Table of Contents

Nepal

Table of Contents

Currency

Nepalese Rupee (NPR)

Payroll Frequency

Weekly, Bi-weekly, or Monthly

Employer Taxes

10%

About Nepal

Nepal is a landlocked country bordered by China to the north, and India to the south and west. It has a population of 26 million and has a volatile political climate, especially in the Tarai region due to the exploitation of its people who are mostly laborers. This has led to political tension with many organized political struggles by the Communist Party of Nepal. Nepal’s culture is unique because it is rooted in Hinduism. The Nepalese do not eat beef because they consider the cow to be sacred. Half of the country’s population speaks Nepalese while the rest speak other native languages. The main religion is Hinduism which is practiced by 80% of the population. Tourism is also a core part of the nation’s economy, attracting many visitors and climbers to its spectacular mountainous landscapes that are a part of the Himalayan range, and of course, Mount Everest.

Employment Relationship

• Permanent Employment

There are no special provisions in Nepal's Labour Act concerning permanent employment. The only reference in the law defines permanent employment as regular employment of indefinite duration that does not have as its objective the completion of a particular task or service or engagement for a specific period.  Regular or permanent employees in seasonal industries are entitled to at least 25% of their remuneration during their workplace's seasonal closure.

• Fixed-Term or Specific-Purpose Contracts

Nepal's Labour Act stipulates that if a company needs an immediate increase in production or service, any person may be appointed by contract for this purpose. The contract must outline the time-period, remuneration scheme, and terms of service for any specified work that is not permanent. The modes of hiring include time-bound and work-based employment. No one can be hired for employment without a contract. 

• Temporary Employment Contratcs

Temporary employment contracts are defined as those made to complete particular work or a specific service. Employers can hire temporary employees through licensed employment agencies for work other than their core activity. Employers must also conclude service agreements with the agency. Additionally, temporary employees cannot be paid less than minimum wage by their agencies. The employer must ensure payment of remuneration. Finally, temporary employees must be provided with similar occupational health and safety provisions as those of the employer's regular employees. An employment agency can provide employees to a particular employer only twice.

Probationary Period

In Nepal, the employment relationship is predicated on a probationary period of continuous service lasting 6 months or a full running season in the case of seasonal employment. After this period, the worker will be appointed permanently and provided with an appointment letter confirming the position title, the conditions of service, and the entitled remuneration. If the employer is not satisfied with the employee's performance, they can terminate the employment contract without notice.

Working Hours

In Nepal, regular working hours are 8 hours per day and 48 hours per week. Working hours of employees under 16 years of age cannot exceed 6 hours per day and 36 hours per week. Any work carried out in addition to regular working hours is considered overtime and must be paid at a rate of 150% of the employee's regular wages. The maximum overtime period may not exceed 4 hours per day and 24 hours per week.

Holidays / PTO

• Statutory Holidays

Prithvi Jayanti; Maghe Sankranti; Sonam Losar; Martyrs’ Day; Maha Shivaratri; Ghyalpo Losar; Prajatantra Diwas; International Women’s Day; Ghode Jatra *; Ram Navami; Nepali New Year; Loktantra Diwas; Buddha Jayanti; Labour Day; Ganatantra Diwas; Ramjan Edul Fikra; Edul Aajaha; Raksha Bandhan; Shree Krishna Janmashtami; Nijamati Sewa Diwas *; Hartalika Teej *; Rishi Panchami *; Constitution Day; Indra Jatra *; Ghatasthapana; Fulpati; Maha Ashtami; Maha Navami; Vijaya Dashami; Ekadashi; Dwadashi; Kojagrat Purnima; Laxmi Puja; Govardhan Puja; Bhai Tika; Chhath Puja; Guru Nanak Jayanti *; Udhauli Parva; Christmas Day; Tamu Losar*Celebrated by specific sub-groups

• Paid Annual Leave

In Nepal, annual leave (called 'home leave') is granted at the rate of 1 day for 20 days of work, up to a maximum of 18 days per year. It is fully paid. However, as a general principle, leave is not seen as a right but as a privilege.  Annual leave accumulates up to a maximum of 90 days. Any excess accumulation is cashed in every year.  If an employee's contract is terminated or they die, the payment for unused leave is made to them or their family members.  

• Sick Leave

Nepal's Labour Act entitles workers to fully paid sick leave of up to 12 days per year. If the employee has worked for the employer for less than 1 year, sick leave is granted in proportion to the employment period. Employees can accumulate sick leave up to a maximum of 45 days and must be paid their basic remuneration for accumulated sick leave of over 45 days at the end of the year.

• Maternity Leave

Nepal's New Labour Act provides maternity leave of up to 14 weeks (~98 days), out of which 60 days are fully paid. Employees must take compulsory leave from 2 weeks before and until 6 weeks after delivery. This leave is also granted in case of stillbirth or miscarriage after 7 months of pregnancy. If recommended by the doctor, an employee can extend her maternity leave by a month.  The employer is responsible for paying the employee their regular remuneration for the first 60 days of maternity leave, while Nepal's Social Security Fund provides benefits for the remaining 38 days of maternity leave. The fund also provides NPR 7,500 (Nepalese rupee) per delivery up to 2 times. In the case of the mother's death within 60 days of the child's birth, her husband or partner becomes entitled to the remuneration from the employer for the remaining period. 

• Paternity Leave

Nepal's Labour Act provides for fully paid paternity leave of up to 15 days. The leave can be taken once the wife of the male employee begins labor.

Termination of Employment

• Notice Period

Both employers and employees must provide notice before submitting a letter of employment termination, except in cases of dismissal for misconduct. The notice period correlates with the service period and ranges from 1 day (for employment up to 4 weeks) to 30 days (for more than a year of employment). If any party fails to provide an appropriate notice period to the other party, they are liable to pay the remuneration for the period of such notice to the other party. 

• Severance Benefits

In Nepal, employees dismissed for redundancy are entitled to severance benefits of 1 month's basic wages for every year of service. Employees that have less than 1 year of service receive severance benefits in proportion to their service period.