Handbook

UNDERSTANDING LABOR LAWS

Labor Law refers to the corpus of law that governs employment, remuneration, working condition, trade unions and industrial relations. In its broadest sense, the phrase also refers to social security and disability insurance. The aim of labor law is to balance the power between the worker and employer from dismissing a worker without cause and to establish and maintain mechanisms that recognize workers as “equal” players in negotiation regarding their working conditions. Nepal's labor regulations are principally governed by the Labor Act of 2017 (2074) and the Labor Rules of 2018 (2075). The following are the basic employment requirements that a start-up company must follow in accordance with the Labor Act and Labor Rules:

A.    When hiring any employee, sign a signed employment agreement.
B.     Ensure minimum remuneration, as well as occupational health and safety standards.
C.     Provide benefits such as festival allowances, insurance, and bonuses, among others.
D.    Enlist itself and its employees in SSF and make a monthly contribution to SSF.
E.     Comply with the grounds for termination and make arrangements for payment of terminal benefits in the case of termination (such as provident fund, gratuity, and leave encashmen)

A.    When hiring any employee, sign a signed employment agreement.

S.N Required Information during Employment Agreement
1 Employee and Employers name and address
2 Nature of Employment (such as regular, casual, part-time employment)
3 Employees job description and designation
4 >Employees remuneration and benefits
5 The location , date and commencement date of employment agreement
6 Any other terms and conditions relating to the workers service and work

S.N Nature Of Employment
1 Regular Employees Who work for regular nature of work under a contract without any end-date
2 Work Based Employees Carrying out specific work or rendering specific service
3 Time Bound Employees For definite period under a contract with end-date
4 Casual Employees Work for 35 hours or less in a week

B.    Ensure minimum remuneration, as well as occupational health and safety standards

S.N Entitlements Provisions under the Labor Act 2017
1 Probation period The probation period is 6 months from the date of joining to evaluate the performance of employees.
2 Working hours Working hours are 8 hours a day and 48 hours a week. Overtime is not exceeding 4 hours a day and 24 hours per week. The overtime remuneration is calculated at a rate of 1.5 times of the basic remuneration of the employee. Arrangement for transportation needs to be made while engaging a female employee if the working period begins or ends before the sunrise or after the sunset.
3 Leave and holiday
  • Public holidays: 14 days
  • Home leave: 18 days- 1 day for every 20 days worked
  • Sick leave: Fully Paid up to 12 days ( Eligibility: on a proportional basis for those employees who has not completed 1 year of service)
  • Maternity leave: up to 14 weeks, fully paid for 60 days
  • Paternity leave: up to 15 days, fully paid
  • Mourning leave: 13 days
  • Accumulation: Home leave – 90 days, sick leave -45 days,
  • Leave in lieu: For the laborers put in work on a public holiday or weekly off
4 Remuneration
Minimum Remuneration Basic Remuneration Dearness Allowance Total (RS)
Monthly 9,385/- 5,615/- 15,000/-
Daily 361/- 216/- 577/-
Hourly 48/- 29/- 77/-
Provident Fund (10% of basic remuneration) 9,38.50/- per month
Gratuity (8.33% of basic remuneration) Rs. 781.77/-(Per Month)
SSF additional contribution (1.67% of basic remuneration) Rs. 156.73/-(Per Month)

C.    Provide benefits such as festival allowances, insurance, and bonuses, among others.

S.N Entitlements
1 Festival Allowances Rs. Rs. 9,385/- (Per Year)
2 Bonus 10 % of the profit made by company- only applicable to companies that have 10 or more than 10 employees.
3 Insurance

Accidental Insurance : NRR 700,000/- to each employee covering all types of accidents

Medical Insurance : NRR 100,000/- to each employee

4 Maternity Leave Rs. 18,770.002 (60 days)
5 Paternity Leave Rs. 4,692.50/- (15 days)
6 Sick Leave Rs. 3,754/- (12 days)

A.    Enlist itself and its employees in SSF and make a monthly contribution to SSF.
The company is required to make monthly contribution (including provident fund and gratuity) to SSF in the following rate:

S.N Contribution Provident Fund Gratuity Additional Total
1 Employee 10% --- 1% 11%
2 Employer 10% 8.33% 1.67% 20%
3 Total --- --- --- 31%

E.    Comply with the grounds for termination and make arrangements for payment of terminal benefits in the case of termination (such as provident fund, gratuity, and leave encashment).

S.N Entitlements
1 Disciplinary Actions
  • Warning
  • 1 day deduction of remuneration
  • Withholding annual remuneration increment or promotion for 1 year
  • Dismissal from service
2 Natural Termination
Time- Bound Employees Work Based Employees
  • Terminated at the expiry of time specified in the contract.
  • In case of project- based employment, employment to be extended if the time for completion of work gets extended.
  • Terminated when the work specified in the employment contract is completed.
  • In case of project- based employment, employment to be extended if the project term/project work gets extended
3 Performance – based Termination
  • If the performance of any employee is found unsatisfactory or poor for three or more consecutive performance appraisals.
  • The Company is required to give 7 days' time to the concerned employee to present his/her explanation
4 Other Grounds of Termination
  • Retirement- Legal Age
  • Resignation- Within 15 days
  • Retrenchment- Financial difficulty,workforce being excessive due to merger and full or partial closure of the entity due to any other reason.
  • Sexual Harassment- Disciplinary action up to termination
  • Medical Grounds- cannot be terminated up to six (6) months despite the employee being unable to report to the work due to treatment

Benefits in the Case of Termination

1 Accumulated Annual Home Leave Rs. 28,155/- (90 days)
2 Accumulated Sick Leave Rs. 14,077.50/- (45 days)
3 Gratuity 8.33% of basic remuneration and should be allocated every month
4 Eligibility Since the first day of employment