Nepal

Overview

Nepal’s economy which grew 7.5% in 2017 is largely driven by services which contribute nearly 50% to the GDP while other major sectors include agriculture which contributes approximately 35% and other industries that contribute about 15%. Major exports include carpets, apparel, hemp, jute goods, leather goods, and grains. The country has witnessed high industry growth, along with record growth in construction and hydropower capacity in recent years.

Currency: Nepalese Rupee

Principal language: Nepali, English

Government: Federal Democratic Republic

Capital City: Kathmandu

Major Cities: Pokhara, Patan, Biratnagar, Birgunj

Employment Contracts

The following are the different types of employment contracts that are prevalent in Nepal:

  • Verbal Agreements: Verbal agreements contain minimum employment requirements and compensation and are common in agriculture, construction, domestic work, micro-enterprises, and retail shops.
  • Formal Contracts: Formal contracts contain details such as employment terms and conditions, compensation, and expiry date. They are generally executed in medium and large private organizations who hire professionals from other countries.
  • Appointment Letters: Appointment letters contain details such as employment terms and conditions and are provided to permanent employees working in multinational companies and public sector companies.
  • Probation Employment: Employees working on a probationary basis are provided verbal or written employment contracts. Probation employment generally applies to low skilled workers.

Work/Time Regulations

The regular work schedule comprises 8 hours per day and 48 hours per week. Employees cannot be asked to work for more than 5 hours continuously and must be given a 30-minute break in a day.

Overtime
Work done beyond normal work hours is considered overtime and is paid at a 50% premium over the regular pay.

Leave

Holidays
Public holiday dates change every year based on Nepal’s lunar calendar. The major public holidays are as follows:

  • Prithvi Narayan Shah’s Birthday - 10 January
  • Basanta Panchami (start of Spring) - January/February
  • Maha Shivaratri (Shiva’s Birthday) - February/March
  • Bisket Jatra (Nepali New Year) - 14 April
  • Janai Purnima - July/August
  • Teej (Festival of Women) - August/September
  • Constitution Day - 19 September
  • Indra Jatra (Indra Festival) - September
  • Dasain - September/October
  • Tihar (Diwali) - October/November

Sick Leave
Employees are entitled to 15 days’ sick leave at 50% of their regular pay after completing 1 year of employment. A certificate issued by a medical practitioner recognized by the government must be submitted for sick leave extending 3 days or more.

Maternity Leave
Pregnant employees are entitled to 52 days’ maternity leave only twice during their employment.

Home Leave
Employees are entitled to 1 day of home leave for every 20 days of work and can be accumulated up to 60 days. Work days include public holidays, weekly holidays, and other paid holidays.

Obsequies Leave
Employees are entitled to 13 days’ obsequies leave according to their family custom after completing 1 year of employment.

Special Leave
Employees are entitled to 30 days’ unpaid special leave in a year in special circumstances. Special leave cannot be more than 6 months during the entire employment period.

Benefits

Pension and Social Security

Old-Age Benefits

  • Old-age Benefit (Provident Fund):
    The old-age benefit includes employee and employer contributions and 6.75% annual interest. A yearly bonus based on the provident fund’s operating profit is provided to each participant. Employees can also take a loan against provident fund with its maximum amount and borrowing period based on the nature of the loan. The interest rate is based on the provident fund’s annual income.
  • Old-age Allowance (Social Assistance):
    Old-age allowance of 2,000 rupees is paid to employees while members of the Chepang, Rautes, and other ethnic groups.

Permanent Disability Benefits

  • Personal Accident Insurance (Provident Fund):
    Employees with total disability are given a consolidated amount of 125,000 rupees while those with partial disability are paid 10,000 rupees to 25,000 rupees based on the assessed degree of disability.
  • Disability Pension (Social Assistance):
    Disability pension of 2,000 rupees each month is provided for total disability while 300 rupees are paid for partial disability.

Survivor Benefits

  • Survivor Benefit (Provident Fund):
    Survivors of the deceased are entitled to a lump sum of:
    • 150,000 rupees in case of civil servants
    • 40,000 rupees to 75,000 rupees in case of military and police personnel
    • The survivor benefit is divided equally if there are 2 or more survivors.
  • Funeral Grant (Provident Fund):
    A grant of 30,000 rupees is paid for funeral expenses.
  • Personal Accident Insurance (Provident Fund):
    A lump sum equal to 125,000 rupees is paid in case of personal accident.
  • Survivor Allowance (Social Assistance):
    Survivor allowance of 2,000 rupees is paid each month to widows aged 60 or more while 300 rupees are paid for each child up to a maximum of 2 children.

How GPS can Help

With our Global PEO/Employer of Record services, companies can expand into Nepal and hire their employees without having to establish a branch office or subsidiary in Nepal.

  • Your candidate is hired via our Nepal PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
  • Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Nepal laws.
  • Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
  • With no contractor risks, pass on the compliance burden to Global PEO Services.

Spin Off/M&A Support

  • Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.

24/7 Support in 100+ Countries

  • Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
  • We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.

Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and managements. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcounts.

Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Lean more about our end-to-end international expansion services.

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