What is the notice period for resignation in Sri Lanka?

There is no single statutory notice period for a monthly-paid private-sector employee — it is whatever your contract or letter of appointment states, commonly one month. The Shop and Office Employees Act requires an employer who terminates to give notice or pay in lieu; the same principle is applied to the employee's own notice through the contract.

Do I get gratuity if I resign before 5 years in Sri Lanka?

No. Under the Payment of Gratuity Act No. 12 of 1983 you need at least 5 completed years of continuous service with the same employer (who must have 15 or more workers). The reason for leaving does not matter — resignation, termination, or retirement all qualify once you cross 5 years. Below that, gratuity is Rs 0.

How is gratuity calculated for a monthly-paid worker?

For a monthly-paid employee, gratuity is half a month's wage for each completed year of service: ½ × monthly salary × completed years. Ten completed years on a Rs 100,000 salary gives 0.5 × 100,000 × 10 = Rs 500,000. Partial years are not counted. Daily-paid workers use a different 14-day formula, which this tool does not cover.

Is salary in lieu of notice taxable in Sri Lanka?

Salary in lieu of notice is treated as employment income and is subject to APIT (PAYE) like your regular pay. Gratuity and other lump-sum terminal benefits are taxed separately under IRD APIT Table 02, where the first Rs 5 million (or Rs 10 million for 20+ years of service) is exempt. Use the gratuity tax calculator for the lump-sum tax.

How is unused annual leave paid out when leaving a job in Sri Lanka?

Unused annual (holiday) leave earned under the Shop and Office Employees Act is encashed at your day rate: unused days × daily wage. This calculator lets you choose a calendar day rate (monthly salary ÷ 30) or a working-days rate (salary ÷ weekdays in the month). Confirm which basis your employer's HR policy uses.

What happens to my EPF and ETF when I resign in Sri Lanka?

EPF (employee 8% + employer 12%) and ETF (employer 3%) balances are held by the Funds, not your employer, so they are never part of the employer's final settlement. You claim EPF from the Employees' Provident Fund and ETF from the Employees' Trust Fund Board once you qualify. That is why this tool shows them separately, outside the settlement total.

Does salary in lieu apply if I resign and under-serve my notice?

No — salary in lieu is money the employer pays you when the employer ends the job without full notice. If you resign and serve less than your contractual notice, the shortfall can instead be deducted from what you are owed. The calculator flags this as a caution when you pick Resignation and set notice served below the contractual period.

When were these rules last verified?

The formulas and thresholds here were last cross-checked against the Shop and Office Employees Act, the Payment of Gratuity Act, and IRD APIT guidance on 2026-07-10. They are reviewed after any amendment to labour law or the Inland Revenue Act. This tool covers monthly-paid shop and office employees only.

Sri Lanka · Finance

Sri Lanka Final Settlement Calculator

Leaving a private-sector job? Get one itemised number for what your employer owes you — salary in lieu of notice, unpaid part-month pay, unused-leave encashment, and gratuity for 5+ years — before you sign the resignation letter. No signup, sources cited below.

By Induwara Ashinsana— Executive Director, Ryzera TechnologiesUpdated Jul 10, 2026

Final settlement estimatePrivate sector · monthly-paid

Try a scenario

Monthly gross salary (Rs)

Total monthly remuneration before deductions.

Employment start date

Your first working day.

Last working day

Your effective exit date.

Reason for leaving

Drives who owes the notice pay.

Day-rate basis

How the daily rate is derived.

Contractual notice (months)

Whole months, 0–6.

Notice served (months)

Months of notice actually worked.

Unused annual-leave days

Days to encash, 0–60.

Include gratuity

If you qualify (5+ years).

Total final settlement

Rs 715,000

Completed service: 7 yr 6 mo 28 d · payable by the employer. EPF/ETF are claimed separately from the Funds.

Salary in lieu of notice

Rs 0

Not payable on resignation

Unpaid final-month salary

Rs 150,000

Full final month (worked to month-end) = Rs 150,000

Annual-leave encashment

Rs 40,000

8 day × Rs 5,000 day-rate

Gratuity

Rs 525,000

½ × Rs 150,000 × 7 completed years

Itemised breakdown

Component	Formula	Amount
Salary in lieu of notice	Not payable on resignation	Rs 0
Unpaid final-month salary	Full final month (worked to month-end) = Rs 150,000	Rs 150,000
Annual-leave encashment	8 day × Rs 5,000 day-rate	Rs 40,000
Gratuity	½ × Rs 150,000 × 7 completed years	Rs 525,000
Total final settlement		Rs 715,000

Day rate used: Rs 5,000 (Calendar (÷30)). Final month has 31 calendar days / 23 working days.

EPF & ETF — claimed separately

Your EPF (employee 8% + employer 12%) and ETF (employer 3%) balances are paid by the Funds on a qualifying exit — not by your employer — so they are not part of the settlement total above. Gratuity and other terminal lump sums are taxed under IRD APIT Table 02.

An estimate for monthly-paid shop & office employees. It is not a settlement offer or legal advice — confirm figures with your employer and the Department of Labour. Sources cited below the calculator.

How it works

This calculator estimates the final settlement for a monthly-paid private-sector (shop & office) employee who resigns or is terminated for a non-disciplinary reason. It adds up the four amounts an employer typically settles on your last day, each drawn from a specific statute:

Completed service. The whole years and months between your start date and exit date. Gratuity uses completed years only (Payment of Gratuity Act No. 12 of 1983, § 5). The tool computes years two independent ways — a year/month/day breakdown and a total-month count — and both must agree before gratuity is applied.
Salary in lieu of notice. When the employer ends the job with short notice, they owe (contractual − served) months × monthly salary (Shop and Office Employees Act, § 18). On resignation this is not paid to you; if you under-serve your own notice, the shortfall can be deducted instead — shown as a caution, never added.
Pro-rata unpaid salary. The part-month you worked but were not yet paid, at your day rate × days worked. A month-end exit is treated as a full month's salary, matching how monthly-paid wages are settled (§ 13).
Annual-leave encashment. Unused annual-leave days paid at the day rate: unused days × day rate (Shop and Office Employees Act, § 6). You choose the day-rate basis: calendar (salary ÷ 30) or working days (salary ÷ weekdays in the month).
Gratuity. For 5+ completed years with an employer of 15+ workers: ½ × monthly salary × completed years (Payment of Gratuity Act, § 5). Below 5 years it is zero, with an eligibility note.

The total is the sum of these four. EPF (employee 8% + employer 12%) and ETF (employer 3%) are held by the Funds, not the employer, so they are shown separately and never added in. Gratuity and other lump-sum terminal benefits are taxed under IRD APIT Table 02 — the first Rs 5 million (Rs 10 million for 20+ years) is exempt.

Worked examples

Resignation · 7 completed years · Rs 715,000

Salary Rs 150,000; start 3 Jan 2019; exit 31 Jul 2026; calendar basis.
Day rate D = 150,000 ÷ 30 = Rs 5,000
Salary in lieu: Rs 0 (resignation, notice fully served)
Unpaid final month (31 Jul is month-end): Rs 150,000
Leave encashment: 8 days × 5,000 = Rs 40,000
Gratuity: 0.5 × 150,000 × 7 = Rs 525,000
Total = 0 + 150,000 + 40,000 + 525,000 = Rs 715,000

Employer termination · 3 years · Rs 133,333.33

Salary Rs 80,000; start 1 Jun 2023; exit 15 Aug 2026; calendar basis.
Day rate D = 80,000 ÷ 30 = Rs 2,666.67
Salary in lieu: (1 − 0) × 80,000 = Rs 80,000
Unpaid part-month (15 days worked): 15 × 2,666.67 = Rs 40,000
Leave encashment: 5 days × 2,666.67 = Rs 13,333.33
Gratuity: Rs 0 (only 3 completed years — under 5)
Total = 80,000 + 40,000 + 13,333.33 + 0 = Rs 133,333.33

Gratuity boundary · exactly 5 years vs one day short

Salary Rs 100,000; exit 31 Jul 2026; resignation; leave 0; calendar.
Start 31 Jul 2021 → exactly 5 completed years → eligible.
Gratuity: 0.5 × 100,000 × 5 = Rs 250,000; total = 100,000 + 250,000 = Rs 350,000
Start 1 Aug 2021 → 4 years 11 months → NOT eligible.
Gratuity: Rs 0; total = Rs 100,000 (unpaid month-end salary only)
One day of service flips a Rs 250,000 gratuity — check your dates.

Frequently asked questions

Sources & references

Last cross-checked against these sources on 2026-07-10. This tool covers monthly-paid shop & office employees; it does not compute disciplinary dismissals, TEWA retrenchment compensation, public-sector pensions, or the daily-paid 14-day gratuity formula. It is an estimate, not legal advice.

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