Nepal Labour Act 2074 Summarized (Including Major Provisions and recent Amendments) Genuine

Nepal Labour Act 2074 Summarized


What to expect from this post on Nepal Labour Act 2074 Summarized?

This post condenses and summarizes the major provisions of Nepal Labour Act 2074 along with recent amendments and recent developments revolving around Nepal Labour and Employability.

Where does the Nepal Labour Act 2074 Stand?

Nepal Labour Act 2074 stands as a Minimum Threshold/Criteria between the Employer and the Employee.

What areas are covered by Nepal Labour Act 2074? ( Applicability of Nepal Labour Act 2074)

Nepal Labour Act 2074 is applicable to:-

  • A company, private firm
  •  Partnership firm
  •  Cooperative
  •  Association or
  • Other organization (an “entity”) that is operating or that was established, incorporated, registered, or formed in accordance with applicable law to engage in industry, business, or provide service with or without a profit motive
  • Foreign-registered businesses that are promoting their operations, selling goods, or promoting other works in Nepal.

What areas are outside the scope of Nepal Labour Act 2074?

Nepal Labour act 2074 is not applicable to following entities.

  • Civil service employees
  • Members of the Nepal Army
  • Nepal Police
  • Armed Police Force
  • Organizations incorporated under other applicable laws or located in Special Economic Zones (SEZ), to the extent that separate provisions are provided
  • Working journalists, unless otherwise specified in the contract

What are the types of employees as per Nepal Labour Act 2074?

Types of Nepal Labour as per Nepal Labour Act 2074 are as follows:-

SNEmployee TypeDefined by Nepal Labour Act 2074
1Regular EmployeePeople hired for work or service other than work-based, time-bound, unusual, or part time employment.
2Work-Based EmployeeIndividuals employed to provide and complete a certain service or work. (Contract ends after the completion of certain work or service)
3Time Bound EmployeeEmployees contracted for a specific amount of time.
4Unusual EmployeeEmployees who are employed for seven days or fewer per month.
5Part time EmployeeEmployees who are employed for 35 hours or fewer each week.
Table showing the types of employees and their definition as per Labour Act.

What kinds of Holidays and Leaves are available to the Employees as per Nepal Labour Act 2074?

Available holidays and leave are as follows.

SNType of HolidayDuration
1Weekly VacationOnce a week.
2National Holiday13 days for Male, 14 for Females.
3Home Leave1 day for every 20 days worked. (Not applicable to employees Intitled with Summer or Winter Leave such as teachers)
4Sick Leave12 days per year.
5Maternity Leave1. Can take upto 14 weeks of Maternity leave. ( Extra 1 month of unpaid leave can also be provided if recommended by Maternity Doctor.)
2. Compulsory Maternity Leave should be taken 2 weeks before Delivery Date & upto 6 weeks after the Delivery Date.
3. 60 days of Maternity Leave are Paid Leave.15 days of paid leave are available to the father.
4. Also Applicable in case of birth of dead infant.
5. Also applicable to the Father of the infant in case of demise of Mother during child birth.  
6Mourning Leave13 days leave.

NOTE:- All Leaves and holidays from SN 1- 4 & SN 6 are paid leave. Unutilized home leave & Sick leave can be accumulated for up to 90 days and 45 days respectively. All Leave is viewed as a privilege rather than a matter of right. An approved leave may be shortened or rejected by the body responsible for authorizing it except in circumstances of extreme urgency, prior leave approval may be necessary. It could be considered improper to take a leave without permission.

What is the Probation Period for new Employees?

Under the Act, the probationary period is now only six months long instead of the previous 240 days.

What are the provisions of work time, breaktime, overtime?

Work time is 8 hours per day and 48 hours per week. Overtime has been extended to 24 hours per week. The salary for overtime is 1.5 times the ordinary wage. After five hours of work, there is a 30-minute break where work can be paused. There is a break after each shift in cases where the job cannot be stopped.

What are the provisions of Renumeration, minimum salary in Nepal Labour Act 2074?

In the beginning of Fiscal year, the minimum salary is revised.The Government of Nepal has established the minimum wage. Currently, The minimum salary is as follows:-

SNTypeRenumeration Rs
1Monthly Salary15000
2Daily Workers577
3Hourly Worker77
Minimum Monthly Salary in Nepal as per Nepal Labour Act 2074

Salary Increment/grade: Once a year at the amount of a half-day salary of a month. (ie Total Grade for the year: 0.5 x monthly salary)

Festival outlays: Once a year, a sum equal to the monthly salary is paid for festival expenses.

Within How much time should the employer pay the renumeration?

The maximum time limit for payment of salary are as follows:-

  • For Employees not working for more than a month, payment should be made within three days after the work is finished.
  • For Employees taking part in temporary employment, payment should be made upon completion of the project.
  • For other types of employees, Payment intervals shouldn’t go over one month.

Provisions of various Termination Benefits to the Employees as per Nepal Labour Act 2074

  • Provident fund benefit :- Employer and employee both must contribute 10% of the affected employee’s basic salary into the Social Security Fund. Eligible from the start of employment, a permanent employee.
  •  Gratuity:-  8.33% of basic income paid out each month into the Social Security Fund. Eligible from the start of employment, a permanent employee.
  • Medical insurance:- Coverage of  NPR 100,000 or more per employee per year.Employer and employee will split the cost of the premium 50/50.
  • Accident Insurance:-Every employee must have accident insurance coverage of at least NPR 700,000. Employer has to pay the entire premium. In case of death of the employee, The amount of accident insurance must be paid to the closest successor.
  • Bonus:- 10% of net income is distributed to all the employees.

Intern Provision in Nepal Labour Act 2074

Employed according to an educational institution’s recognized curriculum and upon the conclusion of an agreement with that school, anyone may be permitted to work as an intern.

Trainee Provision in Nepal Labour Act 2074

Unless otherwise required by law, a trainee may be hired for a training period not to exceed one year. All trainees are entitled to social security benefits, such as gratuities and provident funds.

Upon completion of training, the employer is not required to hire the trainee on as a regular employee. If such a trainee is hired, they are not required to serve a probationary period.

Outsourcing Provision in Nepal Labour Act 2074

Work that is outside the scope of the entity’s primary competencies can be performed by outsourced Nepal Labour. The Nepal Gazette specifies the kind of tasks that can be performed by contractors.

Provision regarding hiring Overseas Citizens in Nepal Labour Act 2074 Summarized

No foreign national may be hired without first signing an employment contract in either their own language or in English, which must be understandable to them. The employment agreement is valid for three years unless specified otherwise in the contract.

All foreign nationals must have a work permit, with the exception of those with diplomatic immunity or those who are exempt from it due to a treaty or arrangement they have with the government of Nepal.

What is the Process of Hiring Overseas Citizens?

The entity shall place an advertisement in a national-level daily publication seeking to fill open jobs with Nepali residents before hiring a foreign national. With the Department of Nepal Labour’s approval, a foreign national may be hired for the position if no applications are received or if no one with the necessary local skill set is available.The Department of Nepal Labour may provide a work permit to foreign nationals employed as the chief executive by just noting them there.

Work Permit to Special Technicians

By registering them at the Department of Nepal Labour, technicians hired for work such as fixing machinery, installing new technology, or other short-term Nepal Labour can obtain a work permit.The income of non-resident aliens may be repatriated in convertible foreign currency.

Duties & Responsibilities of Primary Employer.

  • An authorized Nepal Labour provider shall provide workers to the primary employer. A Nepal Labour provider that the employer, the firm’s proprietor, director, or family members are involved with is not a source for hiring employees. Employees of the primary employer are considered to be outsourced workers if they are not from a licensed Nepal Labour supplier or if the work they are doing violates the Act.
  • The primary employer may hire workers if they have a contract with the Nepal Labour supplier.
  • The agreement shall guarantee that the Nepal Labourers will not receive facilities and compensation that are less than the minimum compensation and benefits specified in the Act.
  • The primary employer should routinely find out if the Nepal Labour provider is consistently offering such compensation and perks.
  • If the Nepal Labour supplier has not given outsourced workers the required pay and benefits, the principal employer must notify the Nepal Labour office or Department.
  • The primary employer must set up measures for occupational health and safety.
  • If the minimum pay and benefits are increased in compliance with the laws, the primary employer must adjust the increment.
  • The Nepal Labour provider must ensure that outsourced workers receive compensation and other benefits, and that it does not fall below the minimum amount required.The Nepal Labour supplier’s license may be revoked for failure to pay wages and other benefits.
  • The Nepal Labour provider must gather data on occupational health and safety measures taken by the primary employer, and if such measures have not been taken, it must urge the primary employer to do so.
  • The Nepal Labour provider shall notify the Department or the relevant Nepal Labour office if the primary employer refuses to implement such arrangements despite the recommendation.

We will add more content in this post after detailed study of Labour Act 2074, rules & regulations.

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