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How to hire remote employees in
Sri Lanka’s a great place to hire talent. And if you’re thinking about making a remote hire, you’re in the right place. In the next five minutes, we’ll teach you how to hire there—without spending thousands of dollars on EOR fees and legal red tape:
If you want to successfully hire in
Sri Lanka
, you have two options:
Laws about hiring contractors are significantly more simple in
Sri Lanka
. Onboarding talent takes days, not weeks or months. Both you, the company, and your talent have more flexibility. And in many cases, since you’re remote, the talent you’re hiring is better classified as a contractor, anyway. Of course, it’s not possible in every case, but it’s what we built Thera for.
This is the long route. You can either establish a physical presence with an entity and register as an employer, or you can use an Employer-of-Record (EOR) solution. Odds are, you’ll find using an EOR to be the easier route. Still, using an EOR in
Sri Lanka
is expensive—it can often be $500 per month per employee—and sometimes prone to lengthy onboarding times.
Hiring contractors is normally the easier, faster, more flexible choice—but don’t just take it from us. Below are the specific benefits and drawbacks to hiring contractors in
Sri Lanka
.
Hiring employees takes months, at the minimum. When you hire with Thera's locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.
It costs just $0 to sign up for Thera, then $25 per month to hire your contractors with Thera. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.
Hiring contractors in
Sri Lanka
means you’re generally not on the hook for things like health insurance and paid time off. This makes hiring flexible for you, and it gives your talent more options.
Hiring employees is a bigger commitment, and can open you up to increased liabilities and regulations. When you hire contractors overseas, your biggest risk is misclassification—but laws surrounding contractor classification are often significantly more straightforward.
The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.
Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.
If you’re hiring contractors in
Sri Lanka
, you can pay them with Thera in a single click. You won’t need to worry about complicated wire transfers, fees, or currency conversions. We’ll take care of it all. Just make a click and your contractor will get paid in their currency of choice. This is a valuable bonus for talent in countries where the local currency is particularly weak—most people appreciate the ability to receive their payment in stronger currencies.
If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Sri Lanka than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Sri Lanka.
The employee is entitled to 14 days of annual leave after completing a full year of service. Annual leave for the second year of employment is accrued based on the date the employee joined service.
According to Section 73 of the Factories Ordinance:
As per Sub Section 5 of the Shop and Office Employees Act
There are 23 public holidays.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
The duration of maternity leave is 12 weeks (84 days) excluding weekly holidays, Poya days and statutory holidays.
Six weeks of maternity leave are given to women with two or more children. Two weeks should be taken before the birth and four weeks immediately following the birth.
It is limited to 3 days for the state sector. The employee must take this leave within three months from the date of birth of the child.
There are no statutory laws regarding paternity leave.
Work-Related Injury Leave:If an employee is absent from work due to injury sustained during work and under the circumstances specifically attributed to the nature of his duties, they are granted accident leave.
Duty Leave: All staff members are granted duty leave for the following purposes:
There is no provision for marriage leave. It is at the employer's discretion.
There is no special provision for bereavement leave in Sri Lanka. It is at the employer's discretion.
Whilst there is no specific definition in either the TEWA or the IDA of what constitutes justifiable cause, case law has identified that the following types of conduct will constitute grounds for justifiable cause to dismiss on disciplinary grounds (these are not exhaustive):
An employer's loss of confidence in an employee has also been held to be a sufficient ground for dismissal, provided that it is coupled with a specific ground of misconduct as set out above.
Even where a loss of confidence cannot be linked to a specific ground of misconduct, it is often pleaded by employers to persuade adjudicating
forums that reinstatement is not a suitable remedy.
Notice periods, or payments in lieu of notice, for dismissal are typically stipulated in the contract of employment.
However, where the provisions concerning notice periods, or payments in lieu of notice, are exercised by the employer during the course of an
unjust dismissal, the employee can challenge that termination on the basis of unjust dismissal.
In the case of a dismissal on disciplinary grounds, the Termination of Employment of Workmen (Special Provisions) Act No 45 of 1971 (TEWA)
makes it mandatory for the employer to inform the employee, in writing, of the reasons for the dismissal before the expiry of the second working day after the dismissal has taken place.
Non-disciplinary termination requires a notice period (typically one month) that is mutually agreed in the contract of employment.
The notice period in Sri Lanka is:
Notice periods, or payments in lieu of notice, should be stipulated in the contract of employment. In Sri lanka generally it is a period if six months.
The quantum of compensation that may be awarded by the Commissioner of Labor (Commissioner) as a result of a successful application for unjust dismissal under the TEWA is regulated as follows, depending on the employee's length of service:
The maximum severance payment that can be made under the above formula is LKR1.25 million.
There is no clear provision in labor laws on the duration of probation period in Sri Lanka.
Generally, probation period is six months.
A normal working week cannot exceed 48 hours.
All work over and beyond that period is considered overtime.
If a worker works beyond the stipulated working hours, he/she is entitled to an overtime pay that is 150% (1.5 of X) of the rate of his ordinary pay.
The overtime hours in a week cannot exceed 12 hours.
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