Nepal implements new labor law

The Nepalese government has introduced a new labor law that aims to eliminate existing ambiguities. 
The new law has a broader scope than the previous law covering the following: 
  • Any entity operating in any industry, profession or service, with or without profit, regardless of number of workers; and
  • Representatives or workers hired by an overseas entity undertaking promotion, sales and marketing activities in Nepal.


New employment classification.

The new law introduces several new categories of employment based on the nature of work performed. This includes regular employment, work-based employment (hired for a specific project), time-based employment (hired for a specific amount of time), casual employment (hired for an unspecified amount of time), and part-time employment. Although the new scope will regulate more foreign nationals, the effects will be minimal and validity of stay will not be affected. 
Employment period 
It is now mandatory to include the period of employment in the employment contract. If the period of employment is not stipulated, the contract will be deemed to be valid for three years. 
Relaxed eligibility. 
The type of position for which a foreign national can be hired has been changed from a "skilled technical position" to "skilled position". This allows foreign workers without technical skills to work in Nepal, increasing the pool of eligible foreign nationals seeking to enter for work.  
  • The rules relating to labor market testing remain unchanged. Foreign nationals and their employers are still subject to the same processes to be able to work in Nepal.  
  • The new law does not yet set out the maximum period for employment for a foreign national. The rule that allows foreign nationals to work to five to seven years still applies.


Repatriation of monies earned

Employees are now able to remit up to 75 percent of their Nepalese paid salary to their home country in convertible foreign currency. The regulations concerning remittances have now been classified under the new law. 
Mandatory contribution to employee pension fund. 
An employer must contribute 8.33 percent of the employee's monthly income to the employee's pension fund, commencing from the date of hire. This requirement applies only to employees hired on or after September 4, 2017 and who continue to remain employed at December 22, 2017.  
Source: This update was prepared using information from the Government of Nepal Department of Labour.
Disclaimer: The above information is provided for general information purposes only and should not be construed as legal advice. If you have any further inquiries regarding the applicability of this information, please contact Emily Wang, China Team Lead, Visa and Immigration Services or Debra Beynon, Regional Immigration Manager, APAC.