Employer coverage
Part II generally applies where the employer employed fifteen or more workers on any day during the twelve months immediately before termination.
VERIFIED 5 AUGUST 2026 · PAYMENT OF GRATUITY ACT
Gratuity Calculator Sri Lanka 2026
Estimate gratuity from your last-drawn statutory wage and completed service. The calculator checks the Act’s five-year and fifteen-worker thresholds, supports monthly, daily and piece-rated work, and estimates current IRD Table 03 retention.
PAYMENT OF GRATUITY ACT · IRD TABLE 03
Your gratuity estimate
Enter your employment details and calculate to see statutory initial thresholds, gross gratuity, estimated retention and net amount.
STATUTORY GUIDE
How Sri Lanka gratuity is calculated
The Payment of Gratuity Act separates eligibility from the payment formula. A formula result is not by itself proof that the Act applies to a particular employment relationship.
Completed service
The worker must have at least five completed years under that employer. A statutory year means a completed twelve-month period.
Payment deadline
A gratuity payable under Part II must be paid within 30 days of termination. Late-payment surcharges rise with the delay.
Statutory gratuity formulas
| Worker basis | Rate per completed year | Wage input |
|---|---|---|
| Monthly-rated | ½ × monthly wage | Last-drawn monthly wage or salary |
| Other non-monthly | 14 × daily wage | Last-drawn daily wage or salary |
| Piece-rated | 14 × derived daily wage | Preceding three-month wages ÷ days worked |
What counts as wage or salary?
The Act's definition includes basic or consolidated wage or salary, cost-of-living allowance, special living allowance or a similar allowance, and piece rates. It should not automatically be replaced with every item in gross remuneration.
Domestic servants or personal chauffeurs in private households and workers entitled to a non-contributory pension are excluded from section 5. The Act's employer definition also contains specific exclusions for local authorities and registered co-operative societies. More favourable collective agreements, awards or other agreements may govern instead.
IRD Table 03 retention
Current Table 03 lists retiring gratuity among terminal benefits. When listed qualifying benefits payable by an employer exceed Rs. 5 million, that employer retains 12% from the excess. Table 03 treats ETF-paid benefits separately and instructs the retiring employee to obtain an IRD direction within 90 days.
The calculator estimates the marginal retention attributable to this gratuity after other qualifying benefits payable by the same employer. It is not a final tax assessment.
Frequently asked questions
How is gratuity calculated in Sri Lanka?
For a monthly-rated worker, the statutory formula is half the last-drawn monthly wage or salary for each completed year of service. For another non-monthly worker it is fourteen days of the last-drawn wage for each completed year. A piece-rated worker's daily rate is derived from wages and days worked during the preceding three months.
Who qualifies for statutory gratuity in Sri Lanka?
Part II of the Payment of Gratuity Act generally applies when the employer employed fifteen or more workers on any day in the twelve months before termination and the worker completed at least five years under that employer. Statutory exclusions and more favourable agreements can change the outcome.
Does resignation still qualify for gratuity?
The Act describes termination broadly, including termination by the employer or worker, retirement, death, operation of law or otherwise. The employer-size, service-period and exclusion rules still need to be satisfied.
When must gratuity be paid?
For a gratuity payable under Part II, the Act requires payment within thirty days of termination. It also provides escalating surcharges for late payment.
Is gratuity taxed in Sri Lanka?
IRD APIT Table 03 requires the employer to retain 12% from the part of its listed aggregate qualifying terminal benefits exceeding Rs. 5 million. ETF-paid benefits are assessed separately for that payer. The retiring employee may need an IRD direction, and retention should not be treated as a final personal tax assessment in every case.
Primary sources
Department of Labour: Payment of Gratuity Act, No. 12 of 1983Department of Labour: Labour legislation libraryInland Revenue Department: APIT Table 03 (terminal benefits)
Estimate only. Employment coverage, wage components, forfeiture, contractual terms and IRD directions can affect the actual amount. For a disputed entitlement, contact the Department of Labour or a qualified Sri Lankan employment adviser.
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