Nepal PEO & Employer of Record Services
Global PEO Services (GPS) helps companies hire employees in Nepal without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.
When hiring employees in Nepal, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with Nepal labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in Nepal. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
Nepal - Country Overview
Trading is a major driving factor for Nepal’s economy, which contributes nearly 50% to the GDP. Other major sectors include agriculture and other miscellaneous industries. Major exports include carpets, apparel, hemp, jute products, leather goods, and grains. The country has witnessed high industry growth, along with record growth in construction and hydropower capacity in recent years.
Federal Democratic Republic
Pokhara, Patan, Biratnagar, Birgunj
Employment Contracts in Nepal
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.
Working Hours in Nepal
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.
Work done beyond normal work hours is considered overtime and is paid at a 50% premium over the regular pay.
Employee Leave in Nepal
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
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.
Pregnant employees are entitled to 52 days’ maternity leave only twice during their employment.
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.
Employees are entitled to 13 days’ obsequies leave according to their family custom after completing 1 year of employment.
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.
Employee Benefits in Nepal
- 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):
An old-age allowance of 2,000 rupees is paid to employees. Members of the Chepang, Rautes, and other ethnic groups are paid 1,000 rupees.
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 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.