Labour Law in Nepal: Employee Rights & Employer Duties 2026

Labour law in Nepal

The principal private-sector employment framework is the Labour Act, 2074 (2017) and Labour Rules, 2075 (2018). Social security, trade unions, bonus, child labour, workplace sexual harassment and sector-specific laws may add obligations.

Quick answer

Employers should classify the real employment relationship, issue accurate written documentation, pay at least the current prescribed remuneration, observe statutory hours, overtime, leave and benefits, enrol and contribute to applicable social-security arrangements, provide a safe and dignified workplace, maintain records and use fair grievance and disciplinary procedures. Employees should preserve their contract, attendance, pay, leave and communication evidence.

Who is a worker?

The Labour Act uses a functional definition covering a person performing physical or intellectual work for remuneration, regardless of job title. Calling someone a consultant, intern, volunteer or partner does not decide the issue if the actual relationship is controlled employment.

Relevant indicators include who controls working hours and method, integration into the organisation, exclusivity, recurring payment, tools, supervision, economic dependence and ability to delegate.

Types of employment

The Act recognises regular, work-based, time-based, casual and part-time employment. Classification should match reality: - regular: ongoing work not genuinely limited to a task or period; - work-based: engagement for completion of specified work; - time-based: engagement for a defined period; - casual: short engagement within the statutory limit; and - part-time: generally 35 hours or less per week.

A fixed end date does not automatically make an ongoing permanent function lawful as repeated time-based employment. Trainee and apprentice arrangements require genuine learning rather than ordinary work under a different label.

Written employment documentation

The appointment letter or agreement should state the parties, role, location, start date, employment category, probation where applicable, hours, remuneration, benefits, leave, reporting, confidentiality, intellectual property, policies, notice and lawful termination procedure.

No contract can reduce mandatory protections. Global templates and handbooks must be adapted to Nepal law. Keep a signed copy in the personnel file and give the worker their copy.

Remuneration and payroll

Pay at least the minimum remuneration currently prescribed by the Government of Nepal for the relevant category. Because minimum rates are periodically revised, verify the latest Gazette or official labour notice instead of relying on an old article.

Maintain payslips, bank or payment evidence, attendance, deductions and payroll returns. Deductions require a lawful basis. Festival allowance, provident fund or SSF, gratuity, insurance and other benefits should be assessed under current law and the employee's coverage.

Working hours and overtime

The Labour Act generally limits work to eight hours per day and 48 hours per week, with a rest interval after continuous work. Overtime is exceptional, subject to statutory limits and premium remuneration. Employers need reliable prior approval and time records; an “all-inclusive salary” label does not automatically erase statutory overtime rights.

Leave and rest

Administer weekly rest, public holidays, home leave, sick leave, maternity and maternity-care leave, mourning leave, substitute leave and other applicable leave. Eligibility, accrual and payment differ by type and circumstances.

Publish a clear leave process, but do not use internal approval rules to remove statutory entitlement. Preserve applications, decisions and balances.

Social security and insurance

Assess employer and worker registration and contributions under the contribution-based Social Security Fund system. Keep enrolment, contribution and benefit records consistent with payroll. Where another statutory provident fund, gratuity or insurance treatment applies, document the legal basis and avoid double counting or gaps.

Equality and dignity

Employment decisions should not unlawfully discriminate. Recruitment, pay, promotion, training, discipline and termination need objective, documented criteria. The Workplace Sexual Harassment (Prevention) Act, 2071 imposes prevention and response duties on managers, including awareness, remedial measures and complaint information.

Retaliation after a complaint creates additional risk. Investigations should be prompt, impartial, confidential as reasonably possible and fair to both complainant and respondent.

Health and safety

Employers must identify hazards, provide safe systems, training, protective equipment and emergency response appropriate to the workplace. Record accidents and corrective action. Employees also have duties to follow lawful safety instructions and use equipment properly.

Grievances and collective relations

Use the internal grievance route and preserve written complaints, meetings and decisions. Trade-union and collective-bargaining rights require separate compliance. If internal resolution fails, the competent Labour and Employment Office, Department of Labour and Occupational Safety or Labour Court may become involved.

Employee evidence checklist

- appointment letter and policies; - attendance and overtime records; - payslips and bank statements; - leave applications and balances; - SSF or benefit records; - warnings, appraisals and grievance documents; - emails or messages lawfully obtained; and - resignation, termination and final-settlement documents.

Review note

This guide was reviewed on 21 July 2026. Minimum remuneration, procedures and notices can change; verify the current official material before acting.