Payroll in Sri Lanka: EPF, ETF and payslips made simple

Every month a Sri Lankan employer has to work out salaries, overtime, deductions, EPF and ETF, then print payslips and pay the funds on time. Done by hand, it takes days and small mistakes become big problems. This guide explains the basics and what payroll software should do for you.

EPF and ETF in one minute

• EPF (Employees' Provident Fund): the employee contributes 8% of total earnings (deducted from salary) and the employer contributes 12%.
• ETF (Employees' Trust Fund): the employer contributes 3%. Nothing is deducted from the employee for ETF.
• Contributions for a month are generally due by the last working day of the following month.

So on a salary of Rs. 100,000, Rs. 8,000 is deducted for EPF, the employer adds Rs. 12,000 to EPF and Rs. 3,000 to ETF.

Always check the latest rules and income-tax (APIT) tables with the EPF/ETF authorities or your accountant, as tax tables change from time to time.

What a payslip should show

• Basic salary and fixed allowances
• Overtime hours and amount
• No-pay days and late deductions
• Loans and salary advances recovered
• EPF 8% deducted, and income tax if applicable
• Net salary paid, and the bank account

Where payroll goes wrong

1. Attendance typed again from a register or fingerprint machine
2. Overtime rates calculated differently each month
3. Advances and loans forgotten
4. EPF/ETF totals that don't match the monthly return
5. No record of what was paid to whom last year

What payroll software should do

• Import attendance from fingerprint or face machines
• Calculate overtime, no-pay and late deductions by your rules
• Track loans and advances and recover them automatically
• Calculate EPF and ETF and produce the monthly totals
• Print or email payslips, and produce a bank transfer list
• Keep salary history for gratuity and audits

How Tecrosoft can help

Our payroll & HR system is set up for Sri Lankan payroll: employees, attendance and overtime, EPF and ETF, advances and loans, payslips and bank sheets. We configure your allowances and rules and train the person who runs payroll. Book a free demo with a few of your own staff records.