Calculate the True Cost to Hire an Employee in Sri Lanka
The gross salary on an employment contract is not the full cost to the employer. Sri Lanka law requires employers to pay EPF 12% and ETF 3% on top of gross salary — a total statutory overhead of 15%.
Use our free Employer Cost Calculator (click the Employer Cost tab) to get the full monthly and annual cost-to-company instantly.
Employer Cost Formula
Total CTC = Gross Salary + EPF Employer (12%) + ETF (3%)
| Gross Salary | EPF Employer (12%) | ETF (3%) | Total Monthly CTC |
|---|---|---|---|
| LKR 50,000 | LKR 6,000 | LKR 1,500 | LKR 57,500 |
| LKR 100,000 | LKR 12,000 | LKR 3,000 | LKR 115,000 |
| LKR 150,000 | LKR 18,000 | LKR 4,500 | LKR 172,500 |
| LKR 200,000 | LKR 24,000 | LKR 6,000 | LKR 230,000 |
| LKR 300,000 | LKR 36,000 | LKR 9,000 | LKR 345,000 |
Key Employer Rules
- Contribution base: basic salary + fixed allowances only (overtime and bonuses excluded)
- EPF and ETF due by the last working day of the following month
- Late payment surcharge: 2.5% per month on outstanding amounts
- Applies to all employers with 1+ employees working 5 or more days per week
Frequently Asked Questions
How much does it cost to hire an employee in Sri Lanka?
The total cost is gross salary plus 15% in employer contributions — EPF 12% and ETF 3%. A LKR 100,000 salary costs the employer LKR 115,000 per month, or LKR 1,380,000 per year.
Is overtime included in the EPF base?
No. Overtime, bonuses and irregular allowances are excluded from the EPF/ETF contribution base in Sri Lanka. Only basic salary and fixed monthly allowances are included.
What is the difference between EPF and ETF?
EPF is a retirement savings fund with both employer (12%) and employee (8%) contributions. ETF is a welfare fund — employer only pays 3%. Employees receive ETF as a lump sum on retirement or resignation after 5+ years.
When must EPF and ETF be paid?
Contributions must be remitted by the last working day of the month following the month of employment. Late payments attract a surcharge of 2.5% per month on the outstanding balance.
📅 Book a consultation with GDP Consultants for payroll compliance advice.
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