Is EPF payable on overtime?

No. Overtime is excluded from the earnings on which EPF is calculated. Basic salary, cost-of-living allowance and other fixed monthly allowances are included.

Can an employee opt out of EPF?

No. Membership is compulsory for every employee in covered employment from the first day of work, regardless of probation or contract type.

What is the EPF surcharge for late payment?

A surcharge on the unpaid contribution rising with the delay, from 5% for up to 10 days late to 50% for more than 12 months late, plus possible prosecution.

Do I pay EPF for a probationer?

Yes. Probation does not affect EPF liability. Contributions start from the first month of employment.

What is the difference between EPF and ETF?

EPF is a 20% contribution (8% employee, 12% employer) to the Employees' Provident Fund. ETF is a separate 3% contribution paid only by the employer to the Employees' Trust Fund. Both are calculated on the same earnings.

EPF for employers in Sri Lanka: rates, C-Form, deadlines and surcharges (2026)

What every Sri Lankan employer must deduct, contribute and file for the Employees' Provident Fund, with the arithmetic, the monthly deadline and the surcharge scale for late payment.

Last updated 16 September 2026 by HR Community Editorial

Key facts

Employee contribution: 8% of monthly earnings, deducted from salary
Employer contribution: 12% of monthly earnings, paid by the employer on top of salary
Total remitted: 20% of earnings, in one payment
Earnings base: Basic salary, cost-of-living allowance and other fixed allowances. Overtime and reimbursements excluded
Monthly deadline: Last working day of the following month
Monthly return: C-Form (Form C), filed with the payment, electronically for most employers
Surcharge for late payment: 5% to 50% of the contribution depending on delay
Governing law: Employees' Provident Fund Act No. 15 of 1958

The Employees' Provident Fund is the one statutory deduction every Sri Lankan payroll runs every month without exception. The rules are short. The trouble comes from the earnings base, the deadline and the surcharge scale, so those get the most space here.

Who must contribute

Every employer in Sri Lanka with at least one employee in covered employment must register with the EPF and contribute from the first month of employment. Coverage is broad: permanent, probationary, contract, casual and piece-rate workers are all included. Membership cannot be waived by agreement.

The main exclusions are employees already covered by an approved private provident fund, government pensionable staff, and domestic servants in a private household.

The rates

Contribution	Rate	Paid by
Employee	8% of earnings	Deducted from salary
Employer	12% of earnings	Employer, on top of salary
Total remitted	20% of earnings	One payment to the EPF

An employer may contribute more than 12%, and some collective agreements provide for it, but 12% is the statutory floor.

What counts as earnings

This is where most payroll errors happen. EPF is calculated on the employee's total earnings from employment for the month, which the Act and subsequent circulars define as:

Basic salary or wages
Cost-of-living allowance and any similar allowance
Fixed allowances paid every month (for example a fixed attendance or special allowance)
Payments for work done on holidays and piece-rate earnings
Commission and any cash value of cooked or uncooked food supplied

Excluded from the base:

Overtime pay
Travelling and other expense reimbursements
Bonuses that are genuinely discretionary and not a fixed part of remuneration
Gratuity and other terminal benefits

A worked example. An employee has a basic salary of LKR 80,000, a fixed allowance of LKR 10,000 and earned LKR 12,000 in overtime.

Item	Amount
EPF base (basic + fixed allowance)	LKR 90,000
Employee EPF at 8%	LKR 7,200
Employer EPF at 12%	LKR 10,800
Total remitted	LKR 18,000
Overtime, not in base	LKR 12,000

The employee takes home LKR 102,000 less LKR 7,200 EPF less APIT if applicable. The employer's cost is LKR 102,000 plus LKR 10,800 EPF plus LKR 2,700 ETF.

Deadline and how to pay

Contributions for a month must reach the EPF by the last working day of the following month. September salaries are due by the last working day of October.

Employers with 50 or more employees must file electronically through the EPF Department's e-Return system; smaller employers may still file the paper C-Form with the payment at a bank, though most payroll software produces the electronic file regardless.

The C-Form

The monthly return is Form C, universally called the C-Form. It lists every member with their EPF number, NIC, earnings for the month, employee contribution, employer contribution and total. The totals on the C-Form must equal the payment, to the rupee. Any payroll software sold in Sri Lanka should generate the C-Form in the EPF Department's accepted electronic format without manual editing; ask to see it in a demo.

Surcharges for late payment

Late contributions attract a surcharge on the amount due, on a rising scale:

Delay	Surcharge
1 to 10 days	5%
11 days to 1 month	15%
1 to 3 months	20%
3 to 6 months	30%
6 to 12 months	40%
More than 12 months	50%

Persistent default is a criminal offence under the Act, and Labour Department officers can and do prosecute. The surcharge is on top of the contribution, not instead of it.

Registration, member numbers and the B-Card

A new employer registers with the Labour Department to obtain an employer number. Each new employee is registered on Form A within 14 days of joining and receives a member number. The Form B (the "B-Card") is the employee's nomination form and must be kept on file. Employee registration cannot wait for the end of probation.

When an employee leaves

The employer stops contributing after the last month of employment and certifies the member's departure on the relevant form so the member can claim on retirement or on qualifying grounds. The employer does not pay out EPF; the fund does.

Common mistakes we see in audits

Calculating EPF on basic only and leaving out fixed allowances. The base is total fixed earnings.
Including overtime in the base, which overpays and mis-states the C-Form.
Deducting the employee's 8% but paying it late, which attracts the surcharge on the full 20%.
Not registering casual or probationary staff.
C-Form totals that differ from the bank payment by a few rupees due to rounding at employee level. Round per employee, then sum.

Frequently asked questions

Is EPF payable on overtime?: No. Overtime is excluded from the earnings on which EPF is calculated. Basic salary, cost-of-living allowance and other fixed monthly allowances are included.
Can an employee opt out of EPF?: No. Membership is compulsory for every employee in covered employment from the first day of work, regardless of probation or contract type.
What is the EPF surcharge for late payment?: A surcharge on the unpaid contribution rising with the delay, from 5% for up to 10 days late to 50% for more than 12 months late, plus possible prosecution.
Do I pay EPF for a probationer?: Yes. Probation does not affect EPF liability. Contributions start from the first month of employment.
What is the difference between EPF and ETF?: EPF is a 20% contribution (8% employee, 12% employer) to the Employees' Provident Fund. ETF is a separate 3% contribution paid only by the employer to the Employees' Trust Fund. Both are calculated on the same earnings.