Payroll Services in Sri Lanka
Fully managed payroll in Sri Lanka: APIT deductions, EPF at 12% and 8%, ETF at 3% and every monthly deadline, with a named specialist a phone call away.
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What a payroll outsourcing company in Sri Lanka handles for you
Sri Lankan payroll has changed fast. The tax-free threshold rose to Rs 150,000 a month in April 2025, the national minimum wage reached Rs 30,000 in January 2026, and a unified labour code has been promised before the end of 2026.
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Calculate Your Employee Costs in Sri Lanka
Enter a gross annual salary to see the employer’s statutory cost in Sri Lanka for 2026: EPF at 12% and ETF at 3% of total earnings, with no cap. Gratuity is a separate cost when an employee leaves after five years.
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*Indicative figures only and not definitive legal advice. Local regulations change frequently. Consult an expertSri Lanka
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Employer Costs in Sri Lanka Explained
Employers in Sri Lanka pay 15% on top of total earnings in 2026: 12% to EPF and 3% to ETF. Employees pay 8% to EPF, and APIT comes out of pay above Rs 150,000 a month.
EPF is 12% from the employer and 8% from the employee, and ETF is 3% from the employer. Both apply to total earnings with no salary cap, and the Budgetary Relief Allowance has been part of the minimum wage since March 2025.
Both are due by the last working day of the following month. ETF surcharges run from 5% for a delay of up to 10 days to 50% for more than 12 months, and EPF also charges surcharges according to the delay.
Employers deduct APIT using the Inland Revenue’s tax tables and pay it by the 15th of the following month. Under Table 01, regular monthly pay up to Rs 150,000 is free of tax, or Rs 1,800,000 a year.
Employees whose only income is employment income under APIT, with interest income below Rs 5,000, no longer have to file a return, under the Inland Revenue (Amendment) Act No. 11 of 2026. The same Act gives a tax credit on salary arrears.
Under the Payment of Gratuity Act, employers with 15 or more workers owe half a month’s pay per year of service when an employee leaves after at least five years. Plan for it as a liability from the first day.
Outside disciplinary cases, termination generally needs the employee’s consent or the Commissioner General of Labour’s prior written approval under the Termination of Employment of Workmen Act, which adds its own compensation.
For an employee on Rs 250,000 a month, the employer pays Rs 30,000 to EPF and Rs 7,500 to ETF, for a monthly cost of Rs 287,500.
The employee pays Rs 20,000 to EPF and Rs 8,000 in APIT, and takes home Rs 222,000 a month.
Under the Shop and Office Employees Act the week is up to 45 hours and overtime is paid at 1.5 times normal pay. Leave is 14 days of annual leave from the third calendar year, on a sliding scale in the second, plus 7 days of casual leave. Maternity leave is 84 days for a live birth.
The Labour Minister has promised a unified labour code before the end of 2026, but no draft has been published. Wages Boards set separate terms in the industries they cover.
Sri Lanka payroll contributions and rates, 2026
| Item | Employer | Employee | Applies to |
|---|---|---|---|
| Employees’ Provident Fund (EPF) | 12% | 8% | Total earnings, no cap |
| Employees’ Trust Fund (ETF) | 3% | None | Total earnings, no cap |
| APIT | None | 0% to 36% | Monthly pay above Rs 150,000 |
| APIT payment | By the 15th | Of the following month | |
| EPF and ETF payment | Last working day | Of the following month | |
| Gratuity | Half a month’s pay a year | After 5 years, employers with 15 or more workers | |
| Minimum wage | Rs 30,000 a month | Or Rs 1,200 a day, since 1 January 2026 |
APIT on regular monthly pay in Sri Lanka (Tax Table 01)
| Monthly regular pay | Tax deduction |
|---|---|
| Up to Rs 150,000 | None |
| Rs 150,001 to Rs 233,333 | 6% of pay less Rs 9,000 |
| Rs 233,334 to Rs 275,000 | 18% of pay less Rs 37,000 |
| Rs 275,001 to Rs 316,667 | 24% of pay less Rs 53,500 |
| Rs 316,668 to Rs 358,333 | 30% of pay less Rs 72,500 |
| Above Rs 358,333 | 36% of pay less Rs 94,000 |
Gross to net and employer cost in Sri Lanka, monthly
| Monthly gross pay | Employee EPF | APIT | Net pay | Employer EPF and ETF | Total employer cost |
|---|---|---|---|---|---|
| Rs 100,000 | Rs 8,000 | None | Rs 92,000 | Rs 15,000 | Rs 115,000 |
| Rs 250,000 | Rs 20,000 | Rs 8,000 | Rs 222,000 | Rs 37,500 | Rs 287,500 |
| Rs 500,000 | Rs 40,000 | Rs 86,000 | Rs 374,000 | Rs 75,000 | Rs 575,000 |
The tables assume a resident employee with one employment and regular monthly pay only, using the Inland Revenue’s Table 01 for the year of assessment 2025/26. Gratuity is not included. These are TopSource calculations from the verified rates.
Rates and thresholds shown were verified on 2 November 2026 against the Inland Revenue’s APIT tables for 2025/26, the EPF and ETF rules, and the National Minimum Wage of Workers (Amendment) Act No. 11 of 2025. This page is general information, not tax or legal advice.
How our Sri Lanka payroll service works
Why Choose TopSource for Global Payroll in Sri Lanka
TopSource for payroll, Employer of Record or any other of our services represents a simpler, more reliable and transparent option. If you would rather not employ staff in Sri Lanka directly, our Employer of Record in Sri Lanka can employ them on your behalf.
We don’t hide fees or sneak price increases. We run Sri Lankan payroll in-house and file under your own registration rather than a bureau’s, so the same team that pays your salaries answers your calls. You get a named account manager, one consolidated monthly invoice covering salaries, contributions and fees, and one live Portico view of Sri Lanka beside every other country we run for you, across South Asia and beyond. Portico syncs with your time-tracking, leave and HR systems via API – set up by our onboarding team, not left to yours. GDPR, SOC 2 and ISO 27001 certified.
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Accelerating your growth in Sri Lanka and beyond
TopSource goes far beyond payroll, acting as your end-to-end partner in global workforce management. From Employer of Record (EOR) services and seamless entity setup to localized accountancy and fractional HR support, we cover every aspect of international employment.
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Whether you’re entering the market or scaling operations, our specialists provide the insight and guidance you need to succeed in one of the world’s most dynamic and regulated employment landscapes. With TopSource, you’re backed by real experts, every step of the way.
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Sri Lanka payroll FAQs
15% of total earnings: 12% to the Employees’ Provident Fund and 3% to the Employees’ Trust Fund, with no salary cap. Gratuity is a separate liability when an employee leaves after five years.
Rs 150,000 a month, or Rs 1,800,000 a year. Regular monthly pay above that is taxed at rates from 6% to 36% under the Inland Revenue’s Tax Table 01, and the employer deducts it from pay.
APIT is due by the 15th of the following month. EPF and ETF are due by the last working day of the following month, and late payment brings surcharges.
An employee on Rs 250,000 a month costs Rs 287,500 with EPF and ETF, and takes home Rs 222,000. Tell us the role and salary and we’ll send the full cost within one business day.
The national minimum wage is Rs 30,000 a month or Rs 1,200 a day since 1 January 2026, under the amendment Act No. 11 of 2025. Wages Boards can set higher rates in their industries.
At half a month’s pay for each year of service, for employees who leave after at least five years, at employers with 15 or more workers. It is separate from termination compensation.
Not if their only income is employment income under APIT, with interest income below Rs 5,000. The Inland Revenue (Amendment) Act No. 11 of 2026 removed that requirement, with effect from 1 April 2025.
Under the Shop and Office Employees Act, 14 days of annual leave from the third calendar year, with a sliding scale in the second, plus 7 days of casual leave. Maternity leave is 84 days for a live birth.
The Labour Minister has promised a unified labour code before the end of 2026, but no draft has been published. Current Acts, including the Shop and Office Employees Act and the Wages Boards Ordinance, still apply.
Running payroll in Sri Lanka means a registered company or branch with tax, EPF and ETF numbers. TopSource can run payroll for your Sri Lankan entity or employ your team through our Employer of Record service.
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