Employee benefitsin Nepal

The Labour Act sets a minimum annual medical-insurance cover of NPR 100,000 for each employee. Employer and employee share the premium; the insured amount is a treatment-cover limit, not the premium or a cash allowance. An employer or employee already contributing to a social-security scheme providing the relevant benefit does not duplicate the insurance requirement to that extent.

Some employers add private medical insurance beyond mandatory protection. The policy determines treatment access, covered employees, premium funding and exclusions; extra insurance should be distinguished from the statutory medical-insurance obligation. Some policies include dental and eye-care services.

Some employer-provided private medical policies include dental care. Access depends on the chosen policy’s covered treatments, provider network, limits and exclusions. Dental services within an insurance policy should be distinguished from an employer cash dental allowance.

Some employer-provided private medical policies include eye care. The policy determines whether consultations, corrective lenses or other treatment are covered; eye-care inclusion does not establish reimbursement for every optical purchase.

Employers must fund accident insurance of at least NPR 700,000 per employee covering all kinds of accidents. Death or complete mental or physical incapacity attracts the full insured amount; partial injury or incapacity is paid according to the prescribed disability percentage. If the employer’s failure to insure or insurance error prevents payment, the employer owes the equivalent amount. Relevant social-security protection avoids duplicate insurance to the extent it covers the obligation.

An employee receiving hospital treatment for a work accident or occupational disease cannot be dismissed during that treatment. The same protection extends to one year from the start of home treatment. Full remuneration is payable during the protected treatment period, except to the extent the employee receives the remuneration benefit from the Social Security Fund. Employees able to perform suitable alternative work should be placed in that work.

The Labour Act requires the employer to deduct 10% of each employee’s basic remuneration and add an equal employer contribution for retirement savings, beginning when work starts. These amounts are deposited in the Social Security Fund where its legislation applies, with prescribed alternative arrangements otherwise. Contributions already providing the relevant social-security benefits are not duplicated under the Labour Act. Basic remuneration is the contribution base, rather than total gross pay.

Gratuity is a separate retirement or separation accrual funded by the employer at 8.33% of basic remuneration each month from the start of employment. It is deposited in the employee’s name in the Social Security Fund where applicable, with prescribed alternative arrangements otherwise. This accrual is separate from retrenchment compensation. Social-security contributions providing the same benefit are not charged again under the Labour Act.

For qualifying retrenchment, employees receive one month’s basic remuneration for each year of service, with a proportionate amount for less than one year. Section 145 does not apply to an employer with ten or fewer employees. For covered enterprises, the employer gives the Labour Office and appropriate worker representatives at least 30 days’ notice and discusses alternatives and selection. Employees entitled to an unemployment allowance under social-security legislation do not also receive this compensation.

Paid annual leave accrues at one day for every 20 days worked. The law calls this “home leave”; it is ordinary annual leave, separate from public holidays. Employees can accumulate up to 90 days. On leaving employment, accumulated annual and sick leave is paid using the last basic remuneration. Excess above the accumulation ceiling is paid at year-end. Employees receiving school summer or winter holidays receive only the shortfall where those holidays are shorter than the annual-leave entitlement. Employers can adjust the timing of annual leave for stated operational reasons.

Employees receive 12 days of paid sick leave each year, proportionately for service of one year or less. A certificate from a recognized doctor is required for more than three consecutive days. Sudden illness must be reported as quickly as available communication allows. Up to 45 days can accumulate; excess leave is paid at year-end and accumulated leave is settled at the last basic remuneration when employment ends.

An employee receives 13 days of fully paid mourning leave where mourning is required by the employee’s religion or the employee’s spouse dies. The law also expressly covers a married female employee mourning her father, mother, father-in-law or mother-in-law. This entitlement should be applied to the qualifying circumstances rather than treated as a general 13-day allowance for any relative’s death.

A pregnant employee receives 14 weeks of maternity leave, including at least two weeks before the expected delivery and six weeks after birth. The Labour Act provides full remuneration for 60 days; the rest of the statutory leave is unpaid under the direct employer baseline. A doctor-recommended extension for the mother’s or baby’s health can add up to one month unpaid or use other leave. Stillbirth or miscarriage at seven months or later receives the same leave. A birth registration certificate must be supplied unless the child dies. Social Security Fund payments can replace the employer’s obligation to the extent the fund pays; fund eligibility and payment rules are separate.

A male employee whose wife is giving birth receives 15 days of paid maternity-care leave. This is the statutory partner-leave entitlement. If the mother dies within 60 days of the birth, her employed husband can take paid leave for the remaining part of that 60-day period to care for the child.

A few employers provide parental leave in individual cases beyond statutory maternity and maternity-care leave. The agreed policy sets eligibility, duration and whether salary continues.

Employees receive 13 paid public holidays annually, including May Day. Female employees receive 14, including International Women Labour Day. The applicable regulator determines the enterprise calendar where there is one; otherwise the employer determines it. Employees doing continuous work on a weekly rest day or public holiday receive a substitute day within 21 days. Work without that substitute leave is treated as overtime. Public-sector festival calendars do not automatically establish the private employer’s calendar.

Employees receive an annual festival allowance equal to one month’s basic remuneration. It is paid for the employee’s main religious, cultural or traditional festival on written request; without a request it is paid at Dashain, Nepal’s major autumn festival. Employees with less than one year of service receive a proportionate amount. This mandatory allowance is separate from profit-sharing bonus and is based on basic pay rather than one month of total gross remuneration.

A technology-employer example provides lunch and snacks in the office. This is an in-kind workplace benefit; it does not establish a cash meal allowance for remote days.

A technology-employer example provides a monthly laptop allowance and allows staff to request resources for working from home. The employer’s policy determines qualifying equipment, approval and payment terms.

Hybrid work is offered by technology employers, allowing eligible staff to divide work between home and the office. For example, a technology employer advertises this flexibility alongside a five-day workweek. Team scheduling and role requirements determine the arrangement.

Employers use written employment contracts setting remuneration, benefits and employment conditions, except casual employment. Regular, time-based, work-based, casual and part-time employment are distinct categories. Casual employment is seven days or less in a month; part-time work is 35 hours or less weekly under the Act’s definition. A title or fixed end date does not by itself settle the real nature of employment. Foreign employees must receive the contract and benefit information in English or another language they understand.

Pay intervals cannot exceed one month. Workers engaged for less than one month must be paid within three days after completion, and casual workers immediately after completion. After one year of service, employees receive an annual increment of at least half a day’s remuneration calculated from monthly basic remuneration. Salary and benefits must be specified in the employment agreement.

Ordinary work is limited to eight hours daily and 48 weekly. A paid half-hour break follows five continuous hours. Overtime is limited to four hours daily and 24 weekly and is paid at 1.5 times the basic hourly remuneration. A collective agreement can provide alternative benefits, and managerial employees can agree alternative overtime benefits in their contracts. Women working before sunrise or after sunset must receive employer-arranged transport.

An employment contract can provide a probation period of up to six months. If employment is not terminated during probation for unsatisfactory work, it becomes confirmed on completion. Probation does not remove the employer’s obligation to provide statutory remuneration and benefits.

Except dismissal for misconduct, employer and employee give at least one day’s notice for employment up to four weeks, seven days for four weeks to one year, and 30 days after more than one year. An employer ending employment without notice pays the remuneration for the missing notice; an employee failing to give notice can have the equivalent deducted. Termination requires a proper statutory reason and procedure. Final remuneration and benefits are payable within 15 days of termination, including misconduct dismissal.

Foreign nationals generally need work authorization to work in Nepal, subject to treaty and diplomatic exemptions. Employers generally recruit foreign workers where suitably skilled Nepali workers are unavailable, with special routes for certain foreign-invested enterprises and short technical assignments. Foreign employees’ contractual pay and benefits cannot be less favourable than the Labour Act baseline. A work permit also supports repatriating earned remuneration in convertible foreign currency.