FOR CAP III & CA MEMBERSHIP EXAMINATION: LABOR ACT

1. INAPPLICABILITY
a) Nepal army, Nepal police, armed police force and national research
b) Civil service
c) Employment conditions and benefits in relation to the service established under special law (Eg. Nepal Chartered Accountants Act CA Articles)
d) Employment conditions and benefits in relation to the service established under special economic zone
e) Employees governed by Working Journalist Act, 2051
Prime Commercial Bank Ltd, Vs Labor Court, Anamnagar: Labor Act is applicable to Bank and Financial Institutions also.
2. Basic Salary means basic salary which a worker is entitled to receive for employment + Grade
(If Basic salary is not determined in the contract, minimum wage fixed for the workers as per this act shall be regarded as basic.
For calculation: Basic remuneration of a regular labor shall be equivalent to 60% of last 3 months average gross salary, however, it shall not be
less than the minimum remuneration fixed by the GoN.
Where grade means salary increment entitled to receive after 1 year of employment period
Grade = Any worker who has completed one year of employment service shall be entitled to receive an amount equivalent to, at least, half a day
salary based on monthly basic salary every year as annual salary increment (grade).
3. Entity/Enterprise means any company or private firm or partnership firm or cooperative organization or association or any other organization
established or incorporated or formed or operated pursuant to the prevailing laws with an objective to carry on any industry or occupation or
service with or without any motive to make profit.
4. Employment period means the period during which a worker is employed with an employer and shall include the following periods also:
a) lay off period;
b) period of leave with full remuneration;
c) period of leave taken without remuneration for maternity or maternity care;
d) period of leave taken for medical treatment in case of accident during or while working for the employer.
5. This Act shall act as minimum standard for workers and on matters relating to the workers.
6. A person shall not directly or indirectly employ any person in bonded (forced) Labor.
However, the following act or service carried out by workers shall not constitute bonded (forced) Labor:
a) any work or service to be performed as civil obligations when nation requires;
b) any work or service required to be performed by any person as a consequence of punishment given by a decision or an order of a court;
c) any work or service required to be performed in the interest of a community as its member.

7. Employment of children (Below 14 years) in any work by any person against the prevailing laws is strictly prohibited.

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8. No employer shall discriminate any worker on the ground of religion, color, sex, caste, tribe, origin, language, ideological conviction or any
other similar ground.
However, the following acts shall not be considered discrimination:
a) to give preference to any person for employment on the basis of inherent requirement of a job or service;
b) to engage a female worker who is pregnant, in any work or service which is easier and suitable to her condition without any reduction in the
remuneration and benefits; or
c) to give preference to any physically challenged worker in any job responsibility suitable to his/her physical condition.

9. Workers must not be discriminated in the payment of remuneration for equal value of work on the basis of their sex. However, the nature of the
related work, the time required for the performance of the work, Labor, skill and productivity shall be duly considered in determining whether the
work is of equal value or not.
10. Compulsory Retirement
Any worker in regular employment, after completing the age of 58, shall retire compulsorily. (Exception: Special Nature Work.)

11. CLASSIFICATION OF EMPLOYMENT (Section 10)

Types of employment Person Hired for

Regular Employment The work or service other than work based, time bound, casual or piece rate employment.
Work Based Employment Carrying out specific work or rendering specific service.
Time bound Employment Carrying out work or rendering service for definite period.
Casual Employment Carrying out the work or rendering service for seven or less days in a month.
Part –time Employment In such a manner that he works for 35 hours or less in a week.

12. No employer shall employ any worker without entering into employment contract which shall state the remuneration, benefits, employment
conditions and other matters. However, it shall not be necessary to enter into written employment contract for casual employment.
13. Where an employer executes an employment contract with a worker or employs a worker verbally or engages a worker on casual employment, an
employment relationship between the employer and the worker shall be deemed to have been formed from the date or time such worker is employed
or the service is provided by such worker.
14. Probation (k/LIf0fsfn): Any employer when executing an employment contract with a worker may keep him/her in probation for a period of 6
months and the contract with such worker may be terminated if his/her work is not satisfactory but if the employment contract with such worker
is not terminated, the person shall be deemed to be hired automatically after the ending of the probation period of such worker.

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15. LAY OFF PERIOD (Section 15):

i. When special circumstances like shortage of electricity, water, raw material or lack of fund or inability to reach the workplace or work or
operate the workplace because of any situation beyond control, etc. (Example: COVID 19 Pandemic) arise, employer may stop the work and
lay off the workers. During the lay off period, the employment relationship between the employer and workers shall continue.
ii. How to lay off?
No. of days Lay off done
Up to 15 days On own account
More than 15 days Consult the authorized trade union or Labor management committee.
iii. Workers, who are laid off pursuant to this Act, shall be paid 50 % of their remuneration which they are entitled to until the work is resumed
by the employer.
iv. Provided that such workers shall not be required to give attendance in the workplace during the layoff period unless the requirement of
attendance is mentioned in the notice issued relating to the layoff.

16. Seasonal enterprises and keeping of workers in reserve (section 89):

i. Seasonal Enterprise means any enterprise:
• which can be operated in a particular season only or
• which cannot be operated for more than 180 days in a year.
Examples: Bricks industry, Summer camps, etc.
ii. The workers of any seasonal enterprise shall be kept in reserve during the period of closure in off-season.
iii. During reserve in off season, the workers in regular employment shall be paid at least 25 % of their remunerations which they are entitled to.

17. Working Hours

i. Where an employment contract has provision on starting and finishing time of working hours for workers, it shall be followed accordingly or
in its absence, it shall be as determined by the employer.
ii. Working hours = Maximum 8 hours a day & 48 hours a week with half hour rest after five hours of continuous work
18. Overtime
i. No worker shall be compelled to work more than the hours prescribed however the workers may be made to work overtime if:
• the non-completion of the work may have an adverse effect on the life, health and safety of any person or
• serious harm or loss may be caused to the employer or any other person or workers.
ii. Over time = Maximum 4 hours a day & 24 hours a week.
iii. The work performed by any worker without any arrangement for substitute leave in lieu (Satta bida) shall be deemed to be overtime work.
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iv. When requiring any worker to work overtime, the worker shall be paid remuneration at a rate of 1.5 times of the basic salary that the worker receives during
regular hours of work.

19. Part time employment

i. An employer may employ any worker for part time only.
ii. Any worker working full time shall not be employed in part time work without his/her prior approval.
iii. Remuneration of part time workers shall be fixed, either:
• on the basis of working hours or
• on the basis of the employment contract entered between the two parties.
iv. When determining the remuneration of the part time workers, the monthly remuneration of a worker working full time in the same position and same nature
of work shall be taken as the basis for calculation.
v. Where any part time worker employed is required to work overtime, such worker shall be paid remuneration at the rate of 1.5 times of the remuneration
he/she is entitled to.
vi. Part time workers shall not be restricted from working elsewhere for others.
vii. In relation to a part time worker working for more than one employer, each employer shall, on the basis of basic salary the worker is entitled to receive,
make contribution for gratuity, provident fund and other related social security benefits.

20. Remuneration and benefits

i. Every worker shall be entitled to receive the remuneration and benefits from the date s/he commences the work, the amount as specified in an employment
contract ensuring that they are not lesser than what is prescribed in the Act and the rules made under this Act.
ii. When paying the remuneration to the workers, if the time is specified in the employment contract, it shall be followed accordingly or in its absence, it shall
be paid at the time determined by the employer. However, the interval between the dates for payment shall not be more than one month.
iii. Festival Allowance: Every worker shall be entitled to receive an amount equivalent to one-month basic salary in a year as festival allowance for the
celebration of any festival based on his/her own religion, culture and tradition. And if any worker has not completed one year of employment service on the
day such allowance is distributed he shall be entitled to receive such allowance in proportion to the length of period s/he has worked.
21. Deduction of remuneration
Remuneration shall never be deducted except (Generally Max 33% of monthly remuneration) under following circumstances:
i. any tax or fees levied under the existing laws;
ii. any amount required to be contributed for provident fund and insurance or any other social security benefits;
iii. any amount to be deducted pursuant to the order of judicial or quasi-judicial body or order of the arbitrator or decision;
iv. an amount for any specified service or facility provided by the employer to the worker;
v. wage for absenteeism;
vi. amount equivalent to the book value of the goods lost or loss in cash or kind caused willfully or negligently or the amount equivalent to the production
cost in relation to the manufactured goods;

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vii. amount as specified for deduction from remuneration in the collective agreement;
viii. membership fees charged by trade unions; and
ix. loan or payment made in advance to the worker by employer.
x. Suspension
a. Suspension due to police custody:
Reason Worker himself Complaint by employer
Suspension Automatically Automatically
Remuneration No remuneration for suspension period No remuneration for suspension period
What if proved N. A. If the worker imprisoned due to complaint filed by employer is proved innocent,
innocent? he shall be entitled to receive the full remuneration for the period.
b. Suspension due to other cases than police custody:
Ø Reasons:
• If it is found inappropriate to continue the employment or
• if there is a possibility of destroying the evidence relating to the misconduct if engaged in the work continuously or
• If there is a possibility of creating obstruction in the investigation by the worker for whom the punishment has been proposed,
Ø Suspension period: (3 months + 1 months extension)
Ø Remuneration: half remuneration during the period of suspension
Ø What if proved innocent? All the remuneration along increment in salary if any, after deducting the amount of remuneration he/she has already
received during the period of suspension.
22. Trainees Vs Apprentices:
Basis TRAINEES: k|lzIffyL{{ APPRENTICES: tflndL >lds
Nature Hired as per approved syllabus of an educational institution On the job training.
by signing an agreement with such educational institution
Workers as per NO YES
this Act? (However, the person hired in contravention to the approved
syllabus shall be deemed to be a worker under the regular
employment relationship.)
Period As per syllabus Max 1 year
(However, if a specific training period is prescribed for a specific nature
of work under the prevailing law or specific training period is required,
an apprentice may be accordingly employed for such prescribed period.)
Working hours Maximum 8 hours a day and maximum 48 hours a week. Maximum 8 hours a day and maximum 48 hours a week.

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Benefits N. A. Apprentice shall be provided with, at the minimum, the benefits

equivalent to the minimum wage and other social security benefits
including sick leave, gratuity, provident fund and insurance.
Health and Where a trainee meets with an accident during the work, Applicable
Safety unless otherwise agreed between the enterprise and the (As per Labor Act itself)
measures educational institution, the enterprise shall provide medical
treatment and compensation, which a worker of such
enterprise is normally entitled to under this Act, if injured.
Continuation N. A. The employer shall not be under compulsion to continue the
employment of the apprentice after the completion of the training
period.
Applicability In case of matters other than those provided above, the Labor Act
agreement between the enterprise and the educational
institution shall be applicable.

23. Employment of foreign nationals

i. No employer shall employ any foreign national in any enterprise without acquiring work permit from the Department.
ii. The employer, if unable to acquire skilled workers from among Nepali citizens as required, may employ foreign workers by staying within the
scope of this Act.
iii. Before employing foreign workers, the employer, in order to acquire skilled workers from among the Nepali citizens, shall publish an
advertisement in national daily newspapers.
iv. On failure to receive applications from Nepali citizens as specified in the advertisement or Nepali citizens could not be selected, the employer
may give an application along with the supporting documents for work permits to the Department for hiring foreign workers.
(Advertisement is not required to hire foreign nationals in technical or expert positions under an investment agreement entered into with any
ministry, department, investment board of the Nepal Government and the associations, organizations or other competent entities having full or
partial ownership of Nepal Government by taking approval of Nepal Government or line ministry.)
v. Any foreign national seeking to work in Nepal is required to take work permit as prescribed for which he shall make application to Nepalese
embassy and Labor Department. However, such work permit is exempted under diplomatic immunity provision or any treaty or agreement
entered with the Government of Nepal.
vi. Upon receipt of an application, the Department may issue work permits for the appointment of foreign workers, if the application and other
supportive documents are found reasonable upon examination.
vii. How long?
Technical experts 5 years
Others 3 years
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Extension:
Further 2 years by the Department of Labor with the approval of the Ministry of Labor in case of foreign nationals who has made notable contribution:
a) in fields like country’s educational, social, scientific, technical, NGO, or
b) for national and public welfare in special circumstances
Amendment dated:
2080 Shrawan 25

viii. The employer employing foreign workers shall arrange for the gradual replacement of foreign workers by Nepali workers.
ix. Any employer, when entering into an employment contract with a foreign worker and providing information relating to his/her job
responsibilities and other employment terms and benefits, shall use English or any other language, which the foreign worker understands.
x. Any foreign worker with a work permit acquired pursuant to this chapter shall be permitted to repatriate the remuneration earned by working in
Nepal in any convertible foreign currency to his/her country.

24. LEAVES: not a matter of right (Except sick leave, mourning leave and maternity leave)
Weekly holiday 1 day in each week
Public holiday • 13 days
• 14 days including International Women Labor Day for female employees
Substitute leave • For the workers put to work on public holidays or week offs
in lieu • Any worker, if required to work in the weekly or public holiday, shall be provided substitute leave within 21 days from the date
of engagement in such work.
Home leave • 1 day for every 20 days worked
• Workers employed in educational institutions or workers who get summer or winter holidays shall not be entitled to take home
leave.
• Provided that the number of such holidays is lesser than the total number of home leave the workers are entitled to, such workers
shall be entitled to take shortfall number of holidays accordingly.
Sick leave • Fully paid up to 12 days

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• Eligibility: on a proportional basis for those employees who has not completed 1 year of service
• Any worker seeking more than three days of sick leave continuously may require to submit a medical certificate issued by a
certified physician.
• Where there is a need to take sick leave because of sudden illness, such worker must inform the employer or the person specified
by the employer immediately through available means of means of communication.
Maternity leave • Up to 14 weeks, fully paid for 60 days
• Compulsory maternity leaves from 2 weeks before the expected date of delivery and up to at least 6 weeks after delivery
• Where a female worker in a state of seven months’ pregnancy or more than seven months gives birth to a deceased child or
suffers miscarriage, the provision relating maternity leave shall apply.
• Where a mother dies before the completion of sixty days from the day her child is born, the worker whose wife has died may
take paid maternity care leave for the remaining number of days from the employer for whom he is working.
• Paternity leave: up to 15 days, fully paid
Mourning / Where a husband or wife dies or any worker himself is required to mourn pursuant to his core religion or a married female worker
Obsequies Leave is required to mourn on the death of her father/mother or father in law/mother in law, such worker shall be entitled to receive 13 days
mourning leave, fully paid.
Accumulation of • Home leave: 90 days
leave • Sick leave: 45 days

25. Social Security Benefits:

Particulars PROVIDENT GRATUITY INSURANCE
FUND MEDICAL ACCIDENTAL
Amount: - - Min 1,00,000.00 per Min 7,00,000.00 per year for every worker
year for every worker
Contribution: 10% by employee & 8.33% of basic salary Premium half-half by Premium 100% by employer only
10% by employer by employer employer & employee
Eligibility: From the first day of From the first day of - • If a worker dies or is completely incapacitated mentally or
employment employment physically as a result of the accident, such worker or
his/her legal heir shall receive the 100 % of amount of the
insured sum.
• In case, a worker is injured or incapacitated in an accident,
compensation shall be provided pursuant to the percentage
prescribed in proportion to the injury or incapacity caused.

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Deposit to: Social Security Fund Social Security Fund - -

If unable to Pay regular Pay regular - -
deposit: remuneration + 10% remuneration +
to the employee 8.33% to the
employee
Mandatory provision for all employees
Contributions to P.F., retirement funds or any other similar If employer has not subscribed insurance policy for the workers as required or as a
funds to be transferred to Social Security Fund result of serious mistake or negligence, the sum insured could not be received by the
concerned worker or dependent legal heir, such employer shall pay an amount
equivalent to the sum insured to concerned worker or the dependent legal heir.
Any employer or worker making contribution in the social security scheme for the provident fund, gratuity and medical insurance benefits pursuant to the
laws relating to Social Security Fund shall not, to that extent, be required to make additional contribution or subscribe insurance as above.

26. Labor Service Provider

Security Guards
(Mandip Thapa: Employee)
NIC Asia Bank
Garud Securities Pvt. Ltd.
(Main Employer)
(Labor Service Provider)
Monthly payment as per contract

i. Any employer, while hiring workers through Labor provider, shall employ them in any work other than the core work of such business
or service.
Example: Security guards, sanitation, garden management, office assistants (messenger, tea & snacks preparer, etc.), drivers, conductors,
load and unload, storage management, repairs, maintenance, plumbers, electricians, masons, house maids, care givers, baby sitters, etc.
ii. When inviting or submitting any proposal or tender for the purpose of supplying or causing to supply workers through any Labor provider
or entering into an agreement for the supply of workers, the remuneration and other employment benefits of the workers to be supplied
must not be lesser than those prescribed in this Act.
iii. Any company registered pursuant to the prevailing law, interested to supply workers shall be required to take license pursuant to this
Act.
(Provided that a company shall not be permitted to operate as a Labor provider for more than two areas of services or works.)
iv. The Department or Office, if satisfied with the application after examination, shall take the deposit or bank guarantee as prescribed and
issue a license to such applicant in a specified format along with conditions within 15 days from the date of receipt of the application.

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v. Labor Provider shall:

a) Follow this act
b) Provide remuneration & other benefits
c) Apply Occupational safety & health provisions
vi. The Department or Office responsible may cancel the license of Labor provider:
a) if a Labor provider files a written application for the cancellation of the license;
b) in spite of the fines imposed, if the Labor provider continues to violate the conditions specified and directions issued pursuant to
this Act or the rules made under this Act.
vii. Labor provider whose license has been cancelled shall not be considered free from any financial liability it has towards the government
or any worker on the ground that the license has been cancelled.
viii. The Labor provider, on cancellation of the license, shall pay the amount of remuneration and other benefits to the concerned workers
within 15 days from the date of such cancellation. If not paid the concerned Department or Office responsible for the issuance of license
shall arrange the payment of such amount from the deposit or bank guarantee given by such Labor provider at the time of acquiring the
license (Pro rata payment if bank guarantee insufficient or form other properties also, if found).
ix. Main Employer shall:
a) Follow agreement made with labor provider
b) Ensure remuneration is not lesser than prescribed in this act
c) Confirm whether regular remuneration is being paid or not
d) Request to pay remuneration if not paid regularly
e) Inform to department if not paid
f) Arrange for occupational safety & health
g) Increments, if any also to be paid

27. Labor Audit

• Every enterprise, after conducting a Labor audit in relation to the compliance of the Act, rules and any other prevailing law as prescribed,
shall prepare a report accordingly.
• The Labor audit prepared needs to be submitted to the Office or inspector if asked for during inspection carried out under this Chapter or
if demanded, at any other time.
• Employer is required to conduct the labor audit annually by the end of the month of Poush (mid-January).
• Authority to conduct labor audit: managerial level employee of the entity, or any other entity or individual associated in the field of labor.
• False details in the labor audit report is subject to fine up to NRs. 20,000.

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• Submission of Labor Audit Report: Report should be submitted to:

a) Labor Relation Committee,
b) Nepal Rastra Bank by banking and financial institutions,
c) Insurance Board by insurance companies,
d) Such authority providing license for approval for other entities.

28. Duties of employers and workers

Duties of
Employers towards workers Manufacturers, importers and suppliers Workers
• ensure safe environment by making • to manufacture, import or supply equipment, • not to perform any act intentionally or
appropriate safety and health provisions at the products or material found suitable from the carelessly that may cause adverse
workplace; examination for the operation and use in the effect or risk on his/her own safety
• make necessary provision for the use, workplace from the viewpoint of safety and health; and health or of others;
operation, storing or shifting of chemical, • to determine suitable method or process of using or • provide necessary cooperation to the
physical or bio-degradable material or operating such equipment, products or material so employer or any other concerned
equipment so that the safety and health of the that the safety and health of the concerned workers is person for the fulfilment of the duties
workers are not affected adversely; not affected adversely; mentioned in this Chapter;
• provide necessary information, notice or • to identify possible risks of causing adverse effect on • acquire information about the
training relating to the safety and health to the the safety and health of the workers by the use of such manual, instruction or other matters
workers; equipment, products or material; prepared for the operation or use of
• provide necessary training and information in • to conduct necessary research, experiment or test to the equipment, products or material
an appropriate language to the workers in eliminate or minimize the risks identified pursuant to safely and cautiously in the
relation to the equipment and use or operation sub section (c); workplace;
of chemical, physical or biodegradable Provided that if a research, an experiment or a test • operate or use the workplace,
material for the work; conducted earlier by any other person may be relied equipment or products or material
• make proper arrangement for the safe entry upon, such research, experiment or test shall be given safely and cautiously by following
and exit from the workplace; due recognition. the manual, instruction or other
• provide necessary personal safety equipment • to prepare a manual in order to provide all the matters prepared for the operation or
to the workers; and information relating to necessary steps required to be use of such workplace, equipment,
• make other provisions as prescribed. taken during the operation and use of equipment, products or material; and
products or material from the viewpoint of safety and • use the personal safety equipment
health. provided by the employer
compulsorily.

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• Where there is a possibility of causing injury or risk or serious effect on the health of the worker or others or causing loss or damage to the equipment or
product or material if the work is not stopped immediately, the worker involved in such work shall inform the employer or any responsible person.
• The employer shall make necessary arrangement to prevent contagious disease in the workplace. Any worker suffering from any communicable disease
may be prohibited from attending the work during the period of medical treatment.
• During the inspection or on the basis of the information received through any other source, if the Office believes that an immediate danger or risk has
arisen in a workplace or there is a possibility of risk on the safety and health of the worker/s or any other person/s, the Office may give direction to the
employer to stop the work immediately in such workplace.
• Where any accident occurs or any person is injured or dies in the accident or suffers from any occupational disease, the employer shall inform the Office
about it immediately.
• Where any worker contracts any specified occupational disease while working in any enterprise, the prescribed amount of medical expense for the
treatment of such disease or compensation, if such disease is incurable, shall be provided to such worker by the enterprise.

29. Safety and Health Committee

Every employer, having 20 or more workers in any enterprise, shall constitute a Safety and Health Committee comprising of representatives of the workers
also in the manner as prescribed whose functions, duties and powers shall be as follows:
a) to give advice to the employer regularly on the kind of arrangement to be made on the safety and health of the workers and its effectiveness;
b) to evaluate the arrangement made on the safety and health in the workplace and draw the attention of the employer for making it more effective;
c) in spite of the act of drawing attention, the work is not done, the office shall be informed about it accordingly;
d) to review the Safety and Health Policy formulated; and
e) to perform other functions as prescribed.

30. Unfair Labor Practice:

By Employer: By trade unions:
a) act of not complying with the laws related to Labor or cause others to a) act of exerting pressure or threatening any worker to be or not to be a
do so; member of a union;
b) act prohibiting the use of any of the rights conferred by the Labor law; b) act of collecting donation or any other assistance forcibly;
c) intentional act of fabricating fake evidence in order to take disciplinary c) act of picketing or surrounding the private residence or enterprise of the
action against any worker; employer other than the concerned workplace or act of causing to do
d) any act done with an intention to give trouble or harass a worker; so;
e) act of intervention or cause to intervene in the activities relating to d) act of assaulting the employer or his / her representatives or any worker
formation, operation and administrative functions of the trade union; or committing any unlawful activity for the fulfilment of their demands
f) act of continuing lock-out which has been declared unlawful; or act of causing to do so;
g) act of assaulting or cause to assault any worker; e) act of damaging the property of the employer intentionally.

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h) act of provocation or inciting act with an intention to create animosity

or rift among the workers;

31. Powers, functions and duties of Labor Office

a) to carry out inspection and find out whether minimum wage fixed pursuant to this Act, allowances and benefits entitled to receive pursuant to collective
agreement or rights given to the employers and trade unions by the prevailing laws are enforced or not;
b) to conduct regular inspection to find out whether this Act or rules made under this Act are being effectively enforced or not and give necessary direction
to the concerned party for their enforcement;
c) to conduct trainings on standards or codes of conduct as formulated pursuant to this Act or any other prevailing laws and carry out regular inspection
to find out whether they are enforced or not;
d) to provide necessary technical support to the employers and trade unions if they seek such support for conducting necessary trainings;
e) to give direction to employers to produce OSH standards or employee rules or other related documents;
f) to enforce collective bargaining agreement entered into between employers and workers or decision of the arbitrator;
g) to inspect and find out whether children are employed or not and immediately rescue the children if found employed and take action against such
employer accordingly;
h) to carry out inspection to find out whether the employer has implemented the provisions relating to OSH prescribed in the Chapter 12 of this Act for
any enterprise or workplace or not;
i) observe and inspect the equipment installed in the workplace, tools, apparatus or objects or material and examine whether such equipment, tools,
apparatus or objects or material is of prescribed standard or not and if the test is required, collect samples;
j) to conduct or cause to conduct periodic or immediate inspection in the enterprise or workplace;
k) to give an order to the concerned enterprise or the officers of such enterprise to produce electronic record including register or written documents and
if they are not provided, take control of the original register or written documents by entering into such enterprise;
l) to collect required information from the employer, managers and other workers of the enterprise;
m) if necessary, seek explanation from the employer, managers or other workers by summoning them to the office;
n) to give necessary direction for rectification in case any information is received during the inspection of the workplace or enterprise or from any other
source in relation to any activity performed in violation of the Act or the rules made under this Act by the employer or worker or trade union;
o) to keep the record of application or documents or any notice received from any other source in the Office or give evidence of the registration of such
application or documents or keep the record of the decision, order or compromise or give certified copy of any document if requested;
p) to carry any other functions.

32. Duties of inspectors

a) to enter any enterprise or workplace only after showing identity card;
b) to provide receipt while taking control or seizing any register, written documents, records or objects;
c) to keep the identity of any complainant confidential if s/he request to do so;

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d) to fulfil duties without creating any obstruction in the work of the enterprise or workplace;
e) to keep all notices, information and data acquired during inspection confidential unless they need to be disclosed under the requirement of the law.

33. Central Labor Advisory Council & its Functions, Duties And Powers
For the purpose of giving advice on Labor matters to the Government of Nepal
Formation: Functions, Duties and Powers:
Minister or Minister of State of Labor and Chairpers a) to provide advice and suggestions in relation to Labor policies to the
Employment on Government of Nepal;
Secretary, Ministry of Finance Member b) to provide necessary advice and suggestions to the Government of Nepal
Secretary, Ministry of Labor and Member for appropriate improvement in the laws relating to Labor;
Employment c) to provide suggestions to the Government of Nepal in relation to the
Secretary, Ministry of Physical Member ratification or implementation of any international convention concerned
Infrastructure and Transportation with Labor of which Nepal is a party;
Secretary, Ministry of Agriculture Member d) to provide suggestions to the Government of Nepal in relation to the
Secretary, Ministry of Industry Member report concerning any international convention on Labor which it is
Secretary, Ministry of Health Member required to submit;
Director General, Department of Labor Member e) to prepare standards on Occupational Safety and Health and recommend
Executive Director, Social Security Fund Member it to the Government of Nepal;
Executive Director, Vocational Skill Member f) to prepare code of conduct on fair Labor practice and recommend it to the
Development Training Centre Government of Nepal;
Minimum of five persons including two Member g) to provide suggestions in relation to the formulation of policies
women from among employers nominated concerning vocational skill development training;
as prescribed by the Ministry h) to set up necessary coordination with the Government of Nepal,
Minimum of five persons including two Member employers and trade unions for the purpose of establishing industrial
women from among trade union federations peace, sound industrial relation and minimization of disputes;
nominated as prescribed by the Ministry i) to set up necessary coordination with the Government of Nepal,
employers and trade unions for the purpose of employment and
Joint Secretary, (Responsible for the Member
productivity growth;
concerned Division) Ministry of Labor and Secretary
j) to frame and issue directive on collective bargaining as required.
Employment

34. Meetings, Quorum And Decisions (Section 105) Compare And Study

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35. Fixation of Minimum Wages

• The Ministry, at the recommendation of Minimum Wage Fixation Committee, shall fix the minimum wage for workers every two years and shall be
published in the Nepal Gazette which shall be effective from the 1st of new financial year.
• The Minimum Wage Fixation Committee shall, in every two years, commence the process of reviewing the minimum wage from the month of Baisakh.
• If any agreement is entered between a trade union and employer provides the effective date for the implementation of the minimum wage, it shall be
followed accordingly.

Minimum Remuneration/ Wages Applicable in Nepal from 2080-04-01

Other than Tea Estate
Basic (Rs.) Dearness Allowances (Rs.) Total (Rs.)
Monthly 10,820.00 6,840.00 17,300.00
Daily 418.00 250.00 668.00
Hourly 56.00 33.00 89.00
Note: In addition to the Minimum Wage/Remuneration specified above benefits including Provident Fund and Gratuity provided under the Labor
Act and Contribution Based Social Security Act 2017 (2074) and other prevailing laws should be provided.

36. Labor Relation Committee

Employer of every enterprise having 10 or more than 10 workers shall form a Labor relation committee as prescribed whose function, powers and duties
shall be as follows:
a) to hold consultation for productivity increment and improvement of the operating system;
b) to make an effort to settle any grievance or any probable grievance of the workers in consultation with concerned party;
c) to improve the environment of the workplace;
d) to work in the capacity of Occupational Safety and Health Committee until it is formed; and
e) to perform other functions as prescribed.

37. Performance Evaluation of Workers

• An enterprise may, normally, carry out performance evaluation of workers once in a year whose basis and procedure for the work performance
evaluation shall be determined based on reasonability and prudence.
• On completion of performance evaluation, employer or the person designated by him/her shall consult with the concerned worker in relation to his/her
strength and weakness and give a reasonable opportunity to improve the weaknesses.

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• When evaluating the work performance of any worker pursuant to the provisions of the Act or the rules made under this Act or by-law, if the work
performance of such worker is found unsatisfactory or poor for three or more than three years consecutively, the employment of such worker may be
terminated by the employer.

38. MISCONDUCTS AND PUNISHMENT

Warning may be given for a) act of being absent in the work without approving the leave;
the following misconducts b) act of leaving the workplace without taking permission of the management;
by any worker c) act of reaching the workplace frequently late without taking permission of the management;
d) act of disobeying the order given by the employer or any employee above his/her level in relation to the work; or
e) act of doing any other misconduct as specified in the by-law.
Maximum of one day a) act of refusing to accept any letter or notice issued by the employer or officer having the authority to punish;
remuneration may be b) act of taking part in an illegal strike or forcing others to do so or adopting go slow tactic collectively;
deducted for the following c) act of causing loss to the enterprise by decreasing the production or service negligently or carelessly;
misconducts by any worker d) act of attempting to take benefits by submitting false documents;
e) act of not using safety equipment by the worker responsible for using such equipment; or
f) act of doing any other misconduct of similar nature specified in the by-law.
Annual salary increment a) act of taking and using or causing to use any property outside the enterprise without the permission of a person
for one year or promotion entrusted with such authority;
may be withheld for the b) act of attempting to misappropriate the fund in the business of the employer;
following misconducts by c) act of damaging the property of the employer negligently or carelessly;
any worker d) act of stopping the supply of food, water, telephone, electricity or obstructing the movement in and out of the
workplace;
e) intentional act of misusing or causing damage or loss to the objects or provisions kept for the benefit or safety and
health of the workers:
f) act of committing any other misconduct of similar nature prescribed in the by-law.
Worker may be dismissed a) act of assaulting or injuring an employer or any worker or customer or any person concerned with the workplace or
for any of the following act of keeping in captive or causing unrest or damage in the premise of the enterprise with or without the use of any
misconducts weapon;
b) act of taking or giving bribe;
c) act of stealing property of others in the workplace;
d) act of financial misappropriation in the enterprise;
e) intentional act of damaging the property of the employer under his/her control or which is being used by the
employer;
f) act of being absent in the work continuously for more than 30 days without approving the leave;

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g) act of divulging production related formula or any confidential information relating to special technology with an
intention to cause loss or damage to the enterprise where he/she is employed;
h) act of working in collaboration with a competitive employer in the similar nature of business or carrying any
competitive business on his own or providing confidential information about the enterprise where he is employed to
any other competitive employer;
i) if convicted by the court for any immoral or criminal act during the period of employment;
j) act of submitting forged or false educational certificates for the purpose of appointment;
k) act of taking drugs or liquor during working hours or come to the workplace in drunken state;
l) act of being punished for more than two times for misconducts within a period of three years; or
m) act of committing any misconduct for which any prevailing law prescribes dismissal as punishment.

39. PROVISIONS RELATING TO SPECIAL TYPES OF INDUSTRIES AND SERVICES

Provisions Tea-estate workers Construction workers Transport workers Tourism Domestic workers
workers
Section No. 84 85 86 87 88
Meaning Any land used for tea Construction of building, road, Work relating to the
plantation and it shall bridge, canal, tunnel, internal transportation of
also include a factory or interstate waterways or people, animal or
and its premises railways or construction of goods from one place
established for the power station, to another.
processing of the tea telecommunication or
and other related telegraphic stations or
works. installation of related
equipment or machines.
Suitable quarters, daily necessities, clean drinking Y Y Y
water and supply of necessary food items.
Safety arrangement, medical items including Y Y Y Y Y
medicines and free first aid service (Shall be kept in the
vehicles.)
Rescue or cause to rescue any worker in case of an Y Y Y Y Y
accident or serious health problem.
Arrangement for sports and entertainment for the Y Y Y
physical and mental development of the workers
and their dependent family members

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Necessary tools and material in sufficient number Y Y Y Y Y

and quantity required
At least 2 drivers in the vehicles that operate in a Y
long route and arrangement for taking rest in
different places for the drivers of vehicles operating
in the long route
Overtime @ 1.5 times of their ordinary Y Y
remuneration (Either the overtime (Either overtime
payment or trip payment or field,
allowance, food food and other
allowance or any other similar
allowance.) allowances.)
Distribute service fees (Tips) collected as per Y
collective agreement
If the vehicle breaks down before reaching the final Y
destination or is required to be stopped in one place
for any reason, only 50 % of the allowances to be
paid.
Workers engaged in driving shall not consume . Y
alcohol or drugs at least 12 hours before driving the
vehicle and until the final destination is reached.
Public holidays and weekly holidays. As prescribed
Expenses for arrangement of food and shelter or Y
education of the worker, to be deducted from the
remuneration.
Celebrate festivals as per culture, religion or Y
tradition.

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40. SETTLEMENT OF INDIVIDUAL DISPUTES

1. Submit an application in writing

Any worker having Employer
individual claim 2. Give a written acknowledgment of the claim received in writing within 7 days

3. Settle the dispute relating to the claim within 15 days after consultation with the concerned worker
(Time for the settlement of dispute may be extended through consent between the employer and the
concerned worker.)

Dispute is settled Written acknowledgment of the claim not received Dispute is not settled and 15 days from the date of
in writing within 7 days submission of application to the employer has elapsed

OK 4. Submit an application to the labor office for settlement through mediation

5. The labor office shall notify the date and time to the employer and the concerned worker for consultation

6. The labor office shall settle the dispute relating to the claim within 21 days from the date of the receipt of the
application) by holding consultation as required between the employer and the concerned worker

Dispute is settled Dispute is not settled

OK 7. Labor office shall give decision within 15 days on the basis of evidences.

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41. SETTLEMENT OF COLLECTIVE DISPUTES

1. Submit an application in writing as collective claims/ demands

Collective Bargaining Committee (3-11 members):

Employer
formed by any enterprise employing ≥ 10 workers Prohibition on submission of collective claims / demands
a) Team of representatives appointed for negotiation on a) which is contrary to the Constitution of Nepal;
behalf of the elected authorized trade union of the b) which may adversely affect the interest of any other person because it is
enterprise; based on groundless allegation without any proof;
b) Where an election for authorized trade could not be c) any matter which may affect the personal behavior of any employer or
held or the term of the authorized trade union has worker;
expired, a team of representatives nominated through d) matter which is not related to the enterprise;
a mutual agreement; e) where the collective agreement has been entered and the period specified in
c) Where an authorized trade union or the team of the Act for such agreement has not expired yet;
representatives could not be formed, a team of f) relating to contribution rate and benefits specified for the social security
representatives supported with the signatures of more schemes;
than 60% of the workers working in the enterprise.
2. Give a written acknowledgment of the claim received in writing within 7 days

3. Settle the dispute relating to the claim within 21 days after consultation with the concerned worker
(Time for the settlement of dispute may be extended through consent between the employer and the
concerned worker.)

Dispute is settled Written acknowledgment of the claim not received Dispute is not settled and 21 days from the date of
in writing within 7 days submission of application to the employer has elapsed

OK 4. Submit an application to the labor office for settlement through mediation

5. The labor office shall notify the date and time to the employer and the concerned worker for consultation

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6. The labor office shall settle the dispute relating to the claim within 30 days from the date of the receipt of the
application) by holding consultation as required between the employer and the concerned worker

Dispute is settled Dispute is not settled

OK
Settle through arbitration only:
a) if the Collective Bargaining Committee and the employer agree to settle the dispute relating to collective claims or demands through
arbitration;
b) if a collective dispute arises in an enterprise providing essential service;
(Essential service means any service, if interrupted, may have an adverse impact on the life, health and safety of the people of the
entire country or the people living in any part of the country.)
c) if a collective dispute arises in an enterprise located inside the special economic zone;
d) in a situation where the strike is prohibited due to imposition of emergency under constitution.
e) Where the Ministry has a ground to believe that a financial crisis may take place in the country because of ongoing or possible strike
or lockout or believes that the dispute needs to be settled by arbitration.

Arbitration process:
1. The Ministry may form an arbitration panel (or independent Labor arbitration tribunal) ensuring representations from workers,
employers and the Government of Nepal.
2. Any party wanting to settle the dispute through arbitration shall submit claims in writing to the arbitrator.
3. The arbitrator shall send a copy of such claims to the other party and provide an opportunity to such party to file a written statement
in response to that.
4. Conduct hearing: The arbitrator shall have power as that of any court under the prevailing laws to take evidence into record, examine
witnesses, inspect sites and other related work in connection with the proceeding.
5. The arbitrator shall deliver the decision within 30 days from the date of ending of the hearing.

If an arbitrator does If an arbitration panel If decision is not If the employer refuses to If any party dissents
Dispute
not perform the could not be formed given by arbitrators enforce the decision of the with the decision
is settled functions of within the prescribed arbitrators or challenges given by the
arbitration time such decision on legal arbitrator
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OK Employees may go for strike by giving a 30 days prior written notice along with claims or demands and the date from which
the strike is to commence to:
a) Employer
b) Office of the local administration
c) Labor office
(Note: workers deputed as watchmen or guards for the security of the enterprise shall not be permitted to get involved in strike.)

If strike is organized without giving a notice pursuant or if strike continues as collective dispute could not be settled
the management may, by giving justifiable grounds, lockout the enterprise after acquiring an approval from the Department by giving
7 days prior notice to:
a) Employees
b) Office of the local administration
c) Labor office
(Where there is a possibility of causing loss to the enterprise because of gherao, physical unrest or any such type of act by the workers
during the period of strike, the management may lockout the enterprise immediately and in such case the notice along with justifiable
reasons regarding such lockout shall be given to the Office or Department or Office of the Local Administration within 3 days.)

Notes:
1. Lockout is prohibited in enterprises providing essential services.
2. The Department may at any time declare the lock-out of an enterprise illegal in case:
• If it appears unjustifiable or
• If it is likely to disturb the peace and security of the country or
• If it is likely to cause adverse effect on the economy of the country.
3. With the objective of exerting pressure to fulfil the claims or demands when the strike or lockout is continuing, the workers may picket (dharna)
or assemble at the gate of the workplace or enterprise peacefully during which, the workers shall not be permitted to do any act of prohibiting
others from entering or leaving the workplace or enterprise or causing damage to the workplace.

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4. Act of organizing strike or lockout or picketing (dharna) or filing a complaint in accordance with the law by any worker shall not be considered as
violation of his /her employment contract and during the period, the employment contract shall continue to be effective.
5. Remuneration For Strike And Lockout Period
Strike Done in compliance of this Act 50 % remuneration
Done in contravention of this Act No remuneration
Lockout Done in compliance of this Act 50 % remuneration
Done in contravention of this Act Full remuneration
6. Where any financial loss is caused to any employer or worker because of strike or picketing or lockout organized lawfully pursuant to this Act, filing of a case
in any court against the workers, Collective Bargaining Committee or trade union or employer involved in such strike or picketing or lockout in relation to the
loss so caused is prohibited. However, against any person or group involved in the destruction of the workplace, in the act of arson or destruction of property
in any other way or in the act of causing physical damage may be initiated and an amount equivalent to the loss so caused may be recovered.
7. Following arrangements may be done through Collective Agreement:
a) To reduce the remuneration of the employee (Section 34)
b) Arrangement for Interim Management during the transfer of ownership (Section 14)
c) To agree on certain facilities in lieu of overtime payment (Section 31))
d) To determine facilities for which the employer may deduct remuneration (Section 38)
e) To determine the grounds of transfer of employees (Section 109)
f) To determine rate of remuneration during the period of legal strike or lock-out (Section 127)
g) To add the grounds of termination upon misconduct (Section 133)
h) To determine the alternative option of retrenchment; and criteria and terms of retrenchment (Section 145)
8. The validity period of collective agreement shall be two years from the date of effectiveness if specified in the agreement or it shall be from the date of signing
of the agreement if the date of effectiveness is not mentioned in the agreement or from the date of decision of arbitrator if such decision has been made and it
shall have the validity of law.
9. Trade union associations which are active in the tea estate, carpet sector, construction business, Labor provider, transportation sector or any other group of
manufacturers producing similar nature of products or service providers providing similar nature of services or businesses as specified may, by forming a
Collective Bargaining Committee as prescribed, submit collective bargaining claims or demands to the employers' association of concerned group of industries.
42. Voluntary Termination of Employment
Any worker may, by submitting a resignation in writing to the employer, terminate the employment.
The employer shall approve the resignation within 15 days and inform the worker accordingly and if the resignation is not approved by the employer
within 15 days, the resignation shall be deemed to have been approved automatically from the day after such period expires.

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43. Termination of Employment on Medical Ground

Ø Where any worker becomes incapable of working as a result of physical or mental incapacitation or disablement or injury or probability of
causing an adverse effect on the business of the employer because of long term medical treatment of the worker, the employer may, on the basis
of a recommendation of a doctor, terminate the employment of such worker.
Ø The employer shall not terminate the employment of any worker during the period he/she is undergoing medical treatment in the hospital
because of an accident or occupational disease caused while performing the work or within one year from the date of commencement of
treatment at home.
Ø The employer shall give full pay during the period of such treatment.
44. Notice Period
Ø Any employer or worker, while terminating an employment contract in situations other than the termination of employment on the ground of
misconducts, shall serve a written notice to each other as follows:
At least before Employment period
1 day Up to 4 weeks
7 days 4 weeks to 1 year
30 days More than 1 year
Ø Where the employer terminates the employment without giving notice the equivalent amount of remuneration in lieu of notice shall be paid to
the concerned worker and where a worker terminates the employment without giving notice, the employer may deduct an amount equivalent to
the remuneration for such notice period from the remuneration of the concerned worker which he/she is entitled to receive.
45. Retrenchment
• Where an enterprise:
Ø faces financial problems in its operation or
Ø the workers become redundant because of merger of more than one enterprises or
Ø because of any other reason the enterprise needs to be closed down partially or completely
the employer may retrench workers.
• Order of retrenchment shall be (except otherwise approved by the department):
a) foreign workers;
b) comparatively, those workers who have received more punishments for misconducts;
c) workers with poor work performance standard;
d) workers who are hired at the last from among the workers in the same category of work;

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Provided that the workers who were appointed earlier may be retrenched first by stating the grounds for doing so without following the
rule of retrenching the workers first who were hired last.
• Compensation to be paid on retrenchment = one-month basic salary * number of years served to those workers who have completed at least
one year of employment in such enterprise. (If service period is less than one year, the compensation shall be paid proportionately.)
• Where any enterprise, after the workers are retrenched, resumes operation within two years or needs to hire more workers, the preference for
employment shall be given to the workers retrenched.
46. Jurisdiction of the Labor Court
a) Witness examination;
b) Seek necessary explanation from respondent treating it as written statement;
c) The Labor Court, on the basis of application or nature of the case, suo moto may give an order to summon any party during the hearing even
though such party has not been made neither defendant nor respondent in the case and if necessary make him a party to the case.
d) Inspect places or workplace relating to the dispute;
e) If an application filed by any party to the case to keep a case subjudice in the Labor Court in pending or give continuity till it is finally decided
and disposed is found reasonable, notwithstanding the state of the case, the Labor Court may issue an interlocutory order against any of the
parties to stop any act for a specified time or give continuity to any act with or without fixing a period;
f) Confirm or invalidate or alter any directive or decision or order given by the Office or an employer;
g) The Labor Court, when carrying out the court proceeding and disposing the case, shall be the powers as prescribed over the matters specified in
the Act or the rules made under this Act and in other matters, it shall have the powers equivalent to that of any other District Court.
47. Powers of Office In Relation to Enforcement of Agreement And Decisions
Where the decision, judgment or agreement could not be enforced, the concerned party may file an application in the Office and on receipt of such
application, the Office, may enforce such decision, judgment or agreement against the concerned employer or worker by adopting any or all of the
following means stated below:
a) write to the concerned authority or officer to freeze the immovable property of the concerned party or auction the property;
b) write to the concerned authority to freeze the bank account of the concerned party;
c) write to the concerned authority to suspend or withhold all the concessions or facilities provided to the concerned party pursuant to the prevailing
law;
d) write to the concerned authority to suspend the Labor permit or license of the concerned party;
e) issue any other appropriate order.

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48. Procedure Relating To Period And Notice (Same as section 15 of companies act)
• Any notice or period of limitation sent by the employer to any worker or to the employer by any worker shall be immediately acknowledged and
proof of such acknowledgment shall be provided.
• Where such notice or period of limitation could not be delivered, one copy of such notice or period of limitation certified by three witnesses shall
be sent through courier or postal service at the given address and one copy shall be put up at the workplace.
• Such notice or period of limitation shall be deemed to have been notified on time if the Office is informed about such certified notice or period of
limitation. Provided that the application or notice given by the worker need not be put up at the workplace.
• Where any worker refuses to accept such period of limitation or notice, it may be sent through fax or email any other electronic means of
communication. It shall be deemed to have been notified unless proved otherwise.
• Any notice on any matter required to be informed to all the workers collectively shall be deemed to have been received by the workers once it is
put up on the notice board of the workplace and the trade union which is active in the enterprise is informed in writing accordingly.
49. Managers or managerial level workers
A managerial level worker working in the capacity of Chief Executive on time based employment contract, fix employment conditions and benefits
and terminate his/her service.
Managers and managerial level workers are prohibited to submit collective demands or take part in collective bargaining or take part in strike on
behalf of any trade union.
50. Labor Coordination Committee
There shall be a central level Labour Coordination Committee under the chairmanship of the Director General of the Department of Labour and the
membership of Representative of Trade Union Federation & Representatives of Employers Association whose functions, duties and powers shall be
as follows:
• To discuss with the concerned party and provide necessary suggestions for the settlement of industrial dispute of any enterprise.
• To make necessary arrangement and coordination with the concerned for the settlement of any dispute between the employer and the employee.

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