Highlights of Nepalese Labor Laws

In Nepal, the Labor Act 2074 acts and governs the labor relations between employees and the employer in the country where it covers the overall aspects of working conditions, leave provisions, allowance allotment, work permits for foreign nationals, sanctions and many more.
 

• An employee cannot perform any duties without having an employment contract. There should be a written employment contract for all employees but casual employees are not required to have an employment contract.

• No discrimination against any employee based on color, religion, sex, caste or other similar factors.
• Prohibition on the employment of children
• Equal remuneration to equal work without discrimination based on gender.
• Right to trade union
• Right of employees to seek remedies for violations of their rights.
• Prohibition on employing in forced labour.

As per article 10 of the Labor Act, 2074, there are basically 5 types of employment;

• Regular employment,
• Time-based employment,
• Work-based employment,
• Part-time employment
• Casual employment

1.  Regular Employment
 Stable, regular ongoing work with consistent hours and benefits

2.  Time-Based Employment
 Employment that the employer provides or has provided to the labour specifying a certain period on the condition that the labour has to provide any service or perform any work within that period.

3. Work-Based Employment
Employment of specific particular work or service for performance.

4. Part-Time Employment
 Employment with a weekly work requirement of 35 hours or less.

5. Casual Employment
 Employment with a work requirement with a 7 days or less per month.

Applicability
Labor Act is only applicable in the following entities:

1. Company;
2. Private firm;
3. Partnership;
4. Cooperatives;
5. Associations or other organizations;
6. Entities registered in foreign countries and engaged in the promotion of business, sale of products, or promotion of other works in Nepal.

The Labor Act has introduced the provision relating to the Social Security Fund(“SSF”). Subsequently, the Social Security Act, 2017 and the Social Security Regulations, 2018 were enacted for the establishment and operation of SSF. The following percentage amount from the basis salary shall have to be deposited by the employer and employee in SSF.

In Nepal and as per Nepalese Labor law, no any foreigner can access to work without getting work permit from the related department. Foreign citizens working in Nepal, except those with diplomatic immunity or exempt under treaties must acquire a work permit.  Procedures as to how foreigners get the work permit are listed below:

Step 1:  Firstly, advertisement to be given by employer in a national newspaper to hire skilled Nepali citizens

Step 2: In case if no any Nepali citizen applies for employment, the employer shall ask for work permit of a foreign employee from the labor department.

Step 3: Application to the Department of Labor

Step 4: No objection to be granted by Ministry of Home Affairs upon request by the Labor Department.

Step 5: Issuance of work permit for skilled foreign labor upon maintaining the record and after reviewing all the application and evidence by the department.

Work permit is granted to following foreign employees in specific circumstances as:

1. The chief executive of a foreign funded enterprise and the required labor
2. Technicians for short-term repair, maintenance or installation for up to 3  months      .

• The work permission duration shall not exceed as mentioned in the Ministry of Home Affairs consent letter.
•  2 years extension of work permit in special cases upon approval from Ministry for those benefiting national interest, welfare, education, science and technology.
•  5 years work permit for experts and others for 3 years
• Renewal of work permit before 30 days upon their expiration.

The work permit gets cancelled in the following ways: 

As per Labor Act, 2074: 

• Home leave up to 90 days
• Sick leave up to 45 days
• An employee with leave exceeding the specified period shall receive pay for the excess a the end of each year based on their basic remuneration
• Employee or the concerned family member to receive a lump sum based on the last drawn basic remuneration for accumulated home and sick leave upon termination or death of employee.

To be noted: Except sick leave, maternity leave and mourning leave, all other leaves are considered as facility which cannot be claimed as a matter of right

1. Minimum salary: As recently published in Nepal Gazette, the minimum salary is Rs. 17,300( including basic salary of Rs. 10,820 and dearness allowances of Rs. 6,480)
2. Annual Increment:   At least half a day’s basic salary
3. Festival Allowance:  1 month’s basic salary per year
4. Deduction from salary: deduction of tax as per the prevailing laws, contribution amount for social security, salary for absence from work, etc.
5. Reserve Period: half the salary during such period

As as labor act, 2074, Nepal, the following are some of the misconducts and the punishment for those misconducts: 

Misconducts where the employee may be reprimanded: 

a.    Unauthorized work absence.
b.   Leaving workplace without permission

c.   late in work  without obtaining permission,

d.   disobeying work orders from employer or superiors

Remuneration equal to a maximum of one day may be deducted:  

a.    To refuse to receive any letter or notice given by the employer or sentencing authority
b.   To take part in an illegal strike or force others to do so or make delay or slow in work collectively

c.   To cause loss or damage to the enterprise by decreasing the production or service recklessly or negligently

d.   To make attempt to take benefits by submitting false documents,

e.   To not use the equipment provided by the employer if he or she is a labour responsible for using such equipment,

Annual salary increment of one year may be withheld or promotion withheld for one year: 
 

a.  To take any property outside the enterprise without the permission of the competent person and use it or allow it to be used by any unauthorized person,

b. To make attempt to make embezzlement in the employer’s transaction,
c. To damage the employer’s property recklessly or negligently,

d. To stop the supply of food, water, telephone, electricity service or prevent movement within the workplace,

e. To intentionally misuse, or cause loss or damage to any goods kept or provisions made for the benefit, safety or health of the labours,

Termination of employment

a. If it causes bodily injury, hostage of the employer, employee, or any person in the workplace

b.  Giving and taking bribes

c.  Making financial misappropriation in the workplace

d. Causing damage to any property that belongs to the employer,

e. Remain absent from work for more than thirty consecutive days without having a leave sanctioned,

f.  If not maintained the secrecy of any confidential matters of the workplace with the intention of causing loss or damage to such an enterprise,

g. Conviction by the court of any criminal offense involving moral turpitude

h. To make and submit any fake educational certificate and other certificate for the purpose of appointment,

i. Consuming narcotic substance or liquor during the working hours or presence in workplace upon consuming it

j.  Commission of any misconduct if the law provides for the dismissal from service in the case of commission of such misconduct.

Sexual harassment    

• The employment of the employee committing sexual harassment may be terminated depending upon the situation and seriousness of the offence.

Disciplinary Action procedure for employee for their misconduct is given below: 

The Labor Act provides the sanctions which includes fine, imprisonment and both for violation of the provision of the Act. Labor Court, Labor Department and Labor Office has authority to impose the sanction depends on the nature of violation which as listed in below paragraph.

 a.  Sanction by Labor Department

The Labor Department conducts necessary inquiry into a complaint made on any of following matters and imposed the mentioned sanction in case of non-compliance:

b. Sanction by Labor Office

The Labor Office does necessary inquiry into a complaint made on any of following matters and imposed the mentioned sanction in case of noncompliance:

c. Sanction by Labor Court

The Labor Court does necessary inquiry into a complaint made on any of following matters and imposed the mentioned sanction in case of noncompliance:

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