Payroll Setup Checklist for New Employers (Sri Lanka)

Stage 0 – Assign owners before you build anything

Before creating the first payroll file, define who owns each part of the process.

• Employee onboarding data owner assigned
• Salary and allowance approval authority confirmed
• APIT and statutory registration lead named
• Payroll calculation reviewer designated
• Bank transfer release authority confirmed
• Evidence-pack archiving process documented

Stage 1 – Complete tax access first

Payroll cannot operate cleanly if the business does not yet control its IRD access.

• Business TIN issued and confirmed
• PIN access requested and tested on IRD e-Services
• Registered email confirmed with IRD
• Tax calendar owner assigned
• Payroll filer authorised for e-Services where required

Stage 2 – Build the employee master file

Every employee should be in a controlled master file before the first payroll close.

• Full legal name recorded
• NIC or passport details captured
• Start date, job title, and department logged
• Applicable labour-law coverage note added (shop and office, wage-board, or other)
• Agreed salary structure documented
• Bank details confirmed
• Tax and statutory registration status noted
• Leave and attendance profile set up

Stage 3 – Finalise the salary structure

The salary letter and the payroll setup must match before the first payday.

• Basic salary amount confirmed
• Fixed allowances documented
• Variable-pay rules defined
• Overtime treatment agreed
• Normal hours, weekly-rest pattern, and leave basis confirmed
• EPF/ETF contribution basis policy set
• APIT threshold check completed per employee

Stage 4 – Register and configure APIT

• Confirm whether any employee crosses the current APIT threshold
• Activate the APIT or PAYE tax type where needed
• Confirm who prepares the monthly deduction control
• Ensure deductions can be shown clearly on payslips
• Confirm the due-date workflow for monthly remittance (15th of following month)

Stage 5 – Register EPF and ETF

EPF registration must be completed with the Labour Department within 14 days of recruiting the first employee.

• Employer Labour Department registration completed (Form D)
• EPF reference number received and verified
• Employee member-number assignment process defined
• ETF route confirmed for the employer size category
• Monthly remittance owner assigned
• Archive path created for Form C, e-return, R1, or R4 evidence

Stage 6 – Design the payslip and evidence pack

• Approved payroll register format decided
• Employee-level deduction and contribution breakdown documented
• Bank transfer schedule template created
• APIT, EPF, and ETF payment reference capture process set
• Reviewer sign-off workflow confirmed
• Final archived copy storage path defined

Stage 7 – Dry-run the first payroll cycle

Run one internal dry run before the first real salary date.

• Employee records load correctly into the payroll system
• Salary components calculate as expected
• APIT and statutory deductions calculate correctly
• Totals match the bank transfer file
• Reviewer can trace every number back to source records