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Revised National Minimum Wages

Administrator
27th August 2025
Labour & Employment
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The Parliament of Sri Lanka has recently enacted the National Minimum Wage of Workers (Amendment) Act, No. 11 of 2025, which was certified on 23 July 2025 and is deemed effective from 1 April 2025. This amendment introduces significant revisions to the statutory wage framework applicable across all industries and services, with implications for employers and employees alike.

This alert summarises the key amendments, their practical impact, and the broader context in which they operate.

Increase in Statutory Minimum Wages

Section 3(1) of the National Minimum Wage of Workers Act, No. 3 of 2016, has been repealed and replaced to provide for a two-tier wage increment:

o    From 1 April 2025 to 31 December 2025, the applicable minimum monthly wage will be Rs. 27,000 and the minimum daily wage will be Rs. 1,080.

o    From 1 January 2026 onwards, the minimum monthly wage will be increased to Rs. 30,000 and the minimum daily wage will be Rs. 1,200.

These figures represent a significant increase from the earlier statutory minimum of Rs. 17,500 per month.

Consolidation of Budgetary Relief Allowances

A notable feature of this amendment is the express consolidation of budgetary relief allowances (BRAs) paid under the Budgetary Relief Allowance of Workers Act, No. 36 of 2005, and the Budgetary Relief Allowance of Workers Act, No. 4 of 2016, with the national minimum wage.

These BRAs, which were previously treated as separate or supplementary payments, are now deemed to form part of the statutory national minimum wage. In effect, workers whose salaries previously included these allowances will now have those components permanently incorporated into their consolidated wage from 1 April 2025.

Prohibition Against Wage Reduction

Employers are expressly prohibited from reducing monthly wages, including any allowances, to offset the statutory wage increase. This is an important safeguard, and ensures that the intended wage uplift is not undermined through internal salary adjustments or technical deductions.

Enforcement Obligations on Employers and Contractors

The Commissioner-General of Labour is further empowered by the amendment to issue binding directives to ensure full compliance with the revised minimum wage. This includes any end employers using contractors or labour intermediaries, who are now explicitly obligated to ensure that final payments made to workers reflect the increased minimum wage. 

In effect, where workers are hired through intermediaries, it is the responsibility of the end employer (who ultimately obtains the services of any worker) to ensure they are paid in line with the increased minimum wage. This closes a common enforcement loophole in outsourced or layered employment arrangements.

Conclusion

While the upward revision in statutory wages is a welcome move toward ensuring dignified income levels, employers must be mindful of their compliance obligations, particularly in outsourced labour arrangements. Organisations are advised to review their existing employment contracts, wage structures, and contractor relationships to ensure alignment with the amended law.