Nepal Labor Act 2017: Key Provisions and Highlights

The Labor Act 2017, enacted on August 11, 2017 (Shrawan 27, 2074), marks a significant milestone in Nepal’s labor legislation. This Act replaces the Labor Act 1992 and introduces several key provisions aimed at protecting workers’ rights, enhancing working conditions, and promoting fair labor practices.

Applicability of the Labor Act

The Labor Act 2017 is applicable to all entities, including companies, private firms, partnership firms, cooperatives, associations, and other organizations, regardless of their profit motive or the number of employees.

Labor Act 2017: Key Provisions and Highlights

The Labor Act 2017, enacted on August 11, 2017 (Shrawan 27, 2074), is a significant legislation in Nepal that replaced the Labor Act 1992. This Act aims to protect workers’ rights, enhance working conditions, and promote fair labor practices.

Applicability of the Labor Act

The Labor Act 2017 is applicable to all entities, including companies, private firms, partnership firms, cooperatives, associations, and other organizations, regardless of their profit motive or the number of employees. Unlike the previous Act, there is no headcount threshold for its applicability.

Employment Contracts

• Every employee must have a written employment contract, except for casual employees. This contract must outline the terms of employment, including job description, salary, working hours, and benefits.

Types of Employment

The Act categorizes employment into several types:

• Regular Employment: Stable, ongoing work with consistent hours and benefits.
• Time-Based Employment: Employment for a specified period.
• Work-Based Employment: Employment for a specific work or service.
• Part-Time Employment: Work requirement of 35 hours or less per week.
• Casual Employment: Work requirement of 7 days or less per month.

Working Hours and Leave

Working Hours

• Standard working hours are 8 hours a day and 48 hours a week.
• Overtime is limited to 4 hours a day and 24 hours a week, with overtime pay being 1.5 times the regular remuneration. A 30-minute break is mandatory after 5 hours of continuous work.

Leave Provisions

• Weekly Leave: 1 day every week.
• Public Holidays: 13 days annually, with an additional day for female employees on International Women’s Labor Day.
• Home Leave: 1 day for every 20 working days, accumulable up to 90 days.
• Sick Leave: Fully paid up to 12 days, accumulable up to 45 days.
• Maternity Leave: Up to 14 weeks, with 60 days fully paid. Compulsory maternity leave from 2 weeks before the expected date of delivery to at least 6 weeks after delivery.
• Paternity Leave: Up to 15 days, fully paid.
• Mourning Leave: 13 days, fully paid.
• Leave in Lieu: For working on public holidays or weekly off, to be provided within 21 days.

Remuneration and Benefits

• Minimum Wage: As prescribed by the Government of Nepal.
• Increment: Once a year at the rate of half a day’s salary.
• Festival Expenses: An amount equivalent to the monthly remuneration is provided once a year as festival expenses.
• Gratuity: 8.33% of the basic remuneration on a monthly basis, eligible from the first day of employment.
• Provident Fund: 10% contribution from both the employer and the employee, deposited in the Social Security Fund.

Social Security Benefits

• Gratuity: Eligible from the first day of employment, with 8.33% of the basic remuneration contributed monthly.
• Provident Fund: 10% contribution from both the employer and the employee.
• Leave Encashment: Accumulated annual leave up to 90 days and sick leave up to 45 days can be encashed.

Hiring Foreign Nationals

• No foreign national can be engaged in work without a work permit from the Labor Department. Prior to hiring a foreign national, the entity must publish a vacancy advertisement in a national-level daily newspaper to fill the post with Nepali citizens.

Trade Union Rights

• Workers have the right to form and join trade unions. The Act facilitates the registration and functioning of these unions, enabling collective bargaining with employers.

Safety and Health

• Employers must ensure a safe working environment and comply with health and safety regulations. A Safety and Health Committee must be formed in enterprises with 20 or more employees.

Dispute Resolution and Sanctions

• The Act provides for dispute resolution through the Labor Office, Labor Department, and Labor Court.
• Employers who violate the provisions of the Act can face fines, imprisonment, or both. For instance, engaging employees without an employment agreement can result in a fine of up to NPR 5,00,000.

Termination of Employment

• The Act outlines procedures for termination, including notice requirements and severance pay. The probation period is reduced to 6 months from the previous 240 days.

Conclusion

The Labor Act 2017 is a comprehensive legislation that has significantly improved labor rights in Nepal. It ensures fair labor practices, enhances working conditions, and provides robust social security benefits. Understanding these provisions is crucial for both employers and employees to ensure compliance and foster a harmonious workplace.