Employer of Record (EOR) in Nepal - Employment Laws, Payroll, Hiring

Employer of Record in Nepal

Skuad’s Employer of Record Nepal (EOR) solutions make business expansion to Nepal easy and hassle-free. Our unique HR platform allows companies to hire exceptionally talented employees in Nepal, without having to set up a separate legal entity. It streamlines the process of hiring and onboarding a remote team by handling payroll management, taxation, and other legal compliances. To learn more about Skuad, book a demo today.

Nepal at a Glance

Population: 31.2 million

Currency: Nepalese rupee (NPR)

Capital City: Kathmandu‍

Languages spoken: Maithili, Nepali, Bhojpuri, Tharu, Tamang

GDP: USD 40.83 billion

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Employment in Nepal

What You Must Know Before Employing In Nepal

According to the World Bank 2018 report, employment in Nepal was at 68% in 2017. The percentage of unemployment in Nepal is the lowest in South Asia.

The new Labor Act 2074 that replaced the previous Labor Act 2048 comprises modifications in Nepal employment laws regarding the facilities and rights of workers in various industries and sectors.

Employee entitlements of the new labor law are as follows:

Entitlements	Explanation
Statutory Work Hours	8 hours a day and 48 hours a week
Non-Nepalese People at Work	A company with its physical location in Nepal is not permitted to hire a foreign worker unless it has searched for a local Nepalese professional through various advertisements in journals and newspapers with no luck. Foreign nationals are permitted to work in Nepal only if they have a work permit (according to sections 22 and 23 of the Labor Act of Nepal, 2074).
Leaves	The employer has the liberty to decide on a fixed or rotational weekly off pattern for providing one or two holidays per week to its employees. The government has a facility for providing 13 annual public holidays to every worker in the country. Women get an extra holiday every year on Women’s Labor Day in Nepal. Annual leave: The total number of annual leave days provided to an employee depends on the number of working days. Sick Leave: As per the Labor Act, every worker in Nepal can take up to 12 sick leaves annually. If an employee has worked for less than 365 days for an employer, the company has the right to decide their sick leave in proportion to their employment period. The government permits employees to accrue sick leave for a maximum of 45 days. At the end of the year, the employer must pay the basic remuneration for such sick leaves. Bereavement Leave: Employees can take up to 13 days of leave in case of mourning or death in the family. Maternity leave: It can be taken for up to 98 days by a female employee. Out of these 98 days, 60 days are fully paid. Paternity leave: It is also paid for 15 days in Nepal.
Public and optional holidays	Tihar festival Democracy Day Mahashivratri Holi Nepali New Year International Workers' Day Raksha Bandhan Teej Dashain Optional: Nari Diwas Eid-ul-Fitr Edul Aajha Christmas
Overtime	An employee is eligible for overtime wages if they work more than the statutory working hours. According to section 31 of the New Labor Law, one and a half times the ordinary wage of an employee is their overtime wage. The maximum overtime permitted for an employee is 24 hours per week.
Minimum wages	Rs. 15000 per month and Rs. 77 per hour (average)

To ensure your expansion endeavors are in compliance with the Nepal employment laws, Contact Skuad today.

Contractors Vs. Full-time Employees

Employers can hire workers in any of the listed employment:

Part-time employment: When an employer demands less than or equal to 35 hours of work per week from an employee, it is considered part-time employment.

Regular employment: Employment that is not time-based, work-based, or casual employment is termed regular or full-time employment.

Time-based employment: When an employer signs a time-based employment agreement, Nepalese laws permit them to demand any type of professional work from their employee for the period agreed upon by both parties.

Work-based employment: It is also known as contract employment. Under this contract, an employer hires an employee for a specific task without specifying the duration of work. The terms of the employment contracts in Nepal become invalid for the employer and employee upon completing the assigned task.

Casual employment: In casual employment, the employer hires an employee to perform any service or task for less than or equal to seven days in one month.

According to the employment contract law in Nepal or the Labor Laws, when an employer appoints an employee for a specific work, the former must explicitly mention the conditions of service, remuneration, and duration of service in the employment contract. Skuad can help you decide whether to opt for contractual or full-time employees based on your requirements. An expert team of lawyers drafts customized employment contracts depending on the employment type. Book a demo with Skuad to make an informed decision for your business.

Hiring in Nepal

A company aiming to hire employees in Nepal must implement the local laws and satisfy the criteria laid down by the government. The general manager of the company in Nepal must issue an appointment letter to the selected candidate. The government encourages companies to prefer employing Nepalese professionals over international candidates.

Based on performance, work efficiency, attendance, and discipline, the employer must grant a permanent position to the employee after the latter completes one year of service with no interruption.

The appointment letter by the employer must contain the listed details:

Post of appointment;
Remuneration;
Any applicable service conditions.

Employees working on a permanent contract are also eligible to become permanent employees of a company.

The Labor Law of Nepal explicitly mentions that an employer must only allow women in the country to work from 6 a.m. to 6 p.m. on any day. The employer has to make the required arrangements for creating a comfortable working environment for a woman.

Employee health benefits in Nepal are listed below. An employer must:

Ensure proper cleanliness and hygiene at the workplace by disposing of unwanted products and files appropriately.
Facilitate light and ventilation along with the maintenance of suitable room temperature for the employees.
Prevent the collection of dark and other contaminated substances that could affect the health of workers.
Provide the required personal equipment like safety goggles or noise protection devices for protecting an employee based on the work.
Arrange potable water for employees during working hours.
Declare all or some zones in the office as non-smoking zones.
Arrange for a compulsory annual health checkup of employees at companies where the nature of work or the working environment can adversely affect the health of employees.

‍Skuad stands among the hiring companies in Nepal and meets all the required conditions of employment in the country. According to a study, various private companies employed over three-quarters of Nepalese graduates and postgraduates as full-time employees. A majority of the screened individuals were employed at an assistant level in such companies. From managing the payroll of such employees to handling their employment contracts, Skuad professionals have done it all. Talk to us to know more.

Probation & Termination

Employment agreements in Nepal are classified according to the listed types:

Formal contract: A mutually agreed formal contract contains every detail of the job that the employer and employee have agreed upon. It includes the nature of the job, contract expiry date, and compensation details.

Probation employment: According to the Labor Laws of the country, probation employment is a category where an employer does not appoint an employee permanently as the job is temporary. During the probationary period in Nepal, the employee cannot demand a permanent job from the employer, if the employment contract doesn’t mention it. The standard probation period in Nepal is one year for the employees whom the company appoints to a permanent position. The employee receives a verbal or written employment agreement from their employer.

The procedure followed for the termination of employment in Nepal is simple.

Check out the table below to understand it.

Specifications	Details
Retirement	Minimum age for retirement: 55 years The employer can compel the employees attaining that age to retire from the company. If the services rendered by an employee are indispensable to the company’s management, the employer has the authority to extend the service period of the employee by a maximum of 5 years.
Participation in riots	The Department of Labor in Nepal has the authority to end the employment contract of an employee if they are found to be involved in instigating or taking part in riots directly or indirectly
Medical reason	Another ground for terminating an employee is based on ill-health. However, if an employee is injured at the workplace, the employer cannot end their employment for at least one year, or six months if certified by a medical professional.
Other reasons	An employer can also suspend an employee for poor performance or any other valid reasons.
Procedure for terminating an employee	For every reason of termination, the employee may submit a written explanation for the allegation made by the employer. They must submit this explanation within seven days of announcing the termination.

An employee must send a written termination letter to the employer 15 days before resigning. If the employer does not accept the resignation during that period, it is assumed to be automatically accepted. However, if the employee continues working after the completion of 15 days, the voluntary resignation stands canceled.

To ensure your expansion endeavors are in compliance with the Nepal employment laws, Contact Skuad today.

EOR Solution

Business expansion is a long-drawn process that calls for extensive planning, especially when expanding to a foreign country. It is complicated and can take up to several months to complete but by choosing the EOR route for hiring employees in Nepal, you can fast-track the expansion process. Employer of Record Nepal (EOR) solutions by Skuad can make expansion to Nepal much simpler and a lot quicker for business. Our global outreach and a tech-enriched HR platform ensure compliance with local labor laws by managing employment responsibilities such as monthly payroll, work permits, employment contracts as well as taxation for your employees in Nepal. Book a demo with Skuad today.

Types of Visas in Nepal

Except for Indian nationals, every foreign national who wishes to enter the country for professional reasons must get a Nepal work visa. The passport holders of the following countries must apply for a Nepalese visa many days before their arrival. Citizens of other countries can get a Visa on Arrival in Nepal.

Syria
Ghana
Afghanistan
Iraq
Somalia
Palestine
Cameroon
Nigeria
Eswatini
Liberia
Ethiopia
Zimbabwe
Somalia

The types of work visas in Nepal along with the details are given in the following table.

Types of Visas	Details
Business	Issued to professionals visiting Nepal for investment or business reasons.
Tourist	Issued to foreigners entering the country for leisure or tourism purposes.
Relationship	Issued by the Nepal Department of Immigration for the internationally residing members of a Nepalese family or an individual.
Transit	This visa-on-arrival is issued to people transiting in the country for less than or equal to 24 hours
Work	Issued to foreigners who have already entered the country with a tourist visa and the relevant documents for authorizing their employment in Nepal.

The Nepal work visa requirements are listed below. These documents must be submitted to the Department of Immigration in Nepal:

Completed Nepal Work Visa Application form (obtained online)
Work Permit obtained from the Department of Labor
Letter of Recommendation authorized by the relevant ministry
Appointment letter or work contract
Tax clearance of the hiring company
Passport photocopies
A Nepal visa photocopy
Fee: USD 75 per month for Nepal Work Visa

Your company will be free from the burden of dealing with visa complications and permits in Nepal by partnering with Skuad where highly trained professionals take care of your employment requirements from scratch. Call us to know more.

Work Permits

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 authorized by the Department of Labor
Department of Labor	Issues Nepal work permits for foreigners

Without receiving the appropriate work permit, any foreign national will not be allowed to work in Nepal. The Department of Labor provides a work permit to a foreign individual following the Labor Rules mentioned in the Labor Act. Listed below are the grounds on which an employee receives a work permit in the country - A work permit through the general procedure and a work permit based on the recording.

Unavailability of relevant skilled human resources concluded after publishing advertisements in local media for a job position (relevant proof required)
It is provided to foreign nationals who perform technical casual work with relevant experience
It is also provided to employees of organizations receiving foreign investment or the ones that have operated in international aid

For obtaining a work permit based on recording, an employer is not required to submit proof of local human resource unavailability. Entities that are operating with foreign investment have the permission to employ up to three foreign nationals in Nepal. They only have to record the details at the Department of Labor to obtain the permits. However, in Nepal, a work permit without a job offer is not granted to an employee.

Also, foreign technicians who have installed or repaired any new machine or technology for a maximum period of three months must record the details with the Department of Labor to obtain a work permit. Skuad effectively manages the database of your employees. This is why your company would be spared from the tedious procedures of obtaining a work permit for operating in Nepal.

Payroll & Taxes in Nepal

Tabulated below are Nepal payroll tax rates and their details.

Tax	Explanation
Payroll tax	Subject to the rebates and deductions permitted by the Income Tax Act, an employer deducts Nepal employer payroll taxes as per the appropriate slab rates from the salary or benefits provided to the employee.
Land tax	The rates are notified by the local and provincial government bodies.
Stamp duty	Recognized by the Government of Nepal, Stamp duty is regulated by the Stamp Duty Act. It is levied on important deeds and documents.
Dividends - Franked and Unfranked	5%
Interest	15%
Dividends - Conduit foreign income	5%
Intellectual property royalties	15%
Managed Investment Trusts Fund Payments	15%

Skuad manages payroll outsourcing in Nepal for various international companies. It ensures compliance with local laws and keeps track of the changing tax rates before calculating the final payroll for every employee.

To calculate the cost of employment in Nepal, click here.

Incorporation

To understand and implement the best business structure in Nepal, you must consult a local Employer of Record like Skuad. The most frequently observed structure implemented by an employer for incorporating a holding company in Nepal is an LLC. It takes 15 days on average to file an LLC after completing the required paperwork in Nepal. As the minimum limit of share capital is zero, any organization can set up a business in Nepal using legal currency.

‍Skuad helps you in tapping the business opportunities in Nepal by maintaining every paperwork and complying with the regulations as required for operating. You can experience the convenience of employing professionals in Nepal without worrying about local regulations.

Professional Employer Organization (PEO)

A Professional Employer Organization in Nepal is responsible for providing every HR-related function for your organization. However, an Employer of Record (EOR) service takes the complete charge of putting your services and employees as required on their payroll. Every employment contract is created and held by the EOR service provider, and in turn, the provider signs a service agreement with your company.

On the contrary, when you work with a PEO, the employment contracts are stored and managed by your company. This means that the partial responsibility of employing the candidates lies on you, unlike EOR. Skuad efficiently works around the world to provide EOR solutions for hundreds of companies desiring to hire candidates from any global location.

Conclusion

Are you ready to expand your company’s business operations in Nepal? Skuad’s Employer of Record Nepal services can make the process fast and easy by handling your Employment requirements in compliance with local labor laws. If you want to discuss more on how Skuad’s unified employment platform can help with your organization's expansion plans, book a demo with Skuad today!

FAQs

1) What is an employer of record in Nepal?

An Employer of Record (EOR) in Nepal is a service provider that legally employs workers on behalf of a client company. An EOR, like Skuad, takes on payroll processing, tax compliance, benefits administration, and ensuring adherence to local labor laws. This allows companies to hire employees in Nepal without setting up a local legal entity.

2) What are the HR laws in Nepal?

HR laws in Nepal are governed by the Labour Act 2017 and the Labour Rules 2018. These laws cover various aspects of employment, including employment contracts, working hours, wages, leave entitlements, health and safety standards, and termination procedures. The standard workweek in Nepal is 48 hours, and employees are entitled to annual leave, public holidays, sick leave, and maternity leave. The laws also mandate minimum wage levels and provide protections against unfair dismissal and discrimination in the workplace.

3) What is a geo employer of record?

A geo Employer of Record (geo EOR) is a service provider that employs workers on behalf of a client company in a specific geographic location or multiple locations across the globe. The geo EOR handles payroll, tax compliance, benefits, and local labor law compliance, in the targeted geographic regions.

4) What is the difference between EOR and PEO?

An Employer of Record (EOR) takes on full-fledged global workforce management for a client company and a Professional Employer Organization (PEO) enters into a co-employment arrangement with the client company, where both the PEO and the client share employer responsibilities.

5) How many types of employment are there in Nepal?

In Nepal, several types of employment contracts cater to different employment needs. These include permanent (indefinite-term) contracts, which provide long-term employment security; fixed-term contracts, which are for a specified duration or until the completion of a particular task or project; and temporary contracts, which are used for short-term or seasonal work, offering flexibility for both employers and employees.

Nepal

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Employer of Record in Nepal