Sri Lanka Gratuity Calculator (Payment of Gratuity Act)

About the Sri Lanka Gratuity Calculator (Payment of Gratuity Act)

Work out the gratuity an employer in Sri Lanka must pay when your employment ends, under the Payment of Gratuity Act, No. 12 of 1983. Say whether the employer had 15 or more workmen, how you were paid, your last wage or salary and your completed years of service, and see whether the Act gives you a gratuity, how much it is, when it must be paid and the surcharge if it is paid late.

The calculator follows the Act's own rules: half a month's wage or salary for each completed year for a monthly rated workman, 14 days' wage for any other workman, at the rate last drawn, after at least five completed years with the employer. It also compares a more favourable collective agreement or contract, takes off what is forfeited after a dismissal for misconduct, and shows the APIT retained on a large gratuity. Nothing you type leaves your browser.

Without a pass the page shows a free preview of your own result: the gratuity due, the eligibility checks and the first rows of the working, while every other figure stays hidden until you unlock it with a Pro pass.

Who is due a gratuity

An employer who employed 15 or more workmen on any day of the 12 months before your employment ended must pay you a gratuity if you have at least five completed years of service with it, however the employment ends: you resign, the employer ends it, you retire, it ends by operation of law or otherwise. If a workman dies, the gratuity goes to the heirs (Act, sections 5 and 9). The Act does not cover a domestic servant or personal chauffeur in a private household, a workman entitled to a pension under a non-contributory scheme (section 7), or the employees of a co-operative society or a local authority, which are not "employers" under the Act (section 20).

How it is worked out

For a monthly rated workman the gratuity is half a month's wage or salary for each year of completed service; for any other workman, 14 days' wage or salary for each year; in both cases at the rate last drawn (section 6). A piece-rated workman's daily wage is the total wage of the three months before the end of the employment divided by the days worked in them.

"Wage or salary" means the basic or consolidated wage or salary, the cost-of-living, special living and similar allowances, and piece rates. A year is a completed period of twelve months, so months beyond the last full year do not count. Completed service is uninterrupted service, including approved leave and a strike, lock-out or stoppage that is not the workman's fault (section 20).

Agreements, dismissal and a change of employer

When a collective agreement, an award of an industrial court or arbitrator, or another agreement gives a more favourable gratuity, that one is paid instead; never both (section 10). A workman dismissed for fraud, misappropriation of the employer’s funds, wilful damage to its property or causing the loss of its goods forfeits the gratuity to the extent of the damage or loss (section 13). When an employer sells the business within five years of becoming its employer, the service under the old employer counts for the gratuity the new one pays (section 14).

Paying on time

The gratuity is due within 30 days of the end of the employment. Paid later, the employer adds a surcharge on it: 10% for up to a month, 15% for up to three months, 20% for up to six months, 25% for up to twelve months and 30% after that (section 5(4)). The Commissioner of Labour can recover an unpaid gratuity through the Magistrate’s Court (section 8), and the Department of Labour’s Industrial Relations Division gives decisions on gratuity questions.

Smaller employers

The Act does not apply to an employer with fewer than 15 workmen, but a labour tribunal can order such an employer to pay a gratuity under section 31B of the Industrial Disputes Act, which the Gratuity Act amended for that purpose (section 17). A contract or collective agreement may also give one: enter it under More options.

APIT on a gratuity

A retiring gratuity is a terminal benefit. The employer retains 12% of the part of its qualifying payments above Rs 5,000,000 until the IRD's Clearance and Directions Unit gives a direction, and the final tax on terminal benefits is 0% on the first Rs 10,000,000, 6% on the next Rs 10,000,000 and 12% on the balance (APIT Table 03, tax chart). The Sri Lanka APIT (PAYE) Salary Tax Calculator adds a commuted pension, an ETF payment and other payments.

Limitations

• Covers Part II of the Act, the gratuity on a termination; Part I, the gratuity of workmen on land that vested in the Land Reform Commission, is not covered.
• Enter completed years with the same employer, counting earlier service only where the Act adds it (a sale of the business within five years).
• Whether a payment counts as wage or salary, or a scheme as more favourable, is for the Commissioner of Labour or a labour tribunal to decide in a dispute.
• An estimate from the Act’s text, not legal advice: have the Department of Labour or a lawyer check a disputed gratuity.

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