Termination and Severance
Understanding the legal framework for employment termination and severance payments in Sri Lanka.
Notice Period Requirements
Less than 1 year service
Per contract terms
Notice period as specified in employment agreement
1-5 years service
1 month notice
Standard notice period for medium-term employees
Over 5 years service
Extended notice
Longer notice based on tenure and position
Severance Pay Calculation
First 5 years
2.5 months salary per year
Higher rate for initial period of service
6-14 years
2 months salary per year
Reduced rate for middle period
15-19 years
1.5 months salary per year
Further reduced rate for longer service
20-24 years
1 month salary per year
Standard rate for long service
25-34 years
0.5 months salary per year
Minimum rate for extended service
Grounds for Termination
Disciplinary Grounds
- ✓ Misconduct or incompetence
- ✓ Neglect of duty
- ✓ Dishonesty or insubordination
- ✓ Habitual absence without leave
- ✓ Willful damage to company property
Non-Disciplinary Grounds
- ✓ Redundancy due to economic reasons
- ✓ Business restructuring
- ✓ Closure of operations
- ✓ Medical incapacity
- ✓ Retirement
Termination Process
Documentation
- ✓ Written notice of termination
- ✓ Clear statement of reasons
- ✓ Record of prior warnings if applicable
- ✓ Performance review documentation
Legal Requirements
- ✓ Commissioner approval for non-disciplinary cases
- ✓ Employee consent verification
- ✓ Union consultation if applicable
- ✓ Compliance with collective agreements
Timeline Management
- ✓ Proper notice period observation
- ✓ Final settlement calculation
- ✓ Handover process completion
- ✓ Exit interview documentation
Financial Settlement
- ✓ Severance calculation
- ✓ Unused leave payment
- ✓ Bonus pro-rata settlement
- ✓ Statutory contribution closure
Employee Rights During Termination
Right to Notice
Adequate notice period or payment in lieu
Right to Hearing
Opportunity to respond to termination grounds
Right to Appeal
Internal grievance process access
Right to Compensation
Legal entitlements and benefits
Need Help with Termination Procedures?
Our HR experts can help you navigate termination processes while ensuring compliance with Sri Lankan labor laws and protecting both employer and employee interests.