Employer of Record in Sri Lanka: 8 Providers Compared (2026)

Employing someone in Sri Lanka: key facts

Employment law in Sri Lanka is national, with no provincial split. The figures below assume a monthly-paid IT or office employee in Colombo. We read the Acts from Parliament, CBSL, ETF Board and consolidated-law copies; trades covered by a Wages Board have their own hours and rates.

Minimum wage

One national rate covers all workers in any industry or service. Sector Wages Boards can set higher rates.

• The Budgetary Relief Allowances payable at 2025-03-31 are folded into the minimum wage. An IT or office employee is paid far above this floor; it matters mostly as the base for overtime, EPF, ETF and gratuity at the bottom of the scale.

Employer contributions

The employer pays two statutory contributions on total earnings, basic pay plus cash allowances, with no salary cap.

• Total employer cost: 15% of gross. There is no other employer payroll tax or health premium on salary.
• Due date. EPF and ETF are due monthly, by the last working day of the following month (ETF Act, s.16).
• Not settled. The statutory definition of “total earnings”, which allowances count, wasn’t analysed.

Working hours and overtime

• Normal hours in shops and offices are 8 a day and 45 a week, with one whole holiday and one half-holiday a week (Shop and Office Employees Act, s.3-4) (consolidated text, checked 2026-10-27).
• Overtime is paid at 1.5x the hourly rate (monthly pay divided by 240), up to 12 overtime hours a week (Regulations, checked 2026-10-27). Whether managerial or professional staff are exempt wasn’t checked.

Annual leave and public holidays

• 14 days of paid annual leave from the second year of employment, at least 7 of them consecutive. In the first year it is pro rata by start date: 14 days for a start in January-March, 10 for April-June, 7 for July-September, 4 from October.
• 7 days of paid leave a year for private business, ill health or other reasonable cause; in the first year, 1 day per 2 completed months. There is no separate statutory sick leave beyond these 7 days (s.6) (consolidated text, checked 2026-10-27).
• Public holidays: the 2026 list was gazetted in Extraordinary Gazette No. 2438/22 of 2025-05-27 (Newswire, checked 2026-10-27). We didn’t open it, and secondary sites disagree on how many are paid mercantile holidays for private staff (8 or about 20), so we state no count.

Probation

• There is no dedicated probation statute. The Minimum Retirement Age of Workers Act No. 28 of 2021 defines a probationary worker as one employed for not more than 180 days, during which the employer decides suitability. The period can be extended once by up to 180 days.
• The definition excludes a worker who previously did the same work for the same employer (Act, checked 2026-10-27). Whether courts treat it as the general probation rule wasn’t confirmed.

Notice and severance

• Notice: we found no general statutory notice period for monthly-paid office staff. It is set by contract (Shop and Office Employees Act, s.6(6), checked 2026-10-27).
• Gratuity: half a month’s pay (last rate drawn) for each completed year of service, payable on termination for any reason to a worker with at least 5 completed years, by an employer with 15 or more workmen on any day in the preceding 12 months (Payment of Gratuity Act No. 12 of 1983, s.5-6) (Act, checked 2026-10-27).
• Termination approval: where the Termination of Employment of Workmen (Special Provisions) Act applies, compensation is set by the Commissioner-General as a condition of approving a dismissal (employer with 15+ workmen, worker with 1+ year of service). We state no amount: the formula and cap weren’t confirmed from the official text (vLex, checked 2026-10-27).

13th salary and bonuses

• Not mandatory. We found no 13th-month pay in the Shop and Office Employees Act, the EPF and ETF Acts or the Gratuity Act; bonuses are by contract or custom (consolidated text, checked 2026-10-27).

Mandatory benefits

• EPF and ETF, and gratuity after 5 years (above).
• Paid maternity leave under Part III of the Shop and Office Employees Act: 70 days from confinement for a live birth, 28 days otherwise, plus leave before confinement (s.18B as consolidated in 2024) (consolidated text, checked 2026-10-27). Some guides cite 84 working days under the Maternity Benefits Ordinance; we didn’t reconcile the two.
• No mandatory private health or life insurance found.

Work permits

• A foreign employee needs a Residence Visa in the Employment category from the Department of Immigration and Emigration. The department lists the categories as professional personnel for government-approved projects, expatriates in Board of Investment projects, bank personnel, personnel in registered private companies or institutions, and Colombo Port City personnel.
• The sponsor is the employing Sri Lankan entity, so a foreign client without one cannot sponsor. Whether an EOR can sponsor a person who works for its client is not stated by the department, and we don’t say either way (Department of Immigration, checked 2026-10-27). We found no published salary threshold.
• The Ministry of Labour held a stakeholder consultation on an inward labour migration policy on 2026-10-22; the outcome is unknown (Ministry of Labour, checked 2026-10-27).

Currency and payroll

• Sri Lankan rupee (LKR). 1 USD = 332.314 LKR, the Central Bank of Sri Lanka indicative spot rate for 2026-10-27 (CBSL).
• Monthly pay is the practice, and EPF and ETF are due monthly. We found no statute fixing the pay frequency for office staff (ETF Act, checked 2026-10-27).
• Employee income tax is withheld from pay (APIT) and is not an employer cost. There is no regional or municipal income tax on salary. A resident individual gets a personal relief of LKR 1,800,000 a year (LKR 150,000 a month for APIT), and the scale applies to the income after it.

Source: IRD notice PN/IT/2025-01, effective 2025-04-01, checked 2026-10-27. We didn’t see an IRD document for 2026/27 and use this scale because secondary sites report it unchanged.

Is Employer of Record legal in Sri Lanka?

Grey area. No Sri Lankan statute or regulator names, licenses or bans an Employer of Record, and we found no Sri Lankan law-firm or Big Four publication on EOR. An EOR works as a contract structure on ordinary employment law: the local EOR entity is the employer for EPF, ETF, gratuity and tax, and the client directs the work. Two rules cut across that structure.

• EPF Act definition of employer. “Employer” means any person who employs, or on whose behalf any other person employs, any workman, and includes a person who employs a workman on behalf of another. The wording reaches both the party that employs and the party on whose behalf the worker is employed (EPF Act, checked 2026-10-27). The Minimum Retirement Age of Workers Act No. 28 of 2021 uses a similar definition (Act, checked 2026-10-27).
• Termination approval (Act No. 45 of 1971, s.2). No employer may terminate the scheduled employment of a workman, other than as disciplinary punishment, without the workman’s prior written consent or the Commissioner-General of Labour’s prior written approval. The decision comes within three months, in his absolute discretion, with terms such as gratuity or compensation. The Act doesn’t apply to an employer with fewer than 15 workmen on average in the previous six months, or to a workman with less than one year of service (vLex, checked 2026-10-27). Whether an IT or office role at an EOR is “scheduled employment” wasn’t confirmed; the Schedule wasn’t read.
• Gratuity (Act No. 12 of 1983). An employer with 15 or more workmen pays half a month’s pay per completed year to a worker with at least 5 completed years of service, whoever ends the employment (Act, checked 2026-10-27).
• No EOR licence. We found no EOR-specific licence. Private employment agencies are regulated for foreign employment by the Sri Lanka Bureau of Foreign Employment, and we found no registration regime for domestic manpower or EOR providers (ILO, checked 2026-10-27).
• Reform ahead. A unified labour code to merge about fourteen older statutes is being drafted, with a stated target of end-2026 (EconomyNext, checked 2026-10-27). No draft bill was seen in Parliament.

Risks for you as the client:

• EPF and ETF liability. Statutory liabilities may be asserted against the party “on whose behalf” the worker is employed. We found no decision applying this to an EOR client (EPF Act, checked 2026-10-27).
• Slow exit. For a worker with over a year of service at an employer with 15+ workmen, dismissal without consent or approval breaches the 1971 Act. Ending an EOR-employed worker at your request can therefore need an approval process of up to three months (vLex, checked 2026-10-27).
• Agency reasoning. A Sri Lankan firm, Desaram, says workers supplied by private employment agencies are treated as the agency’s employees, not the placing company’s, and advises documenting the supply agreement (Desaram, checked 2026-10-27). We saw it only as a search excerpt, and an academic paper says no dedicated statute covers outsourced workers. Treat both as commentary, not authority.
• Permanent establishment. The Inland Revenue Act taxes a non-resident through a Sri Lankan permanent establishment. Whether an EOR-employed worker who negotiates or concludes contracts for you creates one wasn’t analysed, and we found no Sri Lankan guidance (IRD, checked 2026-10-27).

Background: Employer of Record, co-employment, permanent establishment, contractor misclassification.

Who actually employs your hire in Sri Lanka

Most vendors describe their entity model globally. Here we separate what a vendor says about Sri Lanka from anything we could verify. The Registrar of Companies has no open name search, so no entity below is checked against a register, and no vendor gives a registration number. A vendor statement is a claim, not proof of who employs your hire.

Six of these 8 providers don’t name a Sri Lankan employer, and the two that say they own an entity name none. We couldn’t check any entity against a register. Before signing, ask: “Which Sri Lankan company, with which registration number, will employ my hire, and will it register my hire with EPF and ETF?”

How to choose an EOR in Sri Lanka

Does your hire need a work visa? A Sri Lankan entity must sponsor the Residence Visa, and the Department of Immigration doesn’t say whether an EOR can. Get written confirmation that the vendor’s entity will sponsor. Rivermate’s guide describes entry on an entry visa followed by a Residence Visa within 30 days (Rivermate, checked 2026-10-27).

How easily must you be able to end the role? The 1971 Act can require consent or Commissioner-General approval, with a decision in up to three months, for a worker with over a year of service. Ask each vendor in writing how it handles approvals, and whether it holds a Sri Lankan legal opinion on the EPF Act’s “on whose behalf” wording. We found no law-firm view on EOR to point to.

Is a named employer or a Sri Lanka price the priority? Remote and Atlas say they own an entity, but neither names it; both show $599 a month. Skuad ($199-249), Remote People ($300-600) and Playroll (from $399) publish lower prices but don’t say who the employer is. Rivermate and G-P are quote-based. The statutory 15% is the same for every provider.

How fast must the hire start? Vendor claims: Deel as little as 3 days, Remote People 2-5 business days, Skuad days to about 2 weeks, G-P “days”, Playroll 10-15 business days from signature. Remote adds three days for registration with local authorities and, for non-nationals, a Right to Work assessment (Remote, checked 2026-10-27). These are claims, not measured times.

What it costs to employ someone in Sri Lanka through an EOR

Statutory employer cost in Sri Lanka is 15% of gross pay: EPF 12% plus ETF 3%, with no salary cap and no size-based relief. The two examples use LKR 16,600,000 (about USD 50,000) and LKR 33,200,000 (about USD 100,000) a year at 1 USD = 332.314 LKR (CBSL, 2026-10-27). Employee income tax and the employee’s 8% EPF are withheld from pay and are not an extra cost for the client.

Source: CBSL, ETF Act, checked 2026-10-27. The employer rates haven’t changed in 2021-2026, and neither has a cap or a minimum-wage base, so there is no history to chart.

The EOR’s own fee is on top of the above. Per month, six vendors show a figure: Skuad from $199 billed monthly ($249 with a 12-month commitment, $349 struck through), Remote People $300-600, Playroll from $399, and Remote, Atlas and Deel $599. Remote’s $599 is for annual contracts and its monthly-term price isn’t stated; Atlas’s is a platform fee with statutory contributions and taxes billed on top; Deel’s is a management fee. Rivermate and G-P are quote-based.

Hidden costs, where published: no vendor publishes a Sri Lanka setup fee, deposit, minimum term or termination fee. Skuad says its discount depends on hiring volume (Skuad, checked 2026-10-27).

Basis: an EOR with a large payroll (15+ workmen, so gratuity applies) in Colombo employing an IT or office employee; 2026 rules, LKR. Gross is treated as total earnings with no separate allowances. Gratuity, half a month’s pay per completed year after 5 years, is about 4.2% of annual pay once earned and is payable only on exit; it is not in the totals.

When you don’t need an EOR

• A genuinely independent contractor. Someone who serves their own clients and isn’t under your direction. See how to pay contractors in Sri Lanka and our hiring guide. A resident freelancer or sole proprietor who provides services to a foreign client, used outside Sri Lanka and paid in foreign currency through a bank, is taxed at a maximum rate of 15% on those gains since 2025-04-01, when the earlier exemption was removed. Applying the 15% cap band by band after the LKR 1,800,000 relief gives tax of LKR 2,130,000 on a LKR 16,600,000 invoice and LKR 4,620,000 on LKR 33,200,000. A flat 15% of the invoice with no relief is the other reading (LKR 2,490,000 and 4,980,000), and we found no IRD worked example. The freelancer needs a TIN and an annual return; income that doesn’t meet the conditions is taxed on the normal 6-36% scale. No compulsory social insurance on self-employed income was found (IRD notice, checked 2026-10-27). A person under your control is likely to be treated as an employee; that is contractor misclassification.
• Your own Sri Lankan entity. A local entity can sponsor a Residence Visa and employ directly. Skuad puts EOR onboarding at days to about 2 weeks against 3-4 months for full entity incorporation with Board of Investment setup, a vendor estimate (Skuad, checked 2026-10-27).
• PEO. Deel’s Sri Lanka page also offers its PEO and Global Payroll products for companies that already have an entity in the country (Deel, checked 2026-10-27). See PEO and EOR vs PEO.

What changed in 2026

• 2026-01-01 - National minimum wage rises from LKR 27,000 to LKR 30,000 a month and from LKR 1,080 to LKR 1,200 a day (Act No. 11 of 2025, s.2). The Budgetary Relief Allowance is folded into the wage, and the EPF, ETF, overtime and gratuity bases rise with it for workers at the floor (Act).
• 2026-04-01 - Year of assessment 2026/27 begins. The resident income tax scale (relief LKR 1,800,000; 6/18/24/30/36%) is the one introduced from 2025-04-01 and is reported unchanged by secondary sites; we didn’t see an IRD notice for 2026/27 (IRD).
• 2026-06-17 - The Labour Minister says a unified labour code replacing older labour statutes is targeted for the end of 2026, with a draft to be released for public review. No bill was published as of this check, and this is a news report only (EconomyNext).
• 2026-10-22 - The Ministry of Labour holds a stakeholder consultation on an inward labour migration policy; the outcome is unknown (Ministry of Labour).
• Still in force from 2025-04-01 - The exemption for service exports and foreign-source income paid in foreign currency through a bank is removed; individuals are taxed at a maximum rate of 15% on those gains. Personal relief rose from LKR 1,200,000 to LKR 1,800,000 (Inland Revenue Act as amended by Act No. 2 of 2025) (IRD).
• 2025-10-31 - Personal Data Protection (Amendment) Act No. 22 of 2025 is gazetted and removes the fixed grace periods. In 2026 only the regulator provisions are in operation, and the rest start on a date the Minister sets (DLA Piper).

All checked 2026-10-27.

Numbers that don’t line up on vendor pages

• Skuad price. Its Sri Lanka page shows $199, $249 and $349 a month at once. We read $199 as the monthly-billed rate, $249 as the rate with a 12-month commitment and $349 as the struck-through list price, but the page doesn’t settle which tariff applies (Skuad, checked 2026-10-27).
• Remote People onboarding. Its Sri Lanka page says new hires are onboarded in 2-5 business days, and elsewhere on the same page gives 1-2 weeks for a resident (Remote People, checked 2026-10-27).
• Remote price term. Remote’s $599 applies to annual contracts, and its monthly-term price isn’t on that page (Remote, checked 2026-10-27).

How we built this page

Country rules and vendor data were collected and checked on 2026-10-27, from Parliament, CBSL, IRD, ETF Board and Department of Immigration pages, consolidated-law copies, and vendor pages. Some sites didn’t open directly and were read through text copies. The Registrar of Companies has no open name search, so no entity is verified in a register: where a vendor says it has its own entity we report it as its statement, and the rest are recorded as not disclosed. Fifteen other providers we checked have no Sri Lanka page we could confirm (not found, blocked or empty), so they are not listed. The order puts vendors that say they own an entity first, then the rest by published Sri Lanka price. Nobody pays for placement on this page.