Basic provision of Labour Law in Nepal

There are several legal provisions laid down by the Government of Nepal
for control, support and management of the labour and respect the labour
rights in Nepal. The Constitution of Nepal, 2072 has provided the
fundamental right on Article 33 Every citizen will have the right to
employment. The employment conditions, conditions and unemployment
assistance will be as per the federal law and Every citizen will have the
right to choose employment and Article 34 has provided that the Right to
labor whereas Every worker will have the right to exercise proper labor
practice and Article 39(4) shall have prohibited the employing minor to
work in any factory or company or hazardous work. Under the constitution
there are several labour related legislations that shall have been
performing in the territory of Nepal.
After the restoration of democracy and promulgation of the Constitution
of the Kingdom of Nepal in 1990, many progressive acts are formulated to
promote labor welfare, these legislations have amended after 2nd
people's movement 2062/063; these prevailing legislations are such as;
A) National Legislations
1. Labor Act 1992 (amended in 1998) and deleted 1992 Labour Act in
2074 and enacted new labour law, 2074
2. Child Labor (Prohibit & Regulation) Act 1999,
3. Transportation and Vehicles Management Act 1993,
4. Tea Plantation Workers' Regulation, 1993
5. Foreign Employment Act 1985 (revised in 1993)
6. Trade Union Act 1993 (amended in 1999),
7. Working Journalist Act 1994,
8. Labor Court Regulation Act 1995,
9. Formation of a Central Labor Advisory Board 1998
10. Child Labor (Prohibition and Regulation) Act 1999
11. Revision of Bonus Act, 1973 in 2000,
12. Creation of National Welfare Fund 2000, and
13. Trade Union Act, 1992
 14. Establishment of a Labor Court 1996,
Government of Nepal has ratified the various international legal
mechanisms relating to labour and also endorsed nine conventions
passed by International Labor Organization (ILO), such as;
1. Weekly Rest in Industrial Enterprise Convention, 1921 (No. 14).
2. Forced Labor Convention, 1930 (No. 29).
3. Right to Organize and Collective Bargaining Convention, 1949 (No.
98).
4. Equal Remuneration Convention, 1951(No. 100)
5. Discrimination (Employment and Occupation) Convention, 1958
(No.111).
6. Determination of Minimum Wage Convention, 1970 (No. 131).
7. Minimum Age Convention, 1973 (No.138).
8. Tripartite Consultation (International Labor Standards)
Convention, 1976 (No. 144).
9. Worst Forms of Child Labor Convention, 1999 (No. 182).
The basic objectives of Labour Law has provided that the laws relating to
labour in order to provide for rights, interests and benefits of labours,
develop good labour relations by making explicit provisions on the rights
and duties of labours and employers and increase productivity by ending
all forms of labour exploitation;
Some important definitions are prescribed on section 2 whereas;
"Basic remuneration" means the basic remedies of the workers for
employment by employment, and that word also refers to the amount of
salary increase in the employment period after one year. (Sec.2.a) The
"workplace" means that the worker should remember the workplace or
place of work and that word also refers to the work or status that should
be a worker or condition going to work. (Sec.2.c)
"Enterprise" means any company, private firm, partnership firm,
cooperative organization, or association or other organization in the
establishment, establishment, registration or establishment, as per the
prevailing law for the purposes of industry, business or service, to earn
profits or not to earn profits. (Sec.2.j)
The "remuneration" means the remedial remuneration of the workers
and the word also refers to the allowance. (Sec.2.i)
"Employer" means that the person or establishment of the worker
should remember the worker and the word also mentions the employer
in the right to the establishment and the workers' supplier in the right of
the workers employed according to this law. (Sec.2.m)
"Employment Agreement" means the agreement between the
employer and the workers regarding the service, condition and
convenience of employment, and that word also tells the employer the
appointment letter given to the workers.(Sec.2.n)
"Worker" means a person who is physically or intellectually to pay for
the employer, or the employee or any designated workman.(Sec.2.x)
The "collective agreement" means the agreement between the
employer or the employer's organization and trade union or group
dealing committee, regarding the remedial work, service condition,
convenience or employee and mutual concern of workers. (Sec.2.u)
"Strike" means that workers should regularly be fully or partially denied
the work done by them. However, the situation in which a permanent
settlement or a permanent danger has stopped working or the situation
outside the laborers cannot be present or unable to work. (Sec.2.z)
The section 4 of the new act has provided that no laborers should be
directly or indirectly to the forced/bond labor. However, the work or
service of the worker's perform will not be considered as labor;
(a) the work or service to be done under the duty of the citizen, if
necessary to the nation,
(b) the work or service to be punished as a decision or order from the
court and
(c) the work or service to be a member of such a community for the
benefit of the community. For this purpose, "bond labor" means no work
or service work should be done against any worker who is frightened of
any kind of financial, physical or mental action if no workers work or
serve. (Sec.4)
No person shall so employ a child in any work as to be contrary to law,
it is clear provision to prohibit the child labour of any work. (Section 5)
Employees will not be able to discriminate on the basis of religion,
character, gender, race racial, origin, language or ideological belief
or any other similar basis. However, such condition it will not be
considered discrimination of our work; (a) Prior to the underlying
requirement of work or services, give priority to employment to a person,
(b) to pay for pregnant labor and to facilitate the work and service as per
the physical condition of the pregnant and without cutting the facility. (c)
The physical condition of physical disability is to give priority to the work
of a favorable personality. (Section 6)
For the same work, there should be no discrimination in the
remuneration; based on gender do not have to discriminate on the
wages for the equal value of work among the workers. The purpose of the
same value for the purpose of sub-section (1) shall not be determined
based on the nature of the work related to the work, the time to work, and
the production, labor and production received from work. (Section 7)
Trade Union Rights: Every worker, subject to this Act and other law, will
have the right to establish, conduct, trade union, subscribe to such a union
or engage in that union or engage in other activities related to trade
union. The laborer will have to be duty and responsible to the employer
while using labor rights as per this Act and other laws. (Section 8)
The act has classified the types of employment; whereas section 10
the labour act;
a. Regular employment means any kind of employment other than
employment mentioned in section (b), (c) and (d).
b. Working employment means the employer should take a special task
or service to set aside or give employment to complete it.
c. Timely employment means that the employer should consider giving
employment or giving employment to the workers during the period
of a certain period of time or to provide work.
d. Casual employment means employees should remember the
employment of a worker for a period of seven days or for less than a
period or to complete work or given work.
e. Partial Employment means employment in the week or fifty hours or
less in the week to be given or given.
If a job is raised or not, whether any employment is mentioned, it will be
determined according to the nature based on the nature of the work.
No employment should be done without the employment agreement
(Section 11) Employer does not work for anyone without employment
agreement. However, there is no need to write a written employment
letter for casual employment. The agreement will be required to include
workers' remedies, facilities, employment conditions and other matters
as specified.
The trainees can be employed (Section 16) any establishment can
compromise with any educational institution and employ someone as a
trainee according to the accepted curriculum of such organization. For
the purpose of training the labor will not be considered for the purpose
of this Act. But if the approved courses work against the opposite, they
will be treated as regular employment employees.
Workforce arrangement should be implemented: (Section 17)
Although nothing is written in section 16, it should not be done for eight
hours a day and more than forty-eight hours a week in working, as per
this article. Professional health and security related arrangements will be
implemented as a laborer in the right to trainer. The agreement between
the institutes and the educational institutions, if any trainee training is
done in the accident, such establishments will have to treat such
traffickers as laborers and compensation will be made to provide
compensation to this Act.
Other than those mentioned in sub-section (1), (2) and (3) shall be in
accordance with the written agreement between the respective
educational institutions and institutes.
Trainees workers can be employed as follows (Section 18) Employers
can work in a job by training them. Training period will not exceed a year.
But for special training, i.e. if a period is specified by the prevailing law
or a particular period, it will be used as a student for the last time.
According to this section the employer will have to provide the facility for
reducing minimum salary, sick leave and subsidy, deposit funds,
insurance, and social security as well as the lack of social security.
After the training period, the employer will not be forced to work for the
employees.
But if the same employer keeps in mind the use of self-employed workers,
the test will not be applicable to the right.
Part time can be employed: (Section 19) (1) Employers can work part
time.
But the workers working at full time will not be able to work
independently without their consent.
(2) The remuneration of part-time workers will usually be determined
on the basis of work hours (hours) or on the basis of employment
agreement between the two sides.
(3) When determining the wages of workers working part-time
according to sub-section (2), the work of the same nature will have to
be determined based on the minimum monthly remuneration of the
workers working at the same level.
(4) Due to this time, workers working part time will be given salary for
the work given to the person for such additional time if they work in
extra time.
Otherwise, not to stop working (Section 20): Participants working part
time will not be able to stop working.
Social Security System: Each employer employed solely in the right to
work with more than one employer, for a part time, the contribution of
such workers will be contributed by the basis of basic remedies that will
be contributed to subsidy, storage funds or other social security services.
Section 22 has provided that to prohibit the foreigners to work in
Nepal. (1) The Department of Labor (Unsigned) from the Department of
Labour, will not be able to employ any foreign citizen as a laborer.
(2) Even if anything is written in the sub-section (1), the skillful workers
of the self-employed laborers cannot be able to supply their foreign
workers to the foreign workers who are subject to this subject.
(3) Prior to appointing foreign workers as per the sub-section (2), the
employer will have to publish advertisements in national level daily
journals to get the skills needed by the Nepali citizen. If publishing
such advertisement, even if there is no basis for the appointment of
 Nepalese citizens or the Nepali citizen cannot be elected, the
employer can request the application to the department for labor
permission to work for the work of foreign workers, including
evidence.
(4) In relation to the application received according to the sub-section (3)
and the evidence attached to it, the department will be able to give
labor permission to get foreign workers working in check-by-
observation.
(5) Employee, who has been allowed to work according to the sub-section
(4), employed the employee, has made the Nepalese citizens capable
of replacing foreign laborers in respect of respectively.
(6) Labor and other arrangements for labor permissions shall be as
prescribed.
Section 23 has provided that foreign citizens should take labor
approval to work in: (1) Any foreign workers will have to take labor
approval as specified for work in Nepal.
(2) In addition to the condition of not accepting labor acceptance under
any treaty or agreement with the Government of Nepal, even if
anything written in this law is written, foreign citizens working in Nepal
will have to take labor approval as specified.
Section 24 has provided that even if written permission is given in Section
22 and 23, the Department may, in its case, keep records of the record,
allowing foreign citizens to give labor permission.
Foreign executive or executive of the organization operating from foreign
aid and workers of the number according to the work assigned to such
establishment,
(A)Incoming technologies to repair any machine accessories or to
connect new technologies or to perform such a similar work for three
months or less periods.
Working time (Section 28): No employer shall employ laborers to work
more than eight hours a day and forty-eight hours a week. After working
for five hours continuously, workers will have to give a half-hour half time.
If the work should not be stopped and should continue to work
continuously, then workers will have to give such a rest time. Calculation
of rest of the given day as per sub-section (2) and (3) shall be calculated
during the work of sub-section (1).
More time should not be forced to work (Section 29): (1) Employee
should not force workers to work more than the time mentioned in section
28 (1).
Notwithstanding anything contained in sub-section (1), if the
nonperformance of a work is likely to cause an adverse effect on the life,
safety and health of any person or a serious loss or damage to the
employer, the concerned labour may, subject to sub-section (1) of Section
30, be caused to work overtime.
Provision relating to overtime: (1) if the employer determines whether
the worker is working under Article 28 for more than time, it will be done
for four hours a day and no more than twenty-four hours a week. (2) The
employer will be considered to have been working more time for the
work given by no employer instead of Article 42, instead of giving leave.
Additional salaries should be (Section 31): (1) The salary will be given
for the basic salary of the employee to work for regular work while
working for more time according to Article 30. Sub-section (2) has
provided that notwithstanding anything contained in sub-section (1),
nothing contained in this Section shall bar the collective agreement to
provide for certain benefits or the providing of such benefits as
mentioned in the employment contract in the case of the labour of
managerial level, in lieu of the additional remuneration receivable for an
overtime work.
Determining the time of working (Section 32): (1) Workforce will start
and the work termination of the work will be done in accordance with the
Employment Agreement as per the same as the employer determines.
(2) Other arrangements related to working time will be as prescribed.
Transportation arrangements: In employing a female labour where the
working hours begin after the sunset or before the sun rises, the employer
shall make necessary arrangements for transportation to and from the
workplace.
The chapter 8 has provided that provision relating remuneration,
whereas section 34 has provided that Each worker shall be entitled to
receive the remuneration and benefits from the date on which he or she
starts the work and the remuneration and benefits which a labour is
entitled to shall be so specified in the employment contract as not to be
less than that specified in this Act and the rules framed under this Act.
Under this chapter, Payment of remuneration, Entitlement to annual
increment in remuneration (grade), Entitlement to festival expense,
Prohibition on deduction of remuneration and Remuneration for reserve
period etc.
Leave & Holidays (Chapter 9) has provided;
There have been major changes in maternity leave, sick leave and
accumulation of leave in the New Labor Act. It also provides additional
categories of leave such as paternity leave which was not there in the
Previous Act.
Provisions on Leave and Terms and Conditions
Holiday
Sec. 40 Weekly Off 1 day every week
Sec. 41 Public Holidays 13 days including international Labour day for
employees
14 days including International Women
Labour Day for female employees
Sec. 43 Home Leave 1 day for every 20 worked days
Sec. 44 Sick Leave Fully paid up to 12 days (Eligibility: on a
proportional basis for those employees who
have not completed 1 year of service.
Sec. 45 Maternity Leave Up to 14 weeks, fully pain for 60 days
Sec. 45(7) Paternity Leave Up to 15 days, fully paid
Sec. 48 Mourning Leave 13 days
Special Leave No
Sec. 49 Accumulation Home Leave: 90 days & Sick Leave: 45 days
Excess Accumulation: encashed every year
Section 51 has provided that the leave is not right: All leaves except the
sick leave, mourning leave and maternity leave which the labour is
entitled to pursuant to this Chapter are only facilities and cannot be
claimed as a matter of right. In the case of leaves other than that
mentioned in sub-section (1), the employer may, for the reason to be
specified, refuse, withhold, deduct or alter the time of the approved
leave, on the basis of the need of the work at the workplace.
Terminal Benefits
There have also been major changes in the terminal benefit provided to
the employees such that the benefits are provided to each laborers
irrespective of length of service or nature of employment. The Previous
Labor Act provided the terminal benefits to the permanent employee and
for certain benefits such as gratuity the employee should have completed
a certain year of services. The eligibility criteria have been removed by
the New Labor Act. There have also been changes in the benefits such as
rate of gratuity and leave encashment etc. The benefits have been
compared in the following table.
Provisions & Legal ground on Labour Act
Section
Sec. 52 Provident Contribution: 10% by employer and 10% by
employee of the basic remuneration of the concerned
employee.
Eligibility: permanent employee
Sec. 53 Gratuity Rate of Gratuity: 8.33% of basic remuneration
Time of Allocation: Every month (time of payment of
remuneration)
Eligibility: since the first day of employment
Leave Encashment Accumulation: Section 49
-Home Leave up to 90 days
-Sick Leave up to 45 days
Encashment -at the time of discontinuation of service
at the rate of last drawn salary.
Housing Fund No
Festival Expenses Amount equivalent to the monthly remuneration once
a year. The employee not completing 1 year service
is entitled to the expenses on proportional basis.
Disability from insurance amount on the basis of degree of
Compensation disability
Compensation from insurance amount
against Injury
Death The Act provides that the nearest successor is entitled
Compensation to the amount of accident insurance.
Medical Insurance Coverage: at least one hundred thousand rupees (Rs.
100,000) per year for every worker
Premium: half by the employer and half by the
employee
Accident Insurance Coverage: at least seven hundred thousand rupees
(Rs. 700,000) for every worker
 Premium: fully paid by employer
Festival Expense, Medical Insurance and Accidental Insurance
(Section 37, 54 & 55) Although festival expenses, according to its
religion, culture and traditions, each worker will receive the basic salary
equivalent of one month, each year, as a festival expenditure. The act has
provided that every employee, from the date of starting employment,
shall be eligible to a festival expenses allowance equating to one month
salary and allowance. For employees engaged for less than one year,
their allowance shall be pro-rated.
Furthermore, the act now requires procuring medical insurance with
coverage of at least Rs.100,000 for each employee and the premium shall
be shared equally between each employer and employee. Furthermore,
an accidental insurance coverage of at least Rs. 700,000 must be procured
for all employees, the premium for which should be borne by the
employer.
Disciplinary Action for Misconduct (Section 131) As per the Labor Act,
suspension is not a disciplinary action. However, an employee can be
suspended for the period he/she is imprisoned or for up to three months
during the investigation for misconduct for which the service can be
terminated.
● Reprimanded/Warning
● Withholding Annual Grade of Remuneration or Promotion
● Suspension for up to 3 months Deduction of one day’s remuneration
● Termination
Reprimanded/Warning (Section 131 (1)
● Absent from the work without a leave sanctioned,
● To leave the workplace without obtaining permission of the
management,
● To appear late in work frequently without obtaining permission,
● To disobey any order given in relation to the work by the employer or
any employee superior in level,
● To commit such other misconduct as specified in the bye-law.
Deduction of one day’s remuneration (Section 131(2))
● not accepting the letter or notice of punishment,
● participation or compelling to participate in illegal strike,
● collectively delaying in the work,
● causing loss to the entity by reducing the production or service
recklessly or negligently,
● trying to take facilities by submitting false details,
● not using the security instruments provided by the employer,
● Other similar misconducts as prescribed in Bylaws.
Withholding Annual Grade of Remuneration or Promotion (Section
131(3))
● taking the entity's property outside the entity or allowing unauthorized
person to use such without the permission of the competent person,
● embezzlement with the entity's transactions,
● destroying the entity's property due to negligence or recklessness,
● preventing the supply of food and water in entity or obstructing
movement in the entity,
● abusing any items kept or arrangements made for interest, health and
safety of the workers or employees or causing damage to them
intentionally,
● Other misconducts as prescribed in Bylaws.
● Withholding Annual Grade of Remuneration or Promotion (Section
131(3))
● participation or compelling to participate in unauthorized or illegal
strike,
● striking without fulfilling the legal requirements,
● intentionally slowing down the work against the interests of the Entity
Termination upon Misconduct (Section 131(4))
● causing bodily harm or injury to Proprietor, Manager or Employee of
the entity,
● accepting or offering bribe,
● stealing property of anyone in the entity,
● embezzlement of property of the entity,
● causing damage to the entity's property knowingly
● absence from entity for more than a consecutive period of 30 days
without getting the leave approved
● causing damage to secrecy relating to special technology of the Entity,
settlement of disputes: Individual Claim (Section 113-115)
● Submit a written application to the employer,
● Employer should settle the dispute by negotiating with the employee
within 15 days of receipt of application,
● Such time period can be extended on mutual consent or agreement,
● Upon failure to settle the dispute or if the employer does not provide
notice for negotiation, an application should be filed to the Labor
Office.
● The Labor Office should settle the dispute through discussion between
the parties within 21 days. Upon failure to settle the dispute through
discussion, the Labor Office issues the decision within 15 days.
Settlement of Dispute: Collective Dispute Authority to Submit the
Collective Claim (Section 116):
● Collective Bargaining Committee in an entity with 10 or more
employees
● Group of representatives nominated by the authorized trade union
of the entity
● Group of representatives nominated in consensus by all trade
unions of the entity, where there is no authorized trade union
● Group of representatives supported by 60% or more employees by
signing, where there is no group as provided above.
Upon the receipt of the collective claim,
● the employer must provide a notice in writing within 7 days specifying
the place and time for discussion.
● If the employer does not call for discussion or if the dispute is not
settled through discussion within 21 days, application can be
submitted to the concerned Labor Office for mediation.
● The dispute should be settled within 30 days by mediation by the Labor
Office.
Arbitration (Section 119) Where cannot be settled through mediation,
the dispute it is referred to arbitration in following conditions:
● if an agreement is done between the collective bargaining committee
and employer to settle the collective dispute through arbitration or
● in case the collective dispute arises in an entity operating essential
services or
● in case the collective dispute arises in an entity operating in the Special
Economic Zone or
● at the time strike has been prohibited during the time of emergency as
per the Constitution.
The new Labor Act provides recognition to institutional level collective
bargaining which had been in practice before. The trade union
federations of the entrepreneurs, service sector, tea estate, travel,
tourism, labor suppliers, construction entrepreneurs or industries of
similar nature may from an institutional level present a collective
bargaining demand to the employers' federation.
Following arrangements may be done through Collective Agreement:
● To reduce the remuneration of the employee (Section 34(3))
● Arrangement for Interim Management during the transfer of ownership
(Section 14(2)) To agree on certain facilities in lieu of overtime
payment (Section 31(2))
● To determine facilities for which the employer may deduct the
remuneration (Section 38)
● To determine the grounds of transfer of employees (Section 109(1))
● Determination of rate of remuneration during the period of legal strike
or lock out (Section 127(3))
● To add the grounds of termination upon misconduct (Section 133(2)
● To determine the alternative option of retrenchment; and criteria and
terms of retrenchment (Section 145(3))
This act has provided the guarantee of service on section 139 and section
147 of the New Labor Act, it has increased the age of compulsory
retirement and can be retired after the age of 58 years.
The employee can be terminated after the expiry of the time period
provided in the employment agreement. The employee can be
terminated after the completion of the work specified in the employment
agreement. (Section 140)
The employment of worker may be terminated by resignation himself,
(Section 141)
The employment of a worker may be terminated by the employer if the
performance of the employee is found unsatisfactory in the performance
appraisal for three or more times. Section 142
On the ground of bad health-Section 143
The employer may terminate the employment of an employee upon the
recommendation of a medical practitioner if:
- employee is physically or mentally disabled or injured
- rendering him/her unable to work
requiring a long period for medical treatment affecting the work of the
entity.
Termination by Notice-Sec 144:
The employee or employer terminating the employment should provide
the notice except in the situation of termination by dismissal. There is a
provision for notice i.e., if working period up to 4 weeks' notice will be
provided before 1 day, working period 4 weeks to 1 year notice will be
provided before 1 week and working period Exceeding 1 year notice will
be provided before 30 days.
As per sec 180 of the act, it is not applicable to the following entities:
● Civil Service
● Nepal Army, Nepal Police, Armed Police force.
● Entities incorporated under other prevailing laws or situated in the
Special economic Zones to the extent separate provisions are
provided.
Working journalists, unless specifically provided in the Contract
- Labor Act, 2048
- Industrial Trainee Training Act, 2039
- Retirement Fund Act, 2049