The Labour Law can be defined as the partnership between employees and employers which is mediated by the law (also known as labour law or job law). The dual partnership between employee and employer is addressed by the collective labour laws in Sri Lanka such as Shop & Office Act, Wage Board Ordinance, etc.
The Shop & Office Act is the most prominent and widely applicable Labour Law in Sri Lanka. The shop & office act conveys to the employees what they are entitled from their employers. This act covers important aspects of employment such as Minimum wage, Holidays, Regulation of work hours, Maternity benefits & leave, Termination of employment, Holidays, etc. Any worker who employed in a Sri Lankan shop or office falls under this act. A fact is that this act applies to both local and international workers is a critical thing to note. It doesn’t differentiate between the two.
Working Hours – According to Shop & Office Act, the typical time span of work (exclusive of rest and meal breaks) would be a time period of not more than 8 working hours per day and does not exceed more than 45 hours a week. In the case where an employee is required to work more than the mediated 45 hours per week, the employee should be paid for their overtime with a special overtime rate (1.5 x the hourly rate). However, the number of extra hours they are permitted to work each week is confined to 12 hours only.
Weekly Holidays – An employee who worked for at least 28 hours (exclusive of breaks and overtime) in any given week are entitled to one and a half days of paid vacation in that week or the week following it. These weekly holidays are generally split into two parts which is a half-day off on Saturday and a full-day off on Sunday. It is however common for most businesses now adays (especially in large corporations) to give their employees a whole day off on Saturday. Any employee who is required to work on a weekly holiday is entitled to an overtime payment in accordance with the protocol outlined in the Shop and Office Act.
It should be noted that, Shop & Office Act and it’s Regulations, on the other hand, do not apply to those working in or associated to the shop or office trade as a sales representative, auditor, supervisor, director, or in any related faculty. As a result, such employees could be forced to work more than eight hours per day and/or 45 hours a week without being eligible for overtime pay. However, according to the Shop & Office Act, those employees should be allowed to take weekly holidays.
Rest Break – According to the Shop & Office Act, at the completion of each period of
four hours of continuous working, the employee would be entitled to a half-hour meal or rest break, which amounts to an hour of meal and rest break every working day. However, if an employee is not working for more than five hours on a given day, no lunch or rest break would be allowed in that particular day.
Annual Leave – For each completed year of employment, an office or shop employee is entitled to 14 days of annual leave, paid in full. According to this act, no less than seven days must be allowed in a row. A staff is entitled to equal annual leave depending on the worth of their first year of employment, which is measured as: If the employment begins on or after January 1st but before April 1st, the duration is 14 days, the duration would be 10 days if employment begins on or after April 1st but before July 1st, 7 days if employment started on or after July 1st but before October 1st and 4 days if service started on or after October 1st but before December 31st.
In addition to the Annual Leave, an office or shop employee will be entitled to seven days of unpaid leave each calendar year. For the first year of employment, informal/casual leave can be taken on the basis of one day for every two months of employment done. For staff in the construction sector, the maximum Annual Leave or vacation requests will be one holiday for any 18 days of working (maximum operational days will be 252), for a limit of 14 days. Employment in the engineering sector are entitled to a limit of 14 days of leave, with seven days to be taken consecutively.
Furthermore, for all constitutional holidays, office and shop employees are entitled to a salaried holiday. Examples of such holidays would be Poya holidays, Tamil Thai-Pongal, National Day, Milad-Un-Nabi, Sinhala and Tamil New Year Day & the day that precedes to it, May Day, and Christmas Day. The Shop & Office Act requires the permission of the Labour Commissioner for an office or business employee to work on a day marked as a constitutional holiday, as enforced by the Act’s strict implementation. However, in the majority of cases, if a member of the workforce is required to work on a constitutional holiday, the employee is either granted a replacement holiday for the day prior to December 31st of the year or is paid an additional day’s salary.
Maternity Leave – Employees are entitled to eighty-four (84) days of paid leave for the birth of their first child, or for the birth of their second child if they already have one. Fourteen (14) days of pre-confinement leave and Seventy (70) days of post-confinement leaves are available. In the case of the birth of a third or following child (where the said employee already has 2 previous children, otherwise, her right to leaves will continue at 84 days), the worker will be entitled to 42 working days of leave, which will be divided into fourteen (14) days pre confinement leave and 28 days post-confinement leave.
Termination – According to the Shop & Office Act, contracts of Employment also allow for termination by any party with one month’s notice or one month’s pay instead of notice or without notice for reasons specified in the contract of employment. Despite those requirements, current employment/labour regulations only permit a contract termination with the permission of the employee, with written confirmation by the Labour Commissioner, or with a valid justification for the termination (Eg: inappropriate conduct, stealing, harassment of fellow colleagues). Permanent employees can only be fired only on disciplinary grounds.
It’s difficult to keep track of all the ins and outs of the complex Sri Lankan Labour Laws while you’re busy running a firm. The issue is that you have no choice. Those who do not comply with Sri Lankan labour law will face severe consequences by the Sri Lankan Government. But how do you combine the two? How do you run a profitable company while still keeping track of your compliance to various rules & regulations? Simply put you’ll need a competent Human Resource Department or in the case of small businesses, someone with adequate legal expertise to track the compliance with the Sri Lankan Labour Law so that you can do your employees right while being a good corporate citizen.