Labor Law Changes in Nepal

The Labor Act of Nepal, 2048, has been replaced with the new Labor Act, 2074. This New Act has seen changes in provisions for the rights, interests, facilities, and safety of all workers employed in different enterprises or different sectors. Learn about the latest changes to labor and employment law in Nepal.

Prohibition of Non-Nepalese People at Work
The New Labor Act does not allow non-Nepalese citizens to be engaged in work that was disallowed in the previous Act. A local entity can only hire a foreign national if a Nepalese citizen is not available for any technical post despite multiple advertisements on national public newspapers and journals.

If foreign nationals do obtain work in Nepal, they need to request a work permit as per section 22 and 23 of the Labor Act (2074). However, if they are provided diplomatic immunity or have some written arrangement based on a treaty or agreement with the Government of Nepal, they may proceed without a work permit.

Working Hours
Previously, section 16 of the Labor Act (2048) stated that no employees or workers can be employed for more than 8 hours a day and 40 hours a week. If he works for more than 48 hours per week, he is eligible to be paid overtime wages at the rate of one and a half times his ordinary wages. Section 19 of the Act also identifies the maximum overtime an employee can work to 4 hours a day and 20 hours a week.

In the New Labor Act (2074), working hours continue to be 8 hours a day and 48 hours a week, as shown in section 28 of the new law. The overtime wages also continue to be one and a half times the worker’s ordinary wage rate as per section 31. However, section 30 states that the maximum overtime has been increased to 24 hours per week, as opposed to the previous 20 hours.

Each employee is eligible for one weekly holiday. This can be a Sunday, but if the employer cannot have all employees off on the same day, they may provide a break on a rotational basis. All employees are eligible for a total of 13 days off for annual public holidays, including May Day. Women are given an extra day off for Women’s Labor Day holiday.

Annual leave days in Nepal are decided based on the number of days an employee works with a company. At present, for every 20 days worked, an employee is eligible for one day of annual leave. Nepal’s Labor Act entitles workers to fully paid sick leave up to 12 days per year. If the employee has worked for the employer for less than one year, sick leave is granted in proportion to their employment period. Employees can accumulate sick leave up to a maximum of 45 days and must be paid their basic remuneration for accumulated sick leave over 45 days at the end of the year.

In case of death and mourning, employees are allowed up to 13 days of leave from work.

Pregnant or nursing mothers are allowed a total of 98 days off from work based on their maternity leave. They are fully paid for up to 60 days. Paternity leave, on the other hand, is given for 15 days and is fully paid during this period.

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