With Marzuna EOR services, expanding your business in Nepal is made simpler. With our state-of-the-art HR platform, companies can hire competent Nepalese workers fast, all without having to register a separate legal entity. To ensure you have a hassle-free experience, we handle a number of tasks throughout the onboarding and maintenance of your remote workers, including payroll, taxes, and other regulatory compliances.
According to the World Bank’s 2018 report, Nepal had the lowest unemployment rate in South Asia in 2017 with an employment rate of 68%. The new Labor Act 2074 in Nepal has replaced the previous Labor Act 2048. It includes enhancements to employment laws that give workers in all businesses and sectors more rights and benefits.
Employee entitlements of the new labour law are as follows:
| Entitlements | Explanation |
|---|---|
| Statutory Work Hours | 8 hours a day and 48 hours a week |
| Non-Nepalese People at Work | A business having a physical presence in Nepal is not allowed to employ a foreign worker unless it has unsuccessfully tried to find a local Nepalese professional through several ads in journals and newspapers.
According to provisions 22 and 23 of the Labor Act of Nepal, 2074, foreign people are only allowed to work in Nepal if they obtain a work permit. |
| Leaves | Employers in Nepal are allowed to choose whether to give their staff one or two days off every week, either through a set or rotating weekly off schedule. All employees in the nation are granted 13 yearly public holidays by the government. Every year on Women’s Labor Day, women are given one additional holiday.
The amount of annual leave is calculated using the number of working days. Every employee in Nepal is entitled to 12 sick days annually under the Labor Act. Employers may decide on sick leave in proportion to an employee’s length of employment for those who have worked fewer than 365 days. Employees are eligible for up to 13 days of bereavement leave in the event of a death in the family or personal bereavement. |
| Public and optional holidays |
Optional:
|
| Overtime | If an employee works longer than the required number of hours, they are entitled to overtime pay. Section 31 of the New Labor Law states that an employee’s overtime pay is equal to one and a half times their regular pay.
An employee may work a maximum of 24 hours of overtime each week. |
| Minimum wages | Rs. 15000 per month and Rs. 77 per hour (average) |
Employers in Nepal have the flexibility to choose the type of employment arrangements that best suit their needs:
Nepal’s labor laws mandate that when hiring an employee for a specific role, employers must clearly outline the terms of service, compensation, and the duration of employment in the employment contract. Our team of legal experts can assist you in determining whether to hire contract workers or full-time staff, and we can draft tailored employment contracts based on your chosen employment arrangement to meet your company’s specific requirements.
When establishing a business with employees in Nepal, it is crucial to comply with local regulations and standards. The selected candidate should receive an appointment letter from the newly appointed general manager of the Nepalese company, outlining the position, compensation, and any service requirements. The government encourages businesses to prioritize Nepalese professionals over foreign applicants.
An employee’s eligibility for permanent employment, typically after one year of uninterrupted service, is contingent on their performance, productivity, punctuality, and adherence to discipline.
Under Nepalese labor laws, employers are obligated to provide suitable working conditions for female employees, who are restricted to working from 6 AM to 6 PM. Ensuring a clean and sanitary workplace, proper ventilation, and a comfortable room temperature is essential for employee health. Employers are responsible for preventing the accumulation of hazardous materials and must supply their employees with necessary personal protective equipment. Access to potable water during working hours and designated no-smoking areas in the workplace are mandatory. If an employee’s role or the workplace environment poses health risks, employers are required to arrange for an annual health checkup.
In Nepal, employment agreements may be classified into two categories: formal contracts and probationary employment. A formal contract is a document that outlines all the details of the job, such as its goal, its length, and the terms of payment. Conversely, probationary employment is a transitory role that does not entail long-term employment. In Nepal, an employee on probation cannot ask the employer for permanent employment until it is explicitly included in the employment contract. In Nepal, the average probationary period for employees appointed for permanent positions is one year. During the probationary term, the employer gives the employee a verbal or written employment agreement.
Check out the table below for understanding it.
| Specifications | Details |
|---|---|
| Retirement | The retirement age in Nepal is set at 55 years of age. The employer has the power to ask a worker to leave the firm once they reach this age. However, the employer may increase the employee’s service term by up to five more years if they are deemed essential to the management of the business. Based on the employee’s performance and contribution to the business, the employer has the freedom to make this choice. |
| Participation in riots | If an employee is shown to have been directly or indirectly involved in inciting riots or participating in them, the Nepalese Department of Labor has the ability to terminate their employment contract. |
| Medical reason | The employee’s health is another reason for firing them. However, if an employee sustains an injury at work, the employer is not permitted to terminate their employment for at least a year, or six months if a medical expert certifies it. |
| Other reasons | An employee may also be suspended by an employer due to poor performance or for any other good cause. |
| Procedure for terminating an employee | The employee may respond in writing to any claim made by the employer for any reason for termination, but only within seven days of receiving notice of the termination. |
In Nepal, an employee who chooses to quit is required to provide their employer a written notice of termination 15 days before the day they plan to stop working. Within this time frame, the resignation is deemed accepted if the employer doesn’t respond. However, if the employee stays on after the designated notice period, the resignation is deemed withdrawn, and they are still required to work.
Without proper planning, expanding a business to a foreign nation like Nepal may be quite challenging and take a long time. Nonetheless, the process may be greatly streamlined by utilizing the Marzuna Employer of Record (EOR) service. With our EOR solutions, businesses may quickly and simply hire workers in Nepal while still abiding by local labor laws. Our tech-enabled HR software handles all employment-related tasks, including taxation, work permits, monthly payroll, and employment contracts, saving employers time and stress. Marzuna’s global contacts and experience enable us to effectively support your company’s growth into Nepal.
Any foreign national planning to work in Nepal, with the exception of those holding Indian passports, has to get a work visa. While citizens of certain countries must apply for a Nepalese visa well in advance of their anticipated trip, others can receive a visa upon arrival in Nepal. It’s important to know that different work visa requirements may apply based on the type of employment and duration of stay in Nepal. It is advisable to consult with a reliable visa service provider to ensure a straightforward and trouble-free visa application process.
| Types of Visas | Details |
|---|---|
| Business | issued to professionals travelling to Nepal for business or investment purposes. |
| Tourist | issued to foreign visitors coming to the nation for vacation or tourism. |
| Relationship | issued by the Nepal Department of Immigration to members of Nepalese families or individuals who are living abroad. |
| Transit | People transiting through the country for less than or equal to 24 hours are granted this visa-on-arrival to 24 hours |
| Work | issued to visitors who have already arrived in the nation with a tourist visa and the necessary paperwork allowing them to work in Nepal. |
You must adhere to the nation’s visa rules if you are an outsider looking to work in Nepal. The Department of Labor must provide you a work permit, and the concerned ministry must issue you a letter of reference. The Department of Immigration in Nepal will also need to submit a filled-out Nepal job Visa Application form, your appointment letter or job contract, tax clearance from your hiring firm, passport photocopies, and a photocopy of your Nepal visa. The monthly cost of a Nepal Work Visa is USD 75.
The main governing bodies responsible for providing a work permit in Nepal are tabulated below.
| Authority | Approval |
|---|---|
| Department of Immigration | Issues non-tourist visa after checking the work permit authorised by the Department |
| Department of Labor | provides foreigners with a work permit for Nepal |
The Department of Labor must provide a work permit before a foreign individual is able to engage in lawful employment in Nepal. This can be acquired via a standard approach or a recording-based method. For the former, it is vital to use media advertising to demonstrate the lack of qualified local labour. For the latter, however, organisations operating with foreign investment are permitted to hire up to three foreign nationals without demonstrating their unavailability.
For your business, our efficient database administration can make this procedure simpler. Remember that Nepal does not issue work permits without a job offer, and that foreign technicians who work on new equipment or technologies for up to three months must register their information with the Department of Labor in order to receive a work permit.
Tabulated below are Nepal payroll tax rates and their details.
| Tax | Explanation |
|---|---|
| Payroll tax | Employers deduct Nepal employer payroll taxes according to the applicable slab rates from the employee’s salary or benefits, subject to the rebates and deductions allowed by the Income Tax Act. |
| Land tax | The municipal and provincial governmental entities announce the tariffs. |
| Stamp duty | The Stamp Duty Act governs stamp duty, which is acknowledged by the government of Nepal. It is assessed on significant papers and deeds. |
| Dividends – Franked and Unfranked | 5% |
| Interest | 15% |
| Dividends – Conduit foreign income | 5% |
| Intellectual property royalties | 15% |
| Managed Investment Trusts Fund Payments | 15% |
Expanding your business in Nepal can be a complex process, especially for foreign enterprises. To simplify and streamline the process, it’s advisable to collaborate with a reputable Employer of Record (EOR). Our team of local experts can assist you in establishing your holding company in Nepal and navigate the necessary paperwork and compliance requirements.
The most common business structure in Nepal is the Limited Liability Company (LLC), and it typically takes around 15 days to complete the registration process. Unlike some countries, Nepal doesn’t have a minimum share capital requirement, allowing any corporation to start a business using the national currency.
By partnering with us, you can focus on managing your core business operations while we handle the administrative and legal aspects of recruiting personnel in Nepal. We’re here to help you tap into the vast potential of the Nepalese market without the burden of compliance issues.
