April 12, 2021
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    Severance compensation for workmen increased to Rs. 2.5 million

    March 01, 2021

    Minister of Labour, Nimal Siripala de Silva has stated that the maximum amount of severance compensation that should be paid to an employee of the private sector and semi-government institutions (corporations and statutory bodies), if the relevant institution terminates his service as required, has been increased to Rs. 2.5 million.

    The Extraordinary Gazette Notification dated 25th of February 2021 for this purpose was issued by the Commissioner General of Labour, Prabhath Chandrakeerthi. 

    According to the relevant Compensation Formula issued in 2005 under the Special Provisions for Termination of Employment Act No. 25 of 1971, the maximum amount that was paid up to now was Rs. 1.25 million. However, with the hope of providing maximum relief to the working people, the compensation of Rs. 1.25 million has been increased to Rs. 2.5 million under the National Policy framework of "Vistas of Prosperity and Splendour". The Minister further stated that the compensation was increased after about 15 years.

    The Labour Minister further elaborated that, within the current scenario, for a person whose employment is terminated, Rs. 1.25 million is not enough to sustain his future livelihood. The Government has also considered the assertions of various organizations and trade unions related to the severance compensation amount not being enough to continue their children’s education. Thus, considering these views, the relevant Act has been amended to increase the compensation.

    This compensation payment is effective from February 19, said the Commissioner General of Labor, Attorney-at-Law Prabhath Chandrakeerthi.

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