Nepal

• Maha Shivaratri
• National Democracy Day
• Nari Dibas
• Nepali New Year
• Majdoor Divas
• Buddha Jayanti
• Republic Day
• Janai Purnima
• Gai Jatra
• Shree Krishna Janamashtami
• Constitution Day
• Ghatasthapana
• Dashain
• Laxmi Puja
• Gobardhan Puja
• Bhai Tika
• Chhat Parwa

Working Hours

Employees can work up to eight hours a day, or 48 hours per week.

Minimum Wage

NPR 17,300 per month.

Employee Tax

Annual income	Tax rate
Up to NPR 500,000	1%
NPR 500,001 - 700,000	10%
NPR 700,001 - 1,000,000	20%
NPR 1,000,001 - 2,000,000	30%
More than NPR 2,000,000	36%
Old-age pension contribution	28.33%
Accident and disability contribution	1.4%
Medical insurance contribution	1%
Dependent family contribution	0.27%

Bonuses

Festival bonus:

Employees in Nepal are entitled to a 13th-month salary, also known as 'Festival Bonus'. This is payable with the salary before Dashain.

An employee who has worked for a full year is entitled to a festival bonus equivalent to one month’s basic salary. For an employee who has not worked for a full year, the festival bonus should be proportional to the period worked.

Compulsory benefit; annual increment:

Employers must offer annual increment to employees, provided the employees have worked for one full year of service. The annual increment is equivalent to at least half a day’s basic salary.

Employment contracts must be in writing, except for casual employment. The employment contract must specify the following details:

• Job title
• Job description
• Salary and other benefits to be received by the employee
• Employment duration
• Dismissal/punishment clause
• Working hours and location
• Vacation and sick leave
• Policies, restraints, and rights (such as non-compete clauses)
• Any other relevant terms and conditions of the employment

Employment contracts can be concluded for unlimited/unspecified duration of time or fixed duration. There are no regulations or restrictions for fixed term contracts in Nepal.

Expatriate contracts:

An employment contract with a foreigner must be concluded in English, or in any other language that the foreigner understands.

The remuneration the foreigner is entitled to must be indicated in the employment contract, and the employee is allowed to repatriate the remuneration, or part of it, back to the home country in any convertible foreign currency.

Before hiring a foreigner, an employer must publish an advertisement in a national daily newspaper to acquire the required skilled labour from among the Nepali citizens. If, despite the advertisement, no application is received from any Nepali citizen, or no citizen has the required skills, the employer can proceed to employ a foreigner.

An employer with a foreign employee must employ Nepali citizens to understudy the expatriate and acquire skills and knowledge.

Annual Leave

Minimum of one day's paid leave per 20 days of service.

Sick Leave

Up to 12 days' paid sick leave after one year of service. A medical certificate must be provided after three days’ absence.

For employees who have not completed one (1) year of service, sick leave is granted on a proportional basis.

Accumulation leave:

Employees are allowed to accumulate vacation leave and sick leave for up to ninety (90) days and forty-five (45) days respectively.

If the employee is relieved from service or dies, the employee or their family will receive a lump sum amount based on the last basic remuneration for the accumulated vacation and sick leave.

If the accumulated leave exceeds the specified limits, the employee will receive compensation for the excess leave at the end of each year, based on their basic remuneration.

Parental Leave

• Maternity leave: According to section 87 of the Labour Act 2074 (2017), a pregnant employee is entitled to maternity leave of fourteen (14) weeks. The employee must take the leave from at least two weeks before the expected date of delivery to at least six weeks after the date of delivery.

An employee who takes the full 14 weeks of maternity leave is entitled to full remuneration for sixty (60) days by the employer. The remaining days are not remunerated by the employer, but by the Social Security Fund.

• Paternity leave: As per the Labour Act 2074 (2017), male employees are entitled to fifteen (15) days of fully paid paternity leave.

Termination Process

Penalties and punishments for poor performance are more common than employee dismissal in Nepal. Common employee sanctions include:

• Written warnings
• Pay reductions
• Withholding of a pay increase
• Temporary suspension

The only grounds for termination are:

• Termination upon expiry of term of contract – this is for time-bound, fixed-term, or casual contracts.
• Termination upon incompetence grounds – if an employee’s work performance is found to be unsatisfactory or poor for three or more than three consecutive years, the employer may terminate the employment.
• Voluntary termination – voluntary resignation by the employee. If the resignation is not accepted by the employer within fifteen (15) days, it is deemed to have been accepted after the notice period expires.
• Termination upon retirement – if an employee attains the retirement age of 58.
• Termination upon health grounds – as a result of physical incapacitation, mental incapacitation, grievous hurt or injury, the employer may, on recommendation by a medical doctor, terminate the employment of an employee.
• Termination upon misconduct – if an employee commits any of the following misconduct, the employment may be terminated.These include:
• causing bodily injury to any person in the workplace,
• giving and taking bribe,
• financial misappropriation,
• causing damage to any property that belongs to the employer,
• remaining absent from work for more than thirty consecutive days without having a leave sanctioned,
• failure to maintain the secrecy of any confidential matters with the intention of causing loss or damage to the business,
• conviction by the court of any criminal offense involving moral turpitude,
• submitting any fake educational certificate and other certificate for the purpose of appointment,
• consuming narcotic substance or liquor during working hours or presence at the workplace upon consuming it,
• commission of any misconduct, if the law provides for the dismissal from service in the case of commission of such misconduct.

Notice period: Prior to terminating the employment relation, the employer or employee must give notice as follows:

• one (1) day, if employment is for a maximum of four weeks;
• seven (7) days, if employment is between a period of four weeks to one year;
• thirty (30) days, if employment is for a period of more than one year;
• thirty (30) days, in cases of retrenchment/redundancy.

Severance Pay

Severance pay is only payable to retrenched employees, and the pay is equivalent to one month’s salary for each year of service.

Under a Mauve Group Employer of Record solution, clients and workers can reap the benefits of Mauve’s Global Master Insurance Programme – a market-leading unified corporate insurance programme that connects all Mauve entities to its two preferred providers.

The insurance provides coverage in overseas locations through a combination of the master policy and its linked local policies, where required by law in certain jurisdictions.  The policies include:

• Employer’s Liability and Public Liability - £10,000,000 combined limit.
• Professional Indemnity - £5,000,000 limit.
• Worker’s Compensation – Limit is dependent on location of work.

For specific information about statutory and recommended insurances in your chosen country, get in touch with Mauve.