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EPF and ETF in Sri Lanka: Rates, Calculation and Due Dates for Employers (2026 Guide)
EPF is 20% of total monthly earnings (8% employee, 12% employer) and ETF is 3%, paid only by the employer.
Oct 10, 2026
Every private-sector employer in Sri Lanka pays two statutory contributions on each employee's monthly earnings: EPF at 20% (8% deducted from the employee, 12% paid by you) and ETF at 3% (paid entirely by you). Both are due by the last working day of the following month. Paying late adds a surcharge of 5% to 50% of the amount owed.
This guide covers who must pay, what counts as "total earnings", how to calculate both contributions with worked examples, how and when to pay, and the mistakes that cost employers money. Every rate and rule here comes from the EPF Department of the Central Bank and the Employees' Trust Fund Board.
EPF and ETF at a glance
EPF | ETF | |
|---|---|---|
Full name | Employees' Provident Fund | Employees' Trust Fund |
Law | EPF Act No. 15 of 1958 | ETF Act No. 46 of 1980 |
Employee pays | 8% (deducted from pay) | Nothing |
Employer pays | 12% | 3% |
Total | 20% | 3% |
Calculated on | Total monthly earnings | Total monthly earnings |
Due date | Last working day of the following month | Last working day of the following month |
Paid to | EPF Department, Central Bank of Sri Lanka | Employees' Trust Fund Board |
Late surcharge | 5% to 50% | 5% to 50% |
Who must register and pay
If you employ even one person in the private sector, EPF and ETF almost certainly apply to you.
EPF registration. Register as an employer within 14 days of hiring your first employee. Submit Form D in duplicate, certified, by registered post to your nearest Labour Office or the Commissioner of Labour. Each new employee must then be registered as a member within 14 days of joining. (EPF employer FAQ)
ETF registration. There is no separate registration. You become registered with the ETF Board when you make your first payment, quoting your EPF employer number. (ETF Board employer FAQ)
Who is covered. The ETF Board says contributions must be paid for casual, piece-rate and trainee workers, contract workers, pensioners, people re-employed after taking an ETF refund, people working for more than one employer, expatriates, and students over 14 working after school hours. Contributions start from the employee's first salary. (ETF Board employer FAQ)
Who is exempt. The main exemptions published by the two funds are:
- Household or domestic employees
- Charitable organisations with fewer than 10 employees
- Social service institutions that train orphans, the destitute, deaf or blind people
- For ETF: businesses made up only of family members, and companies whose only employees are the directors or partners
- For ETF: government departments and local authorities whose staff are on the government pension scheme
If you're unsure whether an exemption applies, confirm with the Department of Labour before you stop paying. The employer stays liable for contributions even if an employee says they don't want to contribute.
Contribution rates and what counts as "total earnings"
Both contributions are a percentage of the employee's total monthly earnings, not just basic salary. Getting this base right is where most payroll errors start.
Contribution | Who pays | Rate | Can it be deducted from the employee? |
|---|---|---|---|
EPF – employee share | Employee | 8% | Yes, deducted from salary |
EPF – employer share | Employer | 12% | No |
ETF | Employer | 3% | No, never |
The EPF Department describes 8% and 12% as minimum rates. (EPF: Remitting contributions)
Included in total earnings
The EPF Department lists these as part of total earnings (EPF employer FAQ):
- Salary, wages or fees
- Cost of living allowance, special living allowance and other similar allowances
- Holiday payments
- The cash value of food supplied by the employer, as valued by the Commissioner of Labour
- Food allowances
- Commissions, piece-rate payments and contract payments
- Any other remuneration that may be specified
Excluded from total earnings (EPF)
- Overtime payments
- Reimbursable travelling expenses
- Incentive and bonus payments
A note on ETF. The ETF Board publishes the same list of included items as EPF but doesn't publish a separate exclusions list. (ETF Board: Employer details) In practice, most employers calculate ETF on the same earnings base as EPF. If you have unusual pay items, confirm their treatment with the ETF Board before your first run.
Check every allowance. The included list covers "similar allowances", so a regular monthly allowance can fall inside the base even if it isn't called a living allowance. Reimbursable travel expenses are excluded, but a flat monthly sum that isn't a reimbursement may not be. If an allowance's treatment isn't clear, ask the Department of Labour rather than leave it out.
How to calculate EPF and ETF
Work out total earnings first, then apply the three rates to that one figure.
Example 1: an office employee with allowances, overtime and commission
Nimal's October pay is made up of these items:
Pay item | Amount (LKR) | In total earnings? |
|---|---|---|
Basic salary | 85,000 | Yes |
Cost of living allowance | 10,000 | Yes |
Sales commission | 8,000 | Yes |
Overtime | 12,000 | No |
Travel expenses reimbursed | 5,000 | No |
Gross pay | 120,000 | |
Total earnings for EPF/ETF | 103,000 |
Applying the rates to LKR 103,000:
Contribution | Calculation | Amount (LKR) |
|---|---|---|
EPF – employee (deducted from Nimal) | 103,000 × 8% | 8,240 |
EPF – employer | 103,000 × 12% | 12,360 |
ETF – employer | 103,000 × 3% | 3,090 |
Total sent to EPF | 8,240 + 12,360 | 20,600 |
Total sent to ETF | 3,090 |
What this means for each side:
- Nimal has LKR 8,240 deducted for EPF, so his pay after EPF is LKR 111,760. APIT, if any, is calculated separately.
- The employer pays LKR 15,450 on top of gross pay (12,360 EPF + 3,090 ETF). Nimal's total monthly cost is LKR 135,450.
A common error is calculating on the full LKR 120,000 gross. That would over-deduct LKR 1,360 from Nimal's pay for EPF.
Example 2: a factory worker on basic pay plus food allowance
Saman earns a basic wage of LKR 45,000, a food allowance of LKR 5,000 and LKR 6,000 overtime.
- Total earnings: 45,000 + 5,000 = LKR 50,000 (overtime excluded)
- EPF – employee: 50,000 × 8% = LKR 4,000
- EPF – employer: 50,000 × 12% = LKR 6,000
- ETF – employer: 50,000 × 3% = LKR 1,500
The food allowance is included because the EPF Department lists food allowances as part of total earnings.
Want to check a salary quickly? The free VixHR salary and APIT calculator works out EPF, ETF and take-home pay from a monthly salary.
Due dates, how to pay and which forms to file
EPF and ETF for any month are both due on or before the last working day of the following month. October's contributions, for example, must be paid by the last working day of November.
Paying EPF
Your size | How to submit and pay |
|---|---|
Fewer than 50 employees | Form C (in triplicate) with payment at a People's Bank branch, or e-Return and online payment |
50 or more employees | e-Return is mandatory: two text files (Contribution Detail File and Payment Summary File) uploaded through a licensed commercial bank's online banking, then paid online or by direct debit |
Points to know (EPF: Remitting contributions, EPF employer FAQ):
- Any employer can pay online, whatever its size. The EPF Department lists the participating banks on its site.
- Direct debit is only available to larger employers, and the files must reach EPF at least five days before the last working day of the month.
- If your pre-printed Form C hasn't arrived, download a blank one from epf.lk and pay on time anyway. Don't wait for the form.
- Payments without a Form C or text file are not credited to members' accounts.
Paying ETF
Your size | How to submit and pay |
|---|---|
Fewer than 15 employees | Form R4 with payment; electronic payment encouraged but optional |
15 or more employees | Electronic payment and electronic monthly returns are mandatory |
According to the ETF Board's April 2026 notice, from the July 2026 contribution month (due by 31 August 2026), employers with 15 or more employees must pay through online banking at one of the designated banks or by direct debit. Cheques, money orders, cash and paper returns are no longer accepted from these employers.
ETF half-yearly returns (Form II)
Employers using Form R1 must also file a half-yearly Form II return with each member's contribution details (ETF Board: Payment of contributions):
Period covered | Form II due by |
|---|---|
January to June | 31 August of the same year |
July to December | 28 February of the following year |
Other EPF forms you may need
Form | Used for |
|---|---|
Form D | Registering as an employer |
Form C | Monthly contributions (paper, under 50 employees) |
Form Q | Refund of overpaid contributions, within one year |
Form RR | Re-registering members |
"B" card | The member's EPF card, handed over when they leave |
You must also hand out the half-yearly member statements EPF sends you, and report employees who resign or retire.
Late payment surcharges and penalties
EPF and ETF use the same surcharge scale for late or underpaid contributions. Even a payment a few days late costs 5% of the amount owed. (EPF: Remitting contributions, ETF Board employer FAQ)
How late | 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% |
Other charges to watch for:
- EPF, incomplete details: a 2% surcharge on the total payment if Form C or the text files are incomplete.
- EPF, underpayment: the surcharge runs from the date of the shortfall until it's paid in full.
- ETF, late Form II return: 1% of the related contributions for each month or part of a month the return is late, under Section 37A of the ETF Act.
Example: paying a few days late
A company with a monthly total-earnings payroll of LKR 900,000 owes LKR 180,000 to EPF (20%) and LKR 27,000 to ETF (3%).
- EPF paid 8 days late: 5% × 180,000 = LKR 9,000 surcharge
- ETF paid 20 days late: 15% × 27,000 = LKR 4,050 surcharge
That's LKR 13,050 lost to a missed deadline, before any legal action.
Enforcement
Employees can complain in writing to the Commissioner of Labour. The EPF Department says that after three warnings the Labour Department can take legal action, and unpaid contributions can be recovered as a debt owed to the State. (EPF employer FAQ)
Common employer mistakes
Each of these follows directly from the official EPF and ETF rules above.
- Deducting ETF from the employee. ETF is 3% paid entirely by the employer. It must never come out of the employee's salary.
- Using basic salary only. Cost of living, food and similar allowances, commissions and piece-rate pay are part of total earnings. Leaving them out underpays both funds.
- Including overtime or bonuses in the EPF base. These are excluded, so including them over-deducts the employee's 8%.
- Waiting for the pre-printed Form C. The deadline doesn't move if the form is late. Download a blank Form C and pay.
- Paying without the form or text file. EPF money sent without Form C or e-Return files isn't credited to members' accounts.
- Registering new employees late. Members must be registered within 14 days of joining, and contributions start from the first salary.
- Reusing member numbers. EPF member numbers are assigned in sequence and must never be reused for a new employee.
- Paying ETF by cheque after July 2026. If you have 15 or more employees, the ETF Board now only accepts electronic payment and electronic returns.
- Missing the Form II deadlines. Half-year ETF returns are due 31 August and 28 February, with a 1% monthly surcharge for lateness.
- Mismatched names and NIC numbers. Employee details must match their NIC. Corrections later need certified copies of the NIC, B card and birth certificate.
Frequently asked questions
What is the EPF and ETF percentage in Sri Lanka?
EPF is 20% of total monthly earnings: 8% from the employee and 12% from the employer. ETF is 3%, paid only by the employer. Together the employer pays 15% and the employee 8%.
Can an employer deduct ETF from an employee's salary?
No. The ETF Board states that ETF must not be deducted from employees' earnings. The full 3% is the employer's cost.
Is overtime included in EPF?
No. The EPF Department excludes overtime payments, reimbursable travel expenses, and incentive or bonus payments from total earnings.
When is EPF and ETF due?
On or before the last working day of the month after the salary month. For example, September contributions are due by the last working day of October.
What happens if I pay EPF late?
A surcharge applies, starting at 5% for up to 10 days late and rising to 50% for more than 12 months. The same scale applies to ETF.
Do I need to register separately for ETF?
No. You're registered with the ETF Board when you make your first payment using your EPF employer number.
Do I pay EPF and ETF for casual or part-time workers?
The ETF Board says contributions apply to casual, piece-rate, trainee and contract workers, among others. Check the exemptions list above, and confirm with the Department of Labour if you're unsure.
Is there a minimum number of employees before EPF and ETF apply?
No. EPF registration is required within 14 days of hiring your first employee, and the ETF Board says liability applies to an employer of even one employee, subject to the listed exemptions.
How VixHR handles EPF and ETF
VixHR payroll runs with Sri Lankan tax and contribution rules built in, so APIT, EPF and ETF are worked out for your whole team in every pay run. Attendance, leave and overtime flow into payroll from the same system, and employees see their deductions on itemised payslips through self-service. Statutory summaries export for your finance team or auditors.
- ☐ Editor check before publishing: confirm with the product team whether VixHR exports EPF e-Return text files and ETF return files. If it does, say so here. If not, leave this section as it is.
Try it on your own numbers: use the free salary and APIT calculator, or request a demo to see a full payroll run.
Sources
All rates, deadlines and rules were checked against these official pages on 10 October 2026:
- EPF Department, Central Bank of Sri Lanka – FAQs for employers
- EPF Department – Remitting contributions
- Employees' Trust Fund Board – Employers FAQ
- Employees' Trust Fund Board – Employer details
- Employees' Trust Fund Board – Payment of contributions
- Employees' Trust Fund Board – Notice on mandatory electronic payment (April 2026)
This guide is general information, not legal or tax advice. Rules and forms change, so check the EPF Department, ETF Board or Department of Labour for your specific situation.
