Do Sri Lankan Private Companies Really Respect Labour Laws?
Introduction
Labour laws form the foundation of fair employment practices and protect employees across all sectors. Sri Lanka has a comprehensive set of labour regulations covering many areas, but an important question persists: Do private companies truly follow these laws, especially when viewed against global standards?
How the employer-employee relationship evolved:
Foundation of the concept – master and servant relationship:
In later England, the work relationship model was based on a master–servant basis. The employer (master) had strong power and control, and the employee (servant) was
weak and had very few rights.
Modern changes:
Today, employees have many rights and protections. A major reason for
global shifting is the International Labour Organization (ILO), a UN agency based
in Geneva.
ILO promotes equality, healthy relationships between employers and employees, and international labour standards (in Learning, 2025).
Where Sri Lanka stand present
- ·
Sri Lanka is a member of the ILO
- · It is recognized Sri Lankan labour laws as strong and more employee-friendly compared to countries in other Asian countries.
- · Based on Sri Lankan labour law, ‘hire and fire’ is not allowed (Institute of Chartered Accountants of Sri Lanka, 2025).
Discussion
Overview of Sri Lankan Legislation on Labour
Employment and labour legislation can be divided in to 7 categories:
1 Laws on Social Security: EPF Act, ETF Act, Gratuity Act
2 Laws on
Welfare and Well-being of Employees: Employment of Women, Young Persons, and
Children Act, Maternity Benefits Ordinance; Employment of Females in Mines Act
3 Occupational
safety and health and workmen’s compensation: Factories Ordinance, Workmen’s
Compensation Ordinance.
4 Laws
relating to terms and conditions of Employment : Wages Board Ordinance, Shop
and Office employees Act, Employment of Trainees (Private Sector) Act
5. Labour relations: Trade Union Ordinance, Employees Councils Act, Employees Councils
Act, TEWA,
6 Law
relating to Plantations and Estate labour
7 Foreign
Employment
Even though there are various types of labour laws stated in papers, are all employers actually adhere to these laws?
Global context
As of today these 8 countries—Norway, Denmark, Sweden, Canada, the Netherlands, Germany, France, and Finland—are identified as best HR and labour law practicing considering the way they provide strong
employee protections, ensuring working conditions, legal protection, and benefits (Moss, 2025).
Apart from the above countries, Australia is also recognised because of the Fair Work
Act, which sets out minimum employment standards. According to the International
Trade Union Confederation (ITUC), Nepal witnesses regular violations of workers’
rights, Sri Lanka faces systematic violations of rights, and Bangladesh is
ranked as the worst country for workers (Industri all, 2023).
On the other hand, Sri Lanka and many other emerging countries confront
comparable difficulties. Large informal sectors, few inspections, and gaps
between laws and their execution are problems in nations like Bangladesh,
Nepal, Indonesia, and India. These marketplaces also frequently have problems,
including long working hours, inadequate compensation, and lax enforcement.
Where Sri Lanka stands today ?
However, because foreign buyers demand transparency, fair labour
standards, and ethical audits, industries exposed to global supply
chains—particularly outsourcing, IT, and apparel—tend to exhibit higher
compliance. Additionally, this has caused Sri Lanka's export sectors to more
closely conform to international norms, such as ILO guidelines and ESG
requirements. Compliance is higher in nations with strong digital systems,
suggesting that Sri Lanka might improve its enforcement by increasing the use
of technology-driven employee management systems.
Even though the well-reputed organisations and multinational
organisations comply with labour laws, many small private organisations continue
to neglect and struggle to implement these laws. At the same time, most
employees themselves lack awareness of their basic labour rights. The
Department of Labour stands for workers, but it usually intervenes only when a
formal complaint is made by an employee. During the pandemic many employees
lost their jobs and experienced salary cuts based solely on employers’ decisions.
In many cases, employers did not follow the requirements in TEWA. Pregnant employees in the private sector during and after the pandemic were not considered and treated as well as those in the public sector. The Labour
department also could not stand strong and faced limitations in supporting employees
since the existing legal framework contains gaps in crisis management.
Conclusion
Compared to other South Asian countries, Sri Lanka has strong and well-structured employment regulations. However, there is still a clear gap between legislation and actual implementation. Many small-sector organisations still disregard fundamental labour laws, whereas multinational companies comply with international standards. Additionally, increasing employee awareness and strengthening digital compliance tools are essential. Furthermore, strengthening the Labour Department's capacity and capability, particularly in times of crisis, is crucial. Sri Lanka has strong potential to modernise its labour market to move towards the global context with transparency, ethical behaviour and tech-driven regulations.
Reference:
(Institute of Chartered Accountants of Sri Lanka, 2025) [online] Available at : https://www.casrilanka.com/casl/images/stories/EDBA/labour%20law%201.pdf
[Accessed: November 25, 2025]
(in Learning, 2025) A short history of employee relations and representation [online] Available at: https://www.linkedin.com/learning/introduction-to-employee-relations/a-short-history-of-employee-relations-and-representation. [Accessed: November 25, 2025]
(Moss. L, 2025) RemoFirst 8 Countries With the Best Labor & Employment Laws for Workers' Rights [online] Available at :https://www.remofirst.com/post/best-countries-workers-rights [Accessed: November 25, 2025]
This analysis highlights Sri Lanka’s solid labour regulations while drawing attention to the persistent gap between policy and practice. Strengthening enforcement, boosting employee awareness, and adopting digital compliance tools are essential steps. With improved institutional capacity and tech-driven reforms, Sri Lanka is well-positioned to advance towards a more transparent, ethical, and globally aligned labour market.
ReplyDeleteI appreciate your insightful remark. I concur that improving awareness and enforcement will be essential to closing the gap between policy and practice. Your observations emphasize even more how critical it is to transition to more contemporary and transparent labour rules.
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ReplyDeleteThis is a timely topic, and It rightly acknowledges Sri Lanka’s strong legal framework while also highlighting the practical challenges in implementation. I particularly appreciate the focus on solutions—such as boosting employee awareness, leveraging digital compliance tools, and strengthening the Labour Department—which shows a forward-looking approach. The optimism about Sri Lanka’s potential to modernize its labour market with transparency, ethical practices, and technology-driven regulations is encouraging and well-founded. This perspective not only identifies problems but also points clearly toward meaningful progress.
ReplyDeleteI appreciate your kind and supportive remark. I'm happy that the focus on practical answers and progressive improvement. Increasing institutional capacity, embracing digital tools, and raising awareness are all crucial stages in making real change. Your viewpoint really enriches the discussion.
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ReplyDeleteA brave and necessary critique that moves beyond theoretical law to practical reality. The blog provides a sobering, well-structured analysis of the stark gap between Sri Lanka's strong labour legislation and its inconsistent enforcement, especially within SMEs. Its great strength is the balanced, evidence-based comparison with both global leaders and regional peers, concluding with a clear and urgent call for digital tools, employee awareness, and stronger institutional capacity.
I appreciate your kind and supportive comments. I'm happy you found resonance in the emphasis on the enforcement gap in the actual world, especially in SMEs. The necessity of actual reforms is made even more urgent by your acknowledgement of the need for increased awareness, digital tools, and stronger institutional ability. I sincerely value your insightful viewpoint.
DeleteThis blog provides a well-structured overview of Sri Lanka’s labor law landscape, supported by strong global comparisons. The discussion on compliance gaps and the need for stronger enforcement is particularly well articulated. A thoughtful and relevant analysis.
ReplyDeleteI appreciate your insightful comments. I'm happy that the framework and international comparisons helped to frame the conversation. Your acknowledgement of the enforcement requirements and compliance gaps highlights how crucial it is to solve these problems in a useful and significant manner.
DeleteAs someone working in hospitality, I find this article very relevant. Hotels, by nature, rely heavily on people—our staff are the backbone of guest experience. While Sri Lanka’s labour laws look strong on paper, the reality is that compliance often depends on the size and reputation of the company. In larger hotels, especially those tied to international chains, we see stricter adherence to labour standards because global audits and guest expectations demand it. But in smaller establishments, there can be gaps—long hours, limited awareness of rights, and inconsistent enforcement. The pandemic really highlighted these weaknesses. Many hotel employees faced sudden layoffs or salary cuts without proper consultation or adherence to TEWA. It showed how fragile protections can be when enforcement is weak. For our industry to thrive, respecting labour laws isn’t just a legal obligation—it’s essential for building trust, retaining skilled staff, and delivering the kind of service Sri Lanka is known for worldwide. This article is a timely reminder that we need stronger awareness among employees, better digital compliance tools, and a more proactive Labour Department. In hospitality, happy employees mean happy guests, so respecting labour rights is directly tied to business success.
ReplyDeleteThank you very much for your comment. I appreciate you taking your time to add your experience from the hospitality sector. You have highlighted an important reality: the difference in compliance between larger companies and small local establishments. I agree that the pandemic exposed many weaknesses in smaller companies where they were vulnerable. As you pointed out, awareness of labour rights and business performance is true. Sri Lanka Labour Department should help bridge the gap between regulation and practice by strenghthning the digital systems.
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