Overtime and no-pay in Sri Lanka: rates, divisors, limits and how payroll should compute them (2026)
How to calculate the hourly rate, 1.5x overtime, holiday work and no-pay deductions for Shop and Office and Wages Board employees, with the weekly limits and worked examples.
Last updated by HR Community Editorial
Key facts
- Overtime rate
- Not less than 1.5 times the hourly rate
- Hourly rate (Shop and Office)
- Monthly salary ÷ 240
- Hourly rate (Wages Boards)
- Varies by trade; 200 is a common divisor, or monthly salary ÷ (days × hours) as the Board decides
- Weekly OT limit (Shop and Office)
- 12 hours
- Normal hours (Shop and Office)
- 8 a day, 45 a week
- Statutory holiday work
- Paid at double or a paid day in lieu, per the applicable Act or Wages Board decision
- No-pay deduction
- Monthly salary ÷ days in the month (or ÷ 30 by agreement) × days absent
- EPF on overtime
- Not payable
Overtime and no-pay are where attendance meets payroll, and where most disputes with employees begin. The law sets a floor of one and a half times the hourly rate and a weekly cap, but leaves the divisor and the base salary to the applicable Act, Wages Board decision or contract. This guide sets out the common practice and the arithmetic.
Which law applies
Sri Lankan employees fall under one of two regimes for hours and overtime:
- The Shop and Office Employees Act covers clerical, administrative, retail, hospitality and most office staff.
- The Wages Boards Ordinance covers trades with a Wages Board decision: garment, tea, rubber, engineering, security, printing, and around forty others. Each decision sets its own hours, divisor and rates.
Factory production staff are usually under a Wages Board; the office staff of the same factory are under the Shop and Office Act. Payroll software must be able to hold both rules in one company.
Normal hours
| Regime | Daily | Weekly |
|---|---|---|
| Shop and Office | 8 hours | 45 hours |
| Wages Boards (typical) | 8 hours | 45 hours; varies by trade |
Hours beyond these are overtime. Meal and rest intervals are excluded from hours of work.
The hourly rate
The hourly rate is the monthly salary divided by a monthly-hours divisor.
| Regime | Divisor | Hourly rate on LKR 60,000 |
|---|---|---|
| Shop and Office (accepted practice) | 240 | LKR 250.00 |
| Wages Boards, common practice | 200 | LKR 300.00 |
| 52 weeks × 40 hours ÷ 12 | 208 | LKR 288.46 |
The 240 divisor (8 hours × 30 days) is the accepted practice for Shop and Office employees. Wages Board decisions frequently specify 200 or a formula based on the actual working days and hours of the trade. Use the divisor your regime prescribes and write it into the contract.
The overtime rate
Not less than one and a half times the hourly rate for every hour of overtime:
| Salary | Divisor | Hourly | OT rate (1.5×) | 20 hours OT |
|---|---|---|---|---|
| LKR 60,000 | 240 | LKR 250.00 | LKR 375.00 | LKR 7,500.00 |
| LKR 60,000 | 200 | LKR 300.00 | LKR 450.00 | LKR 9,000.00 |
| LKR 100,000 | 240 | LKR 416.67 | LKR 625.00 | LKR 12,500.00 |
The overtime calculator does this for any salary, divisor and hours.
Holiday and Sunday work
Work on a weekly holiday or a statutory holiday is not ordinary overtime. Under the Shop and Office Act, an employee who works on a statutory holiday is entitled to double remuneration for that day, or normal pay plus a paid holiday on another day within six months. Wages Board decisions typically provide double rate for holiday work and one and a half for Sunday work where Sunday is not the weekly holiday. Software should treat holiday hours as a separate pay element from weekday overtime.
Limits
Shop and Office employees may not be required to work more than 12 hours of overtime in any week. Wages Board decisions set trade-specific limits, and the Factories Ordinance imposes further limits on women and young persons. Attendance systems should flag employees approaching the weekly cap before the roster is finalised, not after payroll.
No-pay deductions
Unauthorised absence is deducted as no-pay:
No-pay = (monthly salary ÷ days in the month) × days absent
Some contracts fix the divisor at 30. Whichever is used, apply it consistently and deduct from the same salary base as EPF, so that the EPF contribution for the month reflects the reduced earnings. Half-day absences and late arrivals beyond the grace period are treated in proportion where the contract allows.
Interaction with EPF, ETF and APIT
| Element | EPF/ETF base | APIT base |
|---|---|---|
| Overtime | Excluded | Included |
| Holiday work premium | Included (payment for holiday work) | Included |
| No-pay deduction | Reduces base | Reduces base |
What good payroll software does here
- Holds different divisors and OT rules per employee group in one company.
- Computes overtime from device punches against the roster, including overnight shifts that cross midnight.
- Separates weekday OT, Sunday work and statutory holiday work as distinct pay elements.
- Flags weekly OT above 12 hours before payroll.
- Applies no-pay to the EPF base automatically.
Frequently asked questions
- How do I calculate the overtime rate in Sri Lanka?
- Divide the monthly salary by the applicable divisor to get an hourly rate, then multiply by 1.5. For a Shop and Office employee on LKR 60,000 the hourly rate is LKR 250 and the overtime rate LKR 375.
- Is overtime calculated on basic or gross salary?
- On the basic salary plus any allowance that forms part of the wage under the relevant Wages Board decision or contract. Most employers use basic salary only; state the basis in the contract.
- What is the maximum overtime an employee can work?
- Twelve hours a week under the Shop and Office Employees Act. Wages Board trades have their own limits set by each Board's decision.
- How is a no-pay day deducted?
- Monthly salary divided by the number of days in the month, or by 30 where the contract says so, multiplied by the days of unauthorised absence. Deduct from the same salary base you use for EPF.
- Is EPF deducted on overtime pay?
- No. Overtime is excluded from the EPF and ETF earnings base. It is included in the APIT base.