Minimum basic salary for private sector raised to Rs. 21,000 from September

• Will apply to EPF, ETF and gratuity
• Wages not increased since 2021 due to economic crisis

The minimum basic salary for private sector employees has been increased to Rs. 21,000, effective from this month. The Labour and Foreign Employment Ministry announced this in a press release, following Speaker Mahinda Yapa Abeywardena’s signing of the Act which was passed in Parliament to establish the new minimum wage.

According to the Ministry, this new minimum wage must be considered when calculating the Employees’ Provident Fund (EPF), Employees’ Trust Fund (ETF), and gratuity payments.

Private sector employers are now required to pay a minimum national monthly salary of Rs. 21,000 from September this year. This includes a basic monthly wage of Rs. 17,500, along with Rs. 3,500 as allowances specified under the Budgetary Relief Allowances of the 2005 and 2016 Acts.

The National Minimum Wage Act No. 03 of 2016 mandated a national minimum wage of Rs. 10,000 per month for all private sector employees from January 1, 2016, with a daily minimum wage of Rs. 400 for daily-wage workers.

An amendment in 2021 raised the minimum monthly wage to Rs. 12,500 and the daily wage to Rs. 500, effective from August 2021. However, due to the economic crisis and the rising cost of living, wages in the private sector have not been increased since 2021.

This issue was discussed multiple times at the National Labour Advisory Council, resulting in a proposal to increase the national minimum wage by Rs. 5,000 – from Rs. 12,500 to Rs. 17,500 –and the daily wage by Rs. 200 – from Rs. 500 to Rs. 700.

Following these deliberations, a draft amendment to the National Minimum Wage Act was submitted to Parliament, which was approved on September 3, 2024. After being signed by the Speaker, the amendment is set to take effect from this month.

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