In Sri Lanka, labor law doesn't prescribe a mandatory notice period for individual employee terminations. However, the Termination of Employment of Workmen (Special Provisions) Act No. 45 of 1971 (TEWA) governs specific circumstances related to termination, particularly in cases of retrenchment.

Notice Period for Retrenchment (TEWA)

The TEWA applies when an employer needs to reduce their workforce due to closure, restructuring, or similar reasons. In such cases, a minimum one-month notice period is required before termination. This entitlement applies only to employees who have completed one year of service. Employees with less than a year's service are not entitled to notice under the TEWA.

• TEWA applies to retrenchment scenarios.
• Minimum one-month notice for termination upon retrenchment.
• Applicable only to employees with at least one year of service.

Notice Periods in Individual Contracts and Collective Agreements

While the TEWA doesn't mandate a general notice period, individual employment contracts or collective bargaining agreements with trade unions may specify notice periods for termination. These agreements can supersede the TEWA's provisions and establish different notice periods depending on the specific employment situation.

It's crucial for employees to carefully review their employment contracts and any relevant collective agreements to understand the applicable notice period in case of termination.

• Individual contracts and collective agreements may prescribe notice periods.
• These agreements can supersede TEWA's provisions.
• Notice periods can vary depending on the specific employment situation.

Severance pay, also known as termination benefits, is a payment that employers may be obligated to provide to employees when their employment is terminated under certain circumstances. In Sri Lanka, the governing laws for severance pay are the Termination of Employment of Workmen (Special Provisions) Act (TEWA), No. 45 of 1971 and the Shop and Office Employees (Regulation of Employment and Remuneration) Act, 19 of 1954. These laws, along with relevant case law, outline the situations where severance pay applies and the calculation methods.

Applicability of Severance Pay

Severance pay is generally required when an employee is terminated involuntarily by the employer. This includes situations such as retrenchment due to economic reasons or redundancy, and dismissal without sufficient cause as per the relevant labor laws. Employees who retire after a specified period of service are also usually entitled to severance pay. In limited cases, employees who resign may be eligible for severance pay, such as in cases of constructive dismissal or resignation due to health reasons as certified by a doctor.

Exclusions from Severance Pay

Severance pay may not be required in scenarios such as dismissal due to misconduct, insubordination, or other serious reasons as outlined by labor laws. Specific laws may set a minimum employment period for severance pay eligibility, such as five years under the Payment of Gratuity Act. Employees on fixed-term contracts that naturally expire may not be entitled to severance pay.

Severance Pay Calculation

Severance calculations generally consider the employee's length of service and their last drawn salary. The precise formulas depend on specific laws. For example, under the TEWA, the calculation is as follows:

• For the first 5 years of service, it's 2.5 months of salary for each completed year.
• For the 6th to 14th year of service, it's 2 months of salary for each completed year.
• For the 15th to 19th year of service, it's 1.5 months of salary for each completed year.
• For the 20th to 24th year of service, it's 1 month of salary for each completed year.
• For the 25th to 34th year of service, it's 0.5 months of salary for each completed year.

Please note that maximum compensation amounts may apply and different calculation methods might exist under other laws.

Termination of employment in Sri Lanka typically falls under two primary categories: termination by an employee (resignation) and termination by an employer. Each follows procedures defined by labor laws, primarily focusing on the Termination of Employment of Workmen (Special Provisions) Act (TEWA), No. 45 of 1971, the Industrial Disputes Act, No. 43 of 1950, and the Shop and Office Employees (Regulation of Employment and Remuneration) Act, 19 of 1954.

Termination by an Employee

Employees are generally required to provide advance written notice to their employer when resigning. The specific notice period is often defined by the employment contract or company policy. In the absence of such a clause, a reasonable notice period is expected. The employee must properly serve the resignation notice to the employer following the procedures outlined in their contract or company policy.

Termination by an Employer

The process for termination by an employer in Sri Lanka is more detailed and regulated to ensure fairness and protect employee rights, particularly for employees covered by TEWA.

Grounds for Termination

Employers must have valid grounds to terminate employment. These include retrenchment due to economic reasons, restructuring, or closure of the business. TEWA places strict requirements on retrenchments, including employer obligations to consult with employees and the need for approval from the Commissioner of Labour in some cases. Employers may also terminate employment for misconduct, insubordination, or other serious breaches of company rules, provided they follow fair disciplinary procedures, including investigation and affording the employee the right to be heard. Other justifiable reasons as stipulated by labor laws and relevant case law are also valid grounds for termination.

Procedures for Termination

Employers must provide written notice of termination to the employee, clearly stating the reasons for termination. Notice periods may vary based on the reason for termination and employment contract terms. Under the TEWA, employers generally need prior approval from the Commissioner of Labour or the employee's written consent to terminate employment. The Commissioner of Labour assesses the legitimacy of the reason for termination before granting approval.

Important Considerations

Contracts can set out additional procedures and terms regarding termination, provided they don't violate statutory labor laws. If an employee believes their termination was unjust or unlawful, they may file a complaint with the Labour Tribunal under the Industrial Disputes Act. TEWA and some other labor laws may not apply to all categories of workers (e.g., managerial staff, some public sector employees). Understanding the complex nuances of labor law and termination procedures in Sri Lanka is essential.