9 Labour Rules Every Employee and Employer in Nepal Should Know

Most people start a job thinking about salary, working hours, and maybe leave. But Nepal’s Labour Act, 2017 (2074) covers much more than that. It sets minimum standards for employment contracts, overtime, festival expenses, leave, workplace safety, part-time work, resignation, termination, and what workers can do when a dispute cannot be settled.

The law was introduced to protect workers’ rights and benefits while also making the responsibilities of employees and employers clearer.

Here are nine parts of the law that are especially useful to know.

1. Your Job Should Come With a Contract

Under Section 11, an employer generally cannot hire someone without entering into an employment contract. That contract should spell out important things such as pay, benefits, working conditions, and other employment terms.

There is an exception for casual employment, where a written contract is not required.

And no, a written contract does not automatically mean there is no employment relationship. Section 12 says a verbal arrangement or casual employment can still establish an employer-employee relationship.

Legal basis: Sections 11 and 12

2. An Apprentice Is Not Automatically a Regular Employee

The law has separate rules for apprentices/ interns.

Under Section 16, a company can take someone as an apprentice through an agreement with an educational institution, as long as the training follows that institution’s approved curriculum.

In that situation, the apprentice is not treated as a regular worker under the Act. But there is an important catch: if the company makes the apprentice work contrary to that approved curriculum, the person is deemed to be in regular employment.

This matters for students who are commonly called “interns.” The Labour Act itself uses the legal term apprentice for this arrangement.

Legal basis: Section 16

3. There Is a Limit to Your Workday

Long working days may be common in some offices, but that does not mean working hours are unlimited.

Under Section 28, workers generally cannot be made to work more than eight hours a day and 48 hours a week.

The same section says workers should get a 30-minute break after five continuous hours of work, and that break counts as part of the working hours.

Legal basis: Section 28

4. Overtime Comes With Limits and Extra Pay

Staying late at work is not supposed to be an open-ended requirement.

Under Section 29, an employer generally cannot force a worker to work beyond the normal working hours. The Act does allow exceptions where not completing the work could affect someone’s life, health, or safety, or could cause serious loss or damage to the employer.

When overtime is required, Section 30 generally limits it to four extra hours a day and 24 hours a week.

And under Section 31, overtime must be paid at 1.5 times the basic rate for regular working hours.

For example, if your basic hourly rate is Rs. 100, the overtime rate would be Rs. 150 per hour.

Legal basis: Sections 29, 30 and 31

5. Festival Expense Is Written Into the Law

Festival expenses are sometimes treated like a company bonus or tradition, but the Labour Act specifically provides for it.

Under Section 37, a worker is entitled each year to festival expenses equal to one month’s basic remuneration.

A worker can make a written request to receive the payment for the main festival they celebrate according to their religion, culture, or tradition. If no request is made, the Act says it should be paid at Dashain.

If the worker has not completed a full year of service by the payment date, the amount is calculated in proportion to the period they have worked.

The important distinction here is that the Act refers to basic remuneration, so this does not necessarily mean one month of the worker’s total take-home pay.

Legal basis: Section 37

6. Workers Have Specific Leave Entitlements

Calling in sick or taking maternity leave is not simply a matter of company generosity. The Labour Act sets specific entitlements.

Under Section 44, workers are entitled to 12 days of paid sick leave each year. For workers who have worked for one year or less, the leave is calculated proportionately. A medical certificate is required for more than three consecutive days of sick leave.

Under Section 45, a pregnant worker is entitled to 14 weeks of maternity leave. The Act provides full remuneration for 60 days of that period, subject to provisions involving the Social Security Fund.

A male worker whose wife is going to give birth is also entitled to 15 days of paid maternity-care leave.

There is also 13 days of mourning leave with full remuneration in the circumstances listed under Section 48.

Legal basis: Sections 44, 45 and 48

7. Part-Time Workers Can Work Somewhere Else

Part-time workers have an interesting protection that many people may not know about.

The Act defines part-time employment as work of 35 hours or less per week.

Then Section 20 makes the rule very straightforward: a part-time worker cannot be restrained from working elsewhere.

So if someone is genuinely employed part-time, their employer cannot simply tell them that they are legally barred from having another job.

Legal basis: Sections 10 and 20

8. Workplace Safety Is Not Optional

A safe workplace is not just good company policy. It is part of an employer’s legal responsibility.

Under Section 69, employers must make proper safety arrangements, provide necessary safety information and training, arrange safe entry and exit, and provide required protective equipment.

Workers also cannot be charged for safety-related facilities or equipment.

But safety is not only the employer’s responsibility. Section 73 requires workers to follow safety instructions, use equipment carefully, and actually use the protective equipment provided to them.

Legal basis: Sections 69 and 73

9. Resignation and Final Pay Have Deadlines Too

Leaving a company has rules on both sides.

Under Section 141, a worker can resign by submitting the resignation in writing. The employer must accept it within 15 days and inform the worker.

If the employer does not accept it within that period, the resignation is considered accepted from the following day after the 15-day deadline expires.

Once employment ends, Section 148 says the employer must pay the worker’s outstanding remuneration and other benefits within 15 days.

If those amounts are not paid within that period, the Act says remuneration continues to be payable until the amount is settled, as if the worker were still in service.

Legal basis: Sections 141 and 148

Can Your Employer Just Fire You?

Not simply because they feel like it.

The Labour Act says employment cannot be terminated outside the process set by the Act, its rules, or applicable workplace bylaws. A proper and sufficient reason must be given.

Depending on the situation, employment may end because a fixed-term contract has expired, a specific job has been completed, work performance has remained poor for the required period, health conditions make continued work impossible, serious misconduct has occurred, or the company needs to retrench workers.

For most terminations other than dismissal for misconduct, Section 144 also requires notice.

A worker employed for up to four weeks generally gets at least one day’s notice. Someone employed from four weeks to one year gets at least seven days’ notice, while someone employed for more than one year gets at least 30 days’ notice.

If an employer ends the employment without giving the required notice, the Act says the employer must pay an amount equal to the remuneration for that notice period.

What If a Worker Thinks the Decision Is Unfair?

This is where the Labour Court becomes important.

The Labour Act does not leave workers or employers with nowhere to go when a workplace dispute becomes serious.

Under Section 151, the Government of Nepal can establish Labour Courts to hear labour-related cases. The Court has powers to examine witnesses and evidence, inspect workplaces, issue interim orders, and uphold, suspend, or change certain decisions made by a Labour Office or an employer.

One of the most useful provisions for workers is Section 165.

If a worker disagrees with an employer’s decision to dismiss or punish them for misconduct, they can appeal directly to the Labour Court within 35 days of receiving notice. For matters handled by labour authorities, workers may also approach the Labour Office or Labour Department first. If they are dissatisfied with the decision made there, they can appeal to the Labour Court within 35 days.

That does not mean every workplace disagreement goes straight to court. The Act also provides procedures through employers, Labour Offices, mediation, and other dispute-resolution mechanisms depending on the type of dispute.

But when the law gives a right of appeal, the Labour Court can become the place where a disputed termination, punishment, or labour decision is formally challenged.

In cases that the Labour Court itself originally hears and decides, Section 161 allows an appeal to the Supreme Court within 35 days of learning of the Labour Court’s order or judgment. Decisions made by the Labour Court while itself hearing an appeal are final under the Act.

Legal basis: Sections 151–161 and 165

There Is Also a Time Limit for Complaints

Another point worth knowing is that labour complaints should not simply be left indefinitely.

Under Section 162, where someone acts in violation of the Labour Act or its rules, the aggrieved person, or a trade union acting with that person’s written consent, may make a complaint to the competent authority generally within six months of the violation.

The correct authority depends on the type of complaint. Some matters are handled first by the Labour Office or Department, while certain matters fall within the Labour Court’s powers.

Why These Rules Matter

Most workplace problems do not begin with a courtroom. They begin with ordinary things: a contract that was never properly explained, overtime that became routine, a payment that did not arrive, a resignation that was ignored, or a worker suddenly being told not to come back.

That is why knowing the basics matters.

Nepal’s Labour Act lays out rules for what should happen from the beginning of a job to the end of it. It covers the contract you sign, how long you can work, what happens when you stay late, what leave you can take, who is responsible for workplace safety, and what happens when either side wants to end the employment relationship.

It also gives workers and employers a legal path when they cannot resolve a dispute themselves, including access to the Labour Office, Labour Department, and, in appropriate cases, the Labour Court.

For workers, understanding these rules can help separate a frustrating workplace experience from something that may actually violate the law.

For employers, the same knowledge can prevent avoidable disputes. Clear contracts, proper records, fair procedures, and following legal deadlines can save both sides a much bigger problem later.

Source: Labour Act, 2017 (2074), Nepal Law Commission.

This article is intended for general information only. A specific labour dispute may also depend on the Labour Rules, Social Security laws, workplace bylaws, collective agreements, sector-specific laws, and the facts of the individual case.