Nepal Government Directs Private Sector to Pay Festival Allowance to Employees

Kathmandu, October 12, 2026: Nepal’s Department of Labour and Occupational Safety has directed private businesses, industries and private educational institutions to ensure that their workers and staff receive the festival allowance provided under the country’s labour law.

The department has contacted major private-sector umbrella organizations and asked them to instruct their affiliated businesses to comply with the legal requirement.

Businesses Told to Pay Workers

The department issued instructions to organizations including the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Confederation of Nepalese Industries (CNI) and Nepal Chamber of Commerce.

The organizations have been asked to inform their affiliated businesses and establishments that eligible employees must receive their festival allowance.

The directive comes during the Dashain festival period, when festival-related expenses increase for many households.

Private School Teachers and Staff Also Covered

The department has separately written to private school umbrella organizations PABSON and N-PABSON, asking them to ensure that teachers and other employees working at private educational institutions receive the allowance.

The requirement is therefore not limited to workers in businesses and industries but also applies to eligible employees working in private schools covered by the Labour Act.

How Much Festival Allowance Should Workers Receive?

Under Section 37 of Nepal’s Labour Act, 2074, workers are entitled to a festival allowance each year for celebrating a major festival according to their religion, culture and tradition.

For an employee who has completed one year of service, the allowance is equivalent to one month of basic salary.

Workers who have not completed a full year of service are still eligible, but their allowance will be calculated proportionately according to their period of employment.

This means the provision is not limited only to employees who have worked for the same employer for a full year.

Employers Could Face Complaints for Non-Payment

The department has also reminded employers that payment of the festival allowance is a legal requirement, rather than a voluntary benefit offered at an employer’s discretion.

If an employer fails to provide the allowance as required by law, affected workers can approach the relevant labour office and file a complaint. The matter can then proceed according to existing labour laws and procedures.

The latest directive seeks to ensure that workers across private businesses and educational institutions receive the festival benefit to which they are legally entitled.