed on a period of probation such requirement shall be expressly stated in the letter of appointment / contract of employment setting out the period of probation and conditions governing such probation.
The employer is free to terminate the services of the probationary employee during the probationary period or at the end of the probationary period should their performance prove unsatisfactory.
Hours Of Work
The workday and working hours differs from industry to industry subject to the following:
- Under the Shop and Office Employees Act, the number of working hours constituting a normal working week should not exceed 45 hours and a normal working day shall not exceed 8 hours, exclusive of an interval for a meal or rest.
- Trades covered under the Wages Board Ordinance, No. 27 of 1941, as amended (“Wages Board Ordinance”) number of working hours constituting a normal working week shall not exceed 48 hours. Further, the Wages Boards constituted for each trade under the Wages Board Ordinance have the power to determine number of working hours and a normal working day.
The Factories Ordinance, No. 45 of 1942, as amended (“the Factories Ordinance”), includes general conditions as to hours of employment of women and young persons, but no specific provisions regarding other workers. In addition to factories, the Factories Ordinance also covers and applies to tenement factories, electrical stations, charitable or reformatory institutions, technical or vocational training institutions, docks, wharves, quays, warehouses and ships, building and other construction works, etc.
The Factories Ordinance defines “young person” to means a person who has attained the age of sixteen years but is under the age of eighteen years. The total hours worked, exclusive of intervals for meals and rest, for women and young persons should not exceed 9 hours in any day or exceed 48 hours in any week. Both women and young persons’ cannot be employed continuously for a spell of more than four and a half hours without an interval of at least half an hour.
Further, the period of employment for young persons should not exceed 12 hours in any day, their work should not commence before 6 a.m. or not continue after 8 p.m., and on one day of the week the period of employment should end by 1 p.m.
The Shop and Office Employees Act, the Wages Board Ordinance, and the Factories Ordinance all contain provisions relating to overtime. Under Sri Lankan law, overtime is applicable for employees at all levels, including those at managerial or executive level.
Special Rules For Part-time Work
There are no specific rules for part-time employees; the general rules covering employment will be applicable to part-time employees as well. A part-time employee will be remunerated wholly or partly for the number of hours worked.
The National Minimum Wage of Workers Act, No. 3 of 2016 (“Minimum Wage Act”), provides for a national minimum monthly wage of Sri Lankan Rupees 10,000/- and the national minimum daily wage of Sri Lankan Rupees 400/-. The national minimum wage is applicable to all employees in any industry or service, and shall be applicable notwithstanding the provisions of any other written law.
Subject to the Minimum Wage Act, earnings are determined by private contracts, decision of employers, collective agreements, decisions of Wages Boards (established under the Wages Boards Ordinance), compulsory determination by Remuneration Tribunals (established under the Shop and Office Employees Act), awards of Industrial Courts or arbitrators, or by Acts of Parliament.
The Wages Boards constituted for each trade under the Wages Board Ordinance have the power to determine the minimum wage of employees working in the respective trades, subject to the national minimum wage prescribed by the Minimum Wage Act. Wage revisions are effected by the respective Wages Boards from time to time.
The Shop and Office Employees Act provides for the following types of holidays:
- Weekly Holidays
The Shop and Office Employees Act provides that 1 ½ days paid holiday must be allowed to the employees who have worked for not less than 28 hrs in any week
- Statutory Holidays
An employee is entitled to a holiday with full remuneration on each of such days, being public holidays, as declared by the Minister. However that number of days so declared by the Minister shall not exceed 9. At present there are 8 statutory holidays declared by the Minister.
- Annual Leave
An employee is entitled to take 14 days (of which 7 days may be taken consecutively) leave with pay in a year from their second year of employment.
- Casual Leave
An employee is entitled to take not more than 7 days leave for private business, ill health or other reasonable cause. This is normally taken at the rate of 1 or 2 days at a time.
For trades covered under the Wages Board Ordinance, the Wages Boards constituted for the respective trade have the power to determine the types of holidays and quantum thereof, including weekly holidays, statutory holidays, annual leave, casual leave, etc.
Regardless of industry, full moon (Poya) days are non-working days.
The Employment of Women, Young Persons and Children Act, No. 47 of 1956, and the Employment of Children Regulations, 1957, (“Employment of Women, Young Persons and Children Act”) provides that no child under the under the age of sixteen shall be employed in any occupation.
Further, a person under the age of eighteen years should not be employed at any time during the night in a public or private industrial undertaking or in a branch thereof. However, a person who has attained the age of sixteen years but is under the age of eighteen years can be employed during the night for purposes of apprenticeship or vocational training. In such circumstances, the employer should grant such a person a rest period of at least thirteen consecutive hours between two working periods.
No maximum age limit is fixed.
There are no statutory provisions regulating sick leave.
The Factories Ordinance and The Workmen's Compensation Ordinance, No. 19 of 1934, as amended (“Workmen’s Compensation Ordinance”), are the main statutes which regulate occupational health and safety generally. The Workmen's Compensation Ordinance provides for the payment of compensation to employees who suffer personal injury (including occupational diseases and disability) caused by accidents arising out of and in the course of employment.
In addition, the Shop and Office Employees Act and the Wages Board Ordinance also contain provisions relating to the health, hygiene, safety and welfare of employees, and the Mines and Minerals Act, No. 33 of 1992, as amended, provides for the health, safety and welfare of workers employed in mines, etc.
Location Of Work/Mobility
Location of work is usually stated in the contract of employment.
In the event the work has to be carried out outside the reputed premises of the organisation, a mobility clause is included in the contract to facilitate moving employees to different locations.
State funded pensions are available for Public (State) sector employees.
The Employee's Provident Fund Act, No. 15 of 1958, as amended (“EPF Act”), and the Employees’ Trust Fund Act, No. 46 of 1980, as amended (“ETF Act”), provide for contributory provident fund and a non-contributory trust fund covering all private sector employees.
The Payment of Gratuity Act, No. 12 of 1983, as amended (“Payment of Gratuity Act”), provides for the payment of gratuity to employees, who have served for more than 5 years with an employer, upon their termination or retirement.
Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
Under the Shop and Office Employees Act, 84 working days of maternity leave is permitted. The nursing mother of a child under 1 year of age should be allowed two nursing intervals at such times as the mother may require in a 9-hour period workday.
Women workers who are not covered under the Shop and Office Employees Act and who are not in casual or seasonal work are entitled to similar benefits under the Maternity Benefits Ordinance, No. 32 of 1939, (as amended) (“Maternity Benefits Ordinance”).
There is no Paternity leave.
The following are compulsory terms for employment covered under the Shop and Office Employees Act:
- the name of employee;
- designation and the nature of the appointment;
- the date on which the appointment takes effect;
- the grade to which the person is appointed;
- basic remuneration & scale of remuneration;
- whether remuneration is paid weekly fortnightly or monthly;
- cost of living or other allowances if any;
- the length of probation or trial period, if any, and the conditions governing such probation or trial period, circumstances under which the appointment may be terminated during such probation or trial period;
- normal hours of work;
- number of weekly holidays, annual holidays and casual and privilege leave, if any;
- overtime rate payable;
- provision of medical aid, if any;
- conditions governing provident, pension scheme or gratuity scheme applicable to the employment; and
- prospects of promotion.
In addition, the following can be considered compulsory terms in a contract of employment in any industry:
- restrictions imposed by law on termination of employees;
- restrictions on statutory holidays;
- maximum deductions from salary;
- unilateral changes by an employer in the status of an employee;
- restraint of trade, etc. against the employee.
- it is implied term in any contract that an employer and an employee cannot contract out of benefits due an employee under the EPF Act, ETF Act, and / or the Payment of Gratuity Act.
The parties are free to agree to have other terms which are not in conflict with the statutory requirements and / or public policy.
The making of an employment contract is the result of an agreement between the employer and employee. The contract envisages reciprocal obligations between the parties. The contract could be oral or in writing and the terms are express or implied. The terms of the contracts vary depending on the type of employment. The types of employment are permanent, temporary, casual, probationary, seasonal, fixed term, and apprentices / trainees.
It is an implied condition of service that the employee shall be faithful in dealing with the employer’s property and in exercising the trust which the employer has placed in him. This duty / obligation is usually expressly provided in the contract. The nature of trade and commercial information that are required to be protected are obvious and usually made known to the employee. The requirement subsists through the period of employment. It is an implied duty to protect trade secrets after leaving one’s employment.
To provide protection to sensitive and information of highly confidential nature after an employee exits his / her employment, restrictive covenants are usually incorporated in contracts.
Unless the contract provides otherwise, the ownership of IP Rights created either under a contract of employment or a contract for services, which IP Right is created in the performance of that contract, is deemed to belong to the employer or the person who commissioned the services.
Where the IP Right is an industrial design that acquires a much greater value than the parties could have reasonably foreseen either at the time the contract was created, or the time the IP Right was created, the creator of that industrial design will be entitled to equitable remuneration for that industrial design, which can either be agreed between the parties or fixed by the court in the absence of agreement between the parties.
There are no specific pre-employment considerations mentioned under statutory laws. However, employers are free to impose their own pre-employment considerations.
All non-nationals employed in Sri Lanka must have a residency VISA with a work permit from the Department of Immigration and Emigration. It is the obligation employers of non-nationals to obtain the relevant work permits for all non-nationals employed by them. This will in the first instance require a written recommendation from the prospective employer and the statutory authority responsible for the overview / regulation of the relevant industry of the employer.
The Factories Ordinance, the Employment of Women, Young Persons and Children Act, the Mines and Minerals Act, the Employment of Trainees (Private Sector) Act, No. 8 of 1978, and the Maternity Benefits Ordinance all provide for restrictions on the employability of certain categories of persons and the minimum conditions of their employment.
In addition, the Government of Sri Lanka has mandated that three per centum (3%) of vacancies in the Public Service and Public Corporations should be filled by disabled persons possessing the requisite qualifications and whose disability would not be a hindrance to the performance of their duties.
There is no specific legislation regulating outsourcing/sub-contracting. Independent contractors are not subject to the employment laws.