Gratuity in Sri Lanka: Who Qualifies, Who Doesn’t, and Why the 15-Employee Threshold Matters?
Gratuity is one of the most important retirement benefits for Sri Lankan workers, designed to recognize long-term service and provide financial security at the end of employment. Yet, many employers and employees remain unclear about when gratuity is payable, who qualifies, and why the law sets a threshold of 15 employees. This article unpacks the Payment of Gratuity Act, No. 12 of 1983 , explains the rules, and illustrates them with real-world examples. Employer Coverage: The 15-Employee Rule The Act applies to any employer who has employed 15 or more workers at any time during a calendar year . If a company crosses this threshold even once in a year, it becomes liable under the Act. Importantly, once covered, the obligation continues even if the workforce later drops below 15. This rule ensures that medium and large employers cannot escape responsibility by downsizing after crossing the threshold. Employee Eligibility To qualify for gratuity, an emp...