Nepal’s Festival Allowance: Who Gets an Extra Month’s Basic Salary and Are Interns Eligible?

Kathmandu, October 1, 2026

Festival Allowance: What Does Nepal’s Labour Law Say?

As Nepal celebrates Dashain, eligible employees across the country are entitled to an annual festival allowance equal to one month’s basic salary under Section 37 of the Labour Act, 2074 (2017). Employers must provide this statutory benefit once every fiscal year to help workers celebrate their religious or cultural festivals. Employees who have worked for less than a year are also eligible for a proportional payment based on their service period.

Who Is Eligible for the Full Allowance?

Workers who have completed at least one year of service by the payment date are entitled to the full festival allowance. The payment is calculated using their monthly basic salary rather than their total monthly earnings, which may include additional benefits and allowances.

New Employees Can Also Receive the Allowance

Employees do not need to complete a full year to qualify. Those who have worked for less than 12 months by the payment date will receive an amount proportional to their completed service period.

For example, an employee earning a monthly basic salary of Rs 30,000 who has completed six months of service would be entitled to Rs 15,000 as a festival allowance.

Is the Festival Allowance Only for Dashain?

Although commonly associated with Dashain, the allowance is not limited to this festival. Employees can submit a written request to receive the payment during their main religious or cultural festival. If no such request is submitted, employers must provide the allowance during Dashain. The benefit is payable once per fiscal year.

Are Interns Entitled to the Festival Allowance?

Not all interns are treated equally under Nepal’s Labour Act. Section 16 states that student interns working under an agreement between an employer and an educational institution, as part of an approved academic curriculum, are not considered regular workers under the Act. Therefore, they are not automatically entitled to the statutory festival allowance.

However, if such interns are assigned work outside their approved curriculum, they are considered regular employees under the Act. Trainee workers employed under Section 18 are a separate category and should not automatically be excluded from statutory employment benefits.

What if Employers Do Not Provide the Allowance?

The festival allowance is a legal entitlement for eligible workers, not an optional payment based on an employer’s decision or company profits. Employees who do not receive their entitled allowance can raise the issue with their employer and seek remedies through the dispute resolution and complaint procedures provided under Nepal’s labor law.

Why Does This Matter for Employees?

With festival celebrations bringing additional expenses for travel, shopping and family gatherings, the annual allowance provides financial support to eligible workers. The provision also recognizes Nepal’s religious and cultural diversity by allowing employees to receive the payment during their main festival rather than restricting it to Dashain.

For new employees, understanding the proportional payment rule is particularly important, as they may qualify for the allowance even without completing a full year of service.