Sri Lanka’s 2026 National Budget has introduced several statutory changes that have a direct impact on employers, HR professionals, and workforce management. Key highlights include an increase in the national minimum wage, new wage support and inclusion initiatives for differently-abled employees, and the introduction of a contributory pension scheme for Sri Lankan expatriate workers. In addition, the government is accelerating digitalisation across tax and payroll systems, signalling a shift toward more streamlined and digitally compliant HR practices.
These statutory updates, combined with broader global HR trends such as technology-enabled workforce management, employee well-being initiatives, and talent mobility, underscore the need for employers to proactively align HR policies with regulatory requirements and modern workforce expectations. Staying informed ensures not only compliance but also the ability to attract, retain, and manage talent effectively in an increasingly competitive market.
National Minimum Wage Increase
Sri Lanka’s Parliament passed the National Minimum Wage for Workers (Amendment) Act, No. 11 of 2025, which sets out revised minimum wage levels:
- From 1 April 2025 to 31 December 2025: Minimum monthly wage of LKR 27,000 and minimum daily wage of LKR 1,080.
- From 1 January 2026: Minimum monthly wage increases to LKR 30,000 and minimum daily wage to LKR 1,200. (Ministry of Labour)
This statutory wage applies across industries and must be reflected in all statutory wage-based calculations such as EPF and ETF contributions.
Support for Employment of Persons with Disabilities
The Government has introduced a wage subsidy to encourage private sector employment of differently-abled individuals:
- Employers may receive a 50 % salary subsidy of up to LKR 15,000 per month for eligible employees for up to 24 months.
- A total of LKR 500 million has been allocated for this initiative.
This initiative supports workforce inclusivity and equitable employment opportunities.
Migrant Workers: Contributory Pension Scheme & Benefits
The 2026 Budget includes a commitment to introduce a contributory pension scheme for Sri Lankan migrant workers, recognising their economic contribution through remittances:
- An initial allocation of Rs. 2 billion has been made via the Sri Lanka Bureau of Foreign Employment to kickstart the programme in 2026.
- The scheme will provide retirement benefits and social security to expatriate workers, formalising pension entitlements for those working abroad.
- Full operational details — such as contribution rates, eligibility, and fund management — will be developed and implemented by the responsible authorities throughout the year.
This is an important step in extending social protection to Sri Lankans working overseas. Employers managing internationally mobile staff should monitor compliance requirements as the scheme is rolled out.
- Additional context: This scheme aligns with existing frameworks such as the “Vigamanika Shramika” pension programme, which also provides retirement and disability benefits to registered migrant workers.
Digital Transformation & Compliance
The 2026 Budget emphasises digitalisation across government systems, including taxation and reporting. For HR functions, this signals:
- Increasing need for digital payroll systems and statutory reporting solutions.
- Early adoption of digital HR and payroll platforms will ensure accuracy, compliance, and operational efficiency.
Broader HR Trends Shaping 2026
Global HR trends also influence workforce strategies in Sri Lanka:
- Technology-Enabled HR: Automation, cloud HR systems, AI-assisted recruitment, and digital payroll tools improve efficiency and compliance.
- Workforce Well-Being: Employee engagement, mental health support, and inclusivity remain key to retention and productivity.
- Skills and Talent Mobility: Flexible work arrangements and upskilling are increasingly important as the workforce evolves.
Looking Ahead: Preparing for 2026
Employers who stay informed of these statutory changes and emerging HR trends will be better positioned to ensure compliance, manage internationally mobile staff, and implement inclusive workforce practices.
About Link Compliance:
Link Compliance helps businesses navigate statutory changes, implement digital payroll solutions, and adopt inclusive HR policies, enabling employers to remain compliant and strategically prepared for 2026. Email: info@linkcompliance.com
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