Part One: Labor Law of Nepal [Labor Act 2074 (2017) and Labor and

Employment Policy, 2062]

Section 1:
S.N Course Content Information on Prevailing Labor Law of Nepal

1 Strategic HRM Reinforcement of national economic administration and elimination of poverty

with the provision of invariance, safety, and healthy working environment by
creating employment and self-employment opportunities through the expert and
skilled manpower capable for the competitive national and international labor
market.
2 Organizational
Structure
3 Job Analysis and
Design
4 Human Resource Provision of the flexibility in the modes of hiring as per the requirements of the
Planning, entity.
Recruitment and 1. Regular Employment 2. Work Based Employment: for completion of certain
Selection work or rendering certain service. 3. Time Bound Employment: employment for
certain time period determined. 4. Casual Employment: employment for seven or
less days in a month. 5. Part time Employment: employment for 35 or less hours
in a week.
5 Training and Quality vocational training and skill development training shall be made more
Developing effective and developed as a means of fulfilling the requirements of the economic
Employees system and labor market as well as to create opportunities for employment and
self-employment.
Subject-matter-specific short-term training shall be conducted within and outside
the workplace for the development of skills and personality of workers
6 Appraising and The system of the person being evaluated holding consultations and discussions
Managing on the evaluation of her or his strong and weak aspects while performing work
Performance shall be developed and work performance evaluation shall be linked to training,
and the worker’s work performance evaluation system shall be made transparent
and systematic.
7 Compensation 1. Provident Fund (Deposited to Social Security Fund ,10% employee’s
Management contribution and 10% employer’s contribution)
2. Gratuity (8.33% of basic remuneration every month)
3. Leave Encashment (Accumulated annual leave up to 90 days and Sick-leave
up to 45 days can be in cashed at the time of discontinuation of service)
4. Severance Compensation (1-month salary for every year of service Eligible
on a proportionate basis.
5. Festival Expenses (Amount equivalent to the monthly remuneration once a
year)
6. Compensation against injury (provided from the insurance amount)
7. Disability Compensation
8. Death Compensation

8 Labor Relations, In order to maintain harmonious labor relations, labor disputes shall be resolved
Safety and Health through bipartite dialogue after building a favorable environment; strikes and
lockouts shall be used as the last resort. The Labor Act has taken a great step in
making workplace more safe and inclusive. Introduction of paternity leave,
increased days of maternity leave, provision of medical and accident insurances
will all contribute in creating a favorable working condition.
 9 Employee Any worker performing the prescribed misconduct can be punished with any of
Discipline the following punishments: 1) Warning 2) Deduction of remuneration equivalent
to minimum one day 3) Withholding annual salary increment and grade
increments for one year, or 4) Dismissal from employment

Section 2:
2.1 Challenges in implementation of provisions mentioned by Labor Law:

 The Government of Nepal has deployed Labor Representative in five countries to deal with
migrant labor issues. Yet, the labor code is only focused on formal sector employers; whereas
informal sector and self-employed workers are denied of rights.
 The foreign employment act, trials and the foreign employment promotion board are not able to
perform well for addressing the issues of migrant workers properly and are not effectively
functioning to control, prosecute and punish fraudulent, slavery and trafficking practices.
 The government has the challenge of correcting the labor act by formulating a new labor act to
solve the issues regarding workers’ facilities, trade union rights and efficient management of trade
unions according to the directives of the then restored parliament.
 The political transition of country is prolonging and new constitution promulgation is still delayed
with confusion and uncertainty.

2.2 Areas of Improvement

 The Government of Nepal must prepare a mid-term review report and share publicly so that
people can seek state accountability on its commitment of implementing the recommendations.
 The Nepal government should have comprehensive review it’s all labor related laws and should
formulate a new labor law in compliance to ILO conventions addressing concerns of informal
sectors, child labor and designating clear mandates of mechanisms to act at local level.
 The Nepal government should act on to review its foreign employment act and current mechanism
and process consulting with trade unions, civil society organizations and victims.
 The Nepal government should initiate to form a national labor council having representation of
employers, governments, trade unions and NGOs working in the area.