DHRM 2043 Business Law

By Ms. H L Ekanayake
Content
1. Law, The Sources of Law, Foundation of Law
• Law
• Sources of Law
• Legal System in Sri Lanka
• Different Types of Laws in Sri Lanka
2. Judicial system of Sri Lanka
3. Labor Law
• Shop & Office Employees’ Act No 19 of 1954
• The Employees’ Provident Fund Act No 15 of 1958
• The Employees’ Trust Fund Act No 46 of 1946
• Industrial Disputes Act No 43 of 1950
• Trade Union Ordinance No 14 of 1935
Note : Dear students, when it comes to the employee welfare, the following acts provide
some welfare aspects.

1. Shops and Office Employees Act, Wages Boards Ordinance, Workmen’s

Compensation Ordinance, EPF, ETF, Gratuity, Maternity Benefits Ordinance

2. Please study them very carefully. How each benefit has been focused by each of the
above act.
 Employee welfare and benefits

Employees’ Provident Fund Employees’ Trust Fund Payment of Gratuity

These three legislations are directly link with the employee

welfare. Employees are being able to get a lot of benefits.
 Because of the Extreme business competition

Attracting and retaining employees have become major challenges for HR departments today.

Higher salaries, fair and competitive terms and conditions, challenging and interesting work are not enough to
keep the employees in this modern world.

In this regard, it is important to provide welfare and benefit facilities for the employees to satisfy them.
The Employees’ Provident Fund Act No 15 of 1958
Objective of the Act
• To ensure retiring benefits to employees through a contributory fund.
• Securing their future of the individuals in times of retirement
Contributions
• Following contributions have to be made to EPF by employer and employee
• Employee – a minimum of 8% from the monthly earnings (this amount will be deducted from the
employees total earnings)
• Employer – A minimum of 12% from the monthly earnings (this amount will bear by the employer)
• Hence total contribution for EPF will be 20%.
Contributions

• However, employers and employees can have a mutual agreement for higher rates as if (12% from
employees and 15% from employers and so on)
• Once agrees, rates cannot be reversed or reduced.
• Employers should make their contributions monthly.
The coverage
• Following employees are covered under the act.
• Permanent and non-permanent employees
• Casual and temporary
• Apprentices/Trainees (Apprentices under NAITA are not covered under the EPF act)
• Daily wage earners
• Those who work on commission basis
• Contract Employees
• Non-permanent employees employed in local authorities
• Partners and directors earning salaries or allowances from the company
Excluding Categories
Following employees are not covered under the act.
• Public sector employees (but semi-government employees are covered. Eg: CEB employees.
• Establishments run by family members. But if the have even a single outsider, he is entitle for EPF
• Non- working directors
• Partners of a business who are not earning a salary contributors to Approved Provident Funds Persons
under 14 years of age
• Self-employed persons, domestic servants
• Apprentices under NAITA
• Employees of charitable or social service organizations having less than 10 workers
• Employees working in organizations where training is given to juvenile offenders, orphans, destitute,
dumb, deaf, blind
 Gross salary comprises of the basic salary and
the allowances as if,
• Travelling Allowance,
• Bonuses
• Overtime allowances
• Maternity Allowances

The Net Salary can be calculated by removing

all the deductions from the gross salary as if,
• Bank loan installments
• Membership fees
• Contribution's to EPF

Basic Salary
 The wage The EPF will be calculated by deducting all the
below deductions from the gross salary
can be
• Travelling Allowance
categorized Gross Salary =Basic Salary + Allowances • Bonuses
into major • Overtime allowances
three • Maternity Allowances
sections • Allowance for attending work
Net Salary= Gross Salary – Other Deductions
Withdrawal of fund balance
A person can claim his EPF in the following instances.
• On reaching the retirement age (male – 55 years female – 50 years)
• If leaving Sri Lanka with no intention of returning
• Becoming permanently disabled
• Female employees resigning from work in consequences of marriage (she has to get married
within 3 months of resignation or resigns before the expiry of 5 yeas after marriage)
• Taking up a pensionable appointment in the public service or in the Local Government
Service
• The event of the death of a member of the fund, his nominee/s can claim the benefits
Online Balance Inquiry

• Employees can now check their account balances online by visiting the EPF website.
• Employees should register with EPF for this facility.
• They should present a duly completed application which is certified by the current employer
and a copy of NIC for EPF –Central Bank of Sri Lanka
For your knowledge:-
There is a document call “ABC form”. Google it. When an employee joined (especially when
they are not entitled for a pension) the employer has to give this card for employee to fill. It
includes all the details as if worker’s details, family details, nominations of % if employee dies
how the fund will be distributed among the nominated family members, basic salary, company
seal and etc. Company sends this to the labour department and the labour department only sends
the section B from the ABS form. Employee has to present this when he tries to get money from
the EPF after he left the company or ends the service.
• When an employee joins a new company, he will be given a new number by the new company
and that will be his new EPF account.
• But it is always useful to maintain one account with the EPF.
• Nominating, Re-Nominating and Cancelling Beneficiaries
• At the time of registration with EPF, employees can nominate one or several beneficiaries
using “Form –H”.
• While a married employee may nominate family members where unmarried employee may
nominate anyone they like.
• Nominations before marriage automatically cancels after marriage and employee will have to
nominate new beneficiaries.
• If the nominee is a minor, a guardian needs to be appointed. When he attains age, the
guardian’s nomination gets automatically cancelled.
• When there are more than one beneficiaries, employee should provide sufficient details
regarding the share each nominee is entitled to.

Mother NIC 50%

Father NIC 50%
- - -
Thank you
 The Employees’ Trust Fund Act
Making
Investment
Fund s in the
market

The Employees’ Trust Fund Act No Provide Benefits to its

members
46 of 1946

To provide employees with a non-contributory benefit at the time of

Objectives of the Act their retirement or termination of employment
To provide benefits for the welfare of members during their
employment
Other Objectives
• Improving the social security of the employee
• Buying shares in a business entity can involve the control and management of their partners
and managers
• Providing more financial benefits to employees
• Establishing an employee bank
• Providing benefits with interest and dividends
• Providing free insurance cover to employees
• Providing financial assistance for heart surgeries
The coverage
• Private sector enterprises
• Semi government enterprises
• Universities
• Corporations
• Statutory Bodies
• Employees of public sector institutions not eligible for a pension
 All employees employed in the above establishments, whether employed on a permanent,
temporary, casual, contract or piece-rate basis as well as learners are covered under the Act. Here,
the number of employees in the company is irrelevant, and even companies with only one
employee will have to contribute to ETF.
 This is a unique feature in the ETF, where self employed persons and migrant workers can decide
on to be members of the fund by contributing, if they wish
Excluding Categories
Following employees are not covered under the act.
• Domestic servants in any household
• Employees in institutions or organizations maintained for performing religious rites or for social service as
charitable organizations having less than ten employees
• Pensionable government servants
Contributions

• Employers has to contribute 3% of the total earnings of the employee on a monthly basis to ETF.
• No contributions can be deduct from the employee.
• Contributions payable (not paid) for every month should be paid on or before the last day of the succeeding
month.
• Any delays will lead to surcharges.
Withdrawal of fund balance

There are instances where an employee can claim the Fund balance before the lapse of 5 yeas mentioned
above. They are:
• On reaching 60 years of age
• When an employee’s services are terminated due to permanent or total disablement
• When an employee leaves Sri Lanka with no intention of returning
• When an employee takes up a pensionable appointment in public services, local government or district
service, or local authority.
• On the death of an employee the benefits will be payable to his nominee/s or dependent/s
 The non-monetary
benefits that the
members are getting

Insurance Benefits Welfare Benefits


Automated Life Insurance Benefit
• The employee who has been passed away must
have an active membership of 6 months prior
to death
• This also applies to suicide
• Suicidal employe requires a 12-month active
membership
Permanent Disability Insurance Benefits
• For Permanent Sicknesses, it is paid 24 times the average
salary received in the 6 months before the accident
• The maximum amount is 150 000
• A medical report must confirm that you cannot work
regularly
• The service provider must certify that the job was lost as a
result of the accident
• If you lose your job due to the accident you have to report
to the board within 03 months
• Valid only for accidents that occurred after 1989
Welfare benefits
• Support program for heart surgery
• Providing financial assistance for cataract surgery
• Scholarship Scheme
• “Wiyana” housing scheme
• Occupational Health Care Hospitalized Medical Insurance Benefit Scheme
• The maximum amount given per year is 25000
• Hostel treatment is available for more than 48 hours
• Those who get the maximum amount cannot get the money back
• Must have five years of continuous active membership
Thank you