Ending employment

Ending employment well is mostly about sequence: agree how the employment ends, work the notice, settle everything owed, and close the statutory records. Sri Lanka protects employees strongly against unilateral termination, so the route you take matters more than the paperwork at the end of it.

Resignation and notice#

An employee resigning gives the notice their contract requires. During the notice period the employment continues in full — pay, contributions and leave accrual all carry on until the last working day.

If either side wants to shorten the notice, put the agreement in writing, including whether pay in lieu is being given. A resignation should be accepted in writing too, confirming the last working day.

Termination by the employer#

This is where Sri Lankan practice differs from many other countries. Under the Termination of Employment of Workmen (Special Provisions) Act — TEWA — an employer covered by the act generally cannot terminate a qualifying employee's services for non-disciplinary reasons without either the employee's written consent or the prior approval of the Commissioner General of Labour.

TEWA broadly applies where the employer has employed a threshold number of workmen and the employee has completed a qualifying period of service, so redundancy, restructuring and "not working out" cases usually need consent or approval — and the Commissioner may determine compensation. Confirm the current thresholds and procedure before starting.

Termination on disciplinary grounds is a different route, and it stands or falls on process:

1. A written charge sheet setting out the allegations
2. A fair opportunity for the employee to respond
3. A domestic inquiry, held and recorded properly
4. A decision proportionate to the finding, communicated in writing

Skipping steps is the usual reason a termination is later found unjustified by a labour tribunal.

Gratuity#

Under the Payment of Gratuity Act, an employee who has completed five years of continuous service with an employer that has employed the threshold number of employees is entitled to gratuity on leaving — commonly calculated as half a month's wage for each completed year of service, based on the last drawn wage.

Points that catch people out:

• It is payable whether the employee resigns or is terminated, subject to the act's exceptions
• Continuous service means service with the same employer, including transfers within the group where the law treats it as continuous
• It is due within the period the act allows after the employment ends, and late payment carries a surcharge

The final settlement#

Before the last payment leaves your account, check off:

• Salary for the final period, including overtime and allowances
• Payment for accrued but unused annual leave, where it is payable
• Gratuity, where the employee qualifies
• Any notice pay in lieu that was agreed
• Deductions still outstanding — advances, loans, company property not returned
• EPF, ETF and APIT on the final month's earnings, remitted in the normal cycle

Give the employee a payslip for the final month like any other, and a statement of how the settlement was arrived at.

Closing the statutory records#

• Mark the employee as left in the EPF and ETF returns for that month, so they do not carry into the next one
• Include the final earnings in the year's tax records and issue the employee's tax certificate at year end
• The employee claims their EPF balance from the fund directly once they qualify — the employer's job is to make sure the contribution record is complete and correct

Service letter and handover#

Issue a service letter confirming the dates of employment and the position held. Take back company assets and revoke system access on the last working day, and keep the personnel file — contract, disciplinary record, leave and pay history — for as long as the law requires, since claims can be raised after the employment has ended.

Weave keeps the full employment record — contract dates, pay history, leave balances and assets issued — in one place, so a final settlement can be assembled from the record rather than reconstructed from memory.