Minimum Wage
There is no single minimum wage in Sri Lanka. Minimum wages are determined by sector specific tripartite wage boards for more than 40 trades in Sri Lanka. Minimum wage may be determined on hourly, daily, weekly or monthly basis by Wage Boards constituted under the Wage Boards Ordinance. Employers are required to pay the minimum wage determined by a trade specific Wage Board.
There are no specific criteria for determining the minimum wage rate. It is adjusted according to the variation in cost of living index applicable to workers in that trade.
Minimum wage rates vary in accordance with the occupation, sector, region and the category of workers. Increase in minimum wage rate is mutually decided by the Government, trade union representatives and employers.
Employer is required to maintain a register at the premises, which should contain the following information: name of each worker employed by him; class of work performed by each employed worker; and the amount paid to each worker. Employer is required to preserve such register for a period of 6 years.
The Wage Boards determine a minimum rate of wages for time worked (referred to as general minimum time rate), a minimum rate of wages for piece work (referred to as general piece rate), a minimum time rate applicable to the piece rate workers to ensure a minimum remuneration based on time worked (referred to as guaranteed time rate), and a minimum rate for overtime work done by the workers (referred to as overtime rate).
As provided under the Wage Boards Ordinance, compliance with minimum wages is ensured by the office of Labour Commissioner, which appoints officers in order to give effect to the provisions of Ordinance. Employers of workers in any trade are required to maintain and keep in the premises where the trade carried out a clear and accurate written record of the following information in respect of each wage period:
(a) the wage period;
(b) the names of the workers who are paid wages in respect of such wage period;
(c) the number of hours or days during which each such worker has worked in such wage period;
(d) the wages paid to each such worker in respect of such wage period;
(e) the date of payment of such wages;
(f) the deductions from such wages; and
(g) particulars of such other matters as may be prescribed.
If an employer fails to comply with the Wages Boards Ordinance or a Wages Board determination on minimum wage, the employer is liable to a fine of:
(i) not less than 100 rupees but not more than 250 rupees in the case of a first offence;
(ii) not less than 250 rupees but not more than 500 rupees in the case of a second offence; and
(iii) not less than 500 rupees but not more than 1,000 rupees in the case of a third and subsequent offences.
If the fine relates to the failure to pay the minimum wages as are determined by a Wages Board, the employer is further liable to a fine not exceeding 50 rupees for each day on which the offence is continued after conviction. In the event of a third or subsequent offence, an employer may also be liable to a term of imprisonment not exceeding 6 months.
In addition to the above penalties (fine or prison sentence), the court may order an employer to pay:
(a) the difference between the due amount (minimum wage) and the amount actually paid and the surcharge as payable in accordance with §4(2A) Wages Ordinance Board;
(b) such sums as are determined by the court plus any surcharge as payable in accordance with §4(2A) Wages Ordinance Board if no wages are paid by the employer to the worker.
Under the Minimum Wage Act 2016, employers are required to maintain and keep in the premises the relevant record setting out the name of each worker employed by him; the class of work performed by each worker employed by him; and the amount paid to each such worker as wages. If an employer fails to pay the national minimum wage (monthly or daily) payable to workers, the Commissioner-General, may after investigation, require the employer to deposit with him the amount of such part of the national minimum wage that is defaulted in respect of such worker or workers for the period the amount is due, within the date specified in such notice.
If an employer contravenes the provisions on payment of minimum wage, he is guilty of an offence is liable on conviction to a fine not exceeding twenty-five thousand rupees or to imprisonment of either description for a term not exceeding six months or to both such fine and imprisonment.
Source: §21-22 and 40-44 of the Wage Boards Ordinance; §3 of the Budgetary Relief Allowance of Workers Act 2016; §3-9 of the National Minimum Wage of Workers Act 2016
For updated minimum wage rates, please refer to the section on minimum wage.
Regular Pay
In accordance with the Wage Boards Ordinance, wage includes any remuneration due in respect of overtime work or of any holiday. Both the Wage Boards Ordinance and the Shop & Office Act have provisions related to the payment of wages.
A Wage Board may fix a wage period for a specific trade and specify the days at the end of which the wages must be paid to the workers. If a worker is not covered under the Wage Board decision, an employer may fix the wage period. However, in either case, wage period cannot exceed one month. The Wage Board Ordinance and the Shop & Office Act require payment of wages at the following intervals:
- within 3 days of the end of wage period if the period does not exceed 1 week;
- within 5 days of the end of wage period if the period does not exceed 2 weeks; and
- within 10 days of the end of wage period if the period exceeds 2 weeks (but is less than one month)
In certain unavoidable circumstances, when the employer is unable to pay remuneration to the worker within specified time period, the employer must retain the remuneration and pay it at the earliest possible opportunity.
The Wages Boards Ordinance and the Shop & Office Employees Act specifically require the employer not to make any deduction other than those authorized by the law. Deductions imposed by Statute are those relating to the collection of income tax at source, Employees’ Provident Fund deductions (8% of a worker’s total earnings) and deductions on account of payments to approved provident funds, etc. If an employer makes unlawful deductions, there is a risk of prosecution.
The employer is authorized to deduct certain amounts from the employee’s salary in case of misbehavior. The employee in turn is called to maintain a certain standard to avoid such fines. One can interpret such standards as the actual responsibility that the law calls the employee to fulfill. Examples are: absence from work without a reasonable excuse, late attendance at work without a reasonable excuse, willful failure on the part of the employee to comply with any lawful order given to him in relation to his work and intoxication during working hours. However, such fines cannot amount to more than 5% of the total salary due for the period to which they refer to, while the approval of the Commissioner is needed if the amount is higher.
The Regulation 17 under the Shop & Office Employees Act requires an employer to keep salary record, which should include following information: name of the employee; age; sex; class or grade, if any; category or designation or occupation; remuneration period (month, fortnight or week); number of hours of work performed during the remuneration period; number of hours of overtime work performed during the remuneration period; rate of remuneration payable; allowances payable (showing each allowance separately); gross remuneration earned for the remuneration period; all deductions made from the gross remuneration (showing each deduction separately); all advances made out of the remuneration during the remuneration period; contributions made by the employer and employee respectively in respect of the remuneration period, to any pension or provident fund; the amount of balance remuneration paid and the date of payment; the total amount of overtime remuneration paid in respect of each remuneration period; the amount recovered under the Income Tax Ordinance or under any other written law or order of court; acknowledgement of the employee in proof of receipt of net remuneration. Employers are required to keep the remuneration record up to date and preserve it for a period of 4 years.
Employers are required under the Shop & Office Employees Act to pay remuneration directly to the person in legal tender and without any deductions (except those authorized under the law and with the consent of such person). The law however requires that the aggregate of such deductions must not exceed 60% of the remuneration due to a worker.
The Wages Board Ordinance however has a different provision. It also requires an employer to pay remuneration directly to a worker in legal tender and without any unauthorized deductions. However, such deductions must not exceed 75% for workers engaged in a trade specified by the Minister and 50% of wages for workers engaged in any other trade.
Source: §2, 5 & 23 of the Wage Boards Ordinance; §19 and Regulation 17 under the Shop & Office Employees Act
