Employer of Record in Nepal

The process of growing your business in Nepal is made easier by EOR services. Without creating a separate legal corporation, businesses may quickly hire qualified Nepalese employees using our cutting-edge HR platform. Payroll, taxes, and other regulatory compliances are just a few of the things we manage while onboarding and maintaining your remote staff to make sure you have a hassle-free experience.

Overview of Nepal

• Population: 29,458,427
• Currency: Nepalese rupee (NPR)
• Capital city: Kathmandu
• Languages spoken: Maithili, Nepali, Bhojpuri, Tharu, Thamang.
• GDP: USD 122.62 billion (2021 estimate, PPP)

Career Prospects in Nepal

The employment rate in Nepal was 68% in 2017, the lowest unemployment rate in South Asia, according to the World Bank’s 2018 report. The former Labor Act 2048 in Nepal has been replaced with the new Labor Act 2074, which contains improvements to employment legislation that provide greater facilities and rights for workers across all industries and sectors.

Employee entitlements of the new labour law are as follows:

Entitlements	Explanation
Statutory Work Hours	8 hours a day and 48 hours a week
Non-Nepalese People at Work	A business having a physical presence in Nepal is not allowed to employ a foreign worker unless it has unsuccessfully tried to find a local Nepalese professional through several ads in journals and newspapers. According to provisions 22 and 23 of the Labor Act of Nepal, 2074, foreign people are only allowed to work in Nepal if they obtain a work permit.
Leaves	Employers in Nepal are allowed to choose whether to give their staff one or two days off every week, either through a set or rotating weekly off schedule. All employees in the nation are granted 13 yearly public holidays by the government. Every year on Women’s Labor Day, women are given one additional holiday.  The amount of annual leave is calculated using the number of working days. Every employee in Nepal is entitled to 12 sick days annually under the Labor Act. Employers may decide on sick leave in proportion to an employee’s length of employment for those who have worked fewer than 365 days.  Employees are eligible for up to 13 days of bereavement leave in the event of a death in the family or personal bereavement.
Public and optional holidays	Tihar festival Democracy Day Mahashivratri Holi Nepali New Year International Workers’ Day Raksha Bandhan Teej Dashain Optional: Nai Diwas Eid-ul-Fitr Edul Aajha Christmas
Overtime	If an employee works longer than the required number of hours, they are entitled to overtime pay. Section 31 of the New Labor Law states that an employee’s overtime pay is equal to one and a half times their regular pay. An employee may work a maximum of 24 hours of overtime each week.
Minimum wages	Rs. 15000 per month and Rs. 77 per hour (average)

Contractors Vs. Full-time Employees

Employers in Nepal are free to choose the sorts of employment they want to fill their positions with;

• Part-time employment: is defined as any occupation that requires a person to put in 35 or less hours per week.
• Regular employment: This is a full-time position where the employer and employee have come to an understanding on the conditions of the job, including the working hours, benefits, and pay.
• Time-based employment: As long as all sides agree to it, employers can recruit employees for a certain time period and require them to do any sort of professional job.
• Work-based employment, sometimes referred to as contract employment, occurs when an employer engages a worker for a certain job but does not define the length of the assignment. 
• Casual employment: Employers engage people for any job or task that must be completed in a month but for no more than seven days.

According to Nepal’s employment contract legislation or labour laws, when employing a worker for a particular position, an employer must expressly define the terms of service, compensation, and length of service in the employment contract. Depending on your company’s needs, we can help you decide whether to hire contract workers or full-time staff. Depending on the kind of employment you select, our team of legal experts can draft particular employment contracts for you.

Recruitment in Nepal

A business that wants to employ people in Nepal must adhere to regional regulations and standards. The chosen applicant must get an appointment letter from the newly appointed general manager of the Nepalese firm, which must include information about the position to be filled, compensation, and any applicable service requirements. The government implores businesses to give preference to Nepalese experts over overseas applicants.

An employee’s eligibility for permanent employment after a year of uninterrupted service is determined by their performance, productivity, punctuality, and discipline.

According to Nepalese labour law, employers are required to provide acceptable working conditions for women who are only permitted to work from six in the morning to six in the evening.

In Nepal, a clean and sanitary workplace, adequate ventilation, and a comfortable room temperature are all benefits for employee health. Employers are responsible for preventing the buildup of hazardous materials and for providing their staff with the essential personal protective equipment. During working hours, potable water must be accessible, and workplaces should designate no-smoking areas. If the nature of their job or the workplace environment poses a risk to an employee’s health, employers are required to make arrangements for an annual health checkup.

Probation & Termination

Formal contracts and probationary employment are the two categories into which employment agreements in Nepal may be divided. A formal contract is a written agreement that describes every aspect of the task, including its purpose, the duration of the contract, and the terms of payment. Probationary employment, on the other hand, is a temporary position that does not imply permanent employment. In Nepal, unless it is specifically stated in the employment contract, an employee cannot request permanent employment from the company while on probation. For workers hired to permanent posts in Nepal, the typical probationary term is one year. The employer provides a verbal or written employment agreement to the employee during the probationary period.

Check out the table below for understanding it. 

Specifications	Details
Retirement	The retirement age in Nepal is set at 55 years of age. The employer has the power to ask a worker to leave the firm once they reach this age. However, the employer may increase the employee’s service term by up to five more years if they are deemed essential to the management of the business. Based on the employee’s performance and contribution to the business, the employer has the freedom to make this choice.
Participation in riots	If an employee is shown to have been directly or indirectly involved in inciting riots or participating in them, the Nepalese Department of Labor has the ability to terminate their employment contract.
Medical reason	The employee’s health is another reason for firing them. However, if an employee sustains an injury at work, the employer is not permitted to terminate their employment for at least a year, or six months if a medical expert certifies it.
Other reasons	An employee may also be suspended by an employer due to poor performance or for any other good cause.
Procedure for terminating an employee	The employee may respond in writing to any claim made by the employer for any reason for termination, but only within seven days of receiving notice of the termination.

In Nepal, an employee who chooses to quit is required to provide their employer a written notice of termination 15 days before the day they plan to stop working. Within this time frame, the resignation is deemed accepted if the employer doesn’t respond. However, if the employee stays on after the designated notice period, the resignation is deemed withdrawn, and they are still required to work.

EOR Solution

It can take a long time and be very difficult to expand a firm to a foreign country like Nepal without careful planning. However, using our Employer of Record (EOR) solution can make the procedure a lot simpler. Businesses may swiftly and easily hire employees in Nepal with our EOR solutions while still adhering to regional labour rules. All employment-related duties, such as monthly payroll, work permits, employment contracts, and taxation, are taken care of by our tech-enabled HR platform, which makes the process hassle-free for the employer. We can assist your company’s expansion into Nepal successfully and successfully thanks to our worldwide connections and experience.

Types of Visas in Nepal

Except for those with Indian passports, all foreign people intending to work in Nepal must get a work visa. Others can obtain a Visa on Arrival in Nepal, while nationals of some nations must apply for a Nepalese visa well in advance of their intended arrival. It’s crucial to be aware that depending on the type of employment and length of stay in Nepal, different work visa requirements may apply. To guarantee a simple and hassle-free visa application procedure, it is advised to speak with a reputable visa service provider.

Types of Visas	Details
Business	issued to professionals travelling to Nepal for business or investment purposes.
Tourist	issued to foreign visitors coming to the nation for vacation or tourism.
Relationship	issued by the Nepal Department of Immigration to members of Nepalese families or individuals who are living abroad.
Transit	People transiting through the country for less than or equal to 24 hours are granted this visa-on-arrival to 24 hours
Work	issued to visitors who have already arrived in the nation with a tourist visa and the necessary paperwork allowing them to work in Nepal.

You must adhere to the nation’s visa rules if you are an outsider looking to work in Nepal. The Department of Labor must provide you a work permit, and the concerned ministry must issue you a letter of reference. The Department of Immigration in Nepal will also need to submit a filled-out Nepal job Visa Application form, your appointment letter or job contract, tax clearance from your hiring firm, passport photocopies, and a photocopy of your Nepal visa. The monthly cost of a Nepal Work Visa is USD 75.

Work Permits

The main governing bodies responsible for providing a work permit in Nepal are tabulated below.

Authority	Approval
Department of Immigration	Issues non-tourist visa after checking the work permit authorised by the Department
Department of Labor	provides foreigners with a work permit for Nepal

The Department of Labor must provide a work permit before a foreign individual is able to engage in lawful employment in Nepal. This can be acquired via a standard approach or a recording-based method. For the former, it is vital to use media advertising to demonstrate the lack of qualified local labour. For the latter, however, organisations operating with foreign investment are permitted to hire up to three foreign nationals without demonstrating their unavailability.

For your business, our efficient database administration can make this procedure simpler. Remember that Nepal does not issue work permits without a job offer, and that foreign technicians who work on new equipment or technologies for up to three months must register their information with the Department of Labor in order to receive a work permit.

Payroll & Taxes in Nepal

Tabulated below are Nepal payroll tax rates and their details.

Tax	Explanation
Payroll tax	Employers deduct Nepal employer payroll taxes according to the applicable slab rates from the employee’s salary or benefits, subject to the rebates and deductions allowed by the Income Tax Act.
Land tax	The municipal and provincial governmental entities announce the tariffs.
Stamp duty	The Stamp Duty Act governs stamp duty, which is acknowledged by the government of Nepal. It is assessed on significant papers and deeds.
Dividends – Franked and Unfranked	5%
Interest	15%
Dividends – Conduit foreign income	5%
Intellectual property royalties	15%
Managed Investment Trusts Fund Payments	15%

Navigating the business climate may be difficult for foreign enterprises seeking to grow in Nepal. To ensure a straightforward and trouble-free process, it is advisable to work with a respected Employer of Record (EOR). With the aid of our team of local specialists, your holding company can be formed in Nepal. These professionals can also guide you through the paperwork and compliance needs.

The most popular business structure in Nepal is the Limited Liability Company (LLC), and it typically takes 15 days to file after all procedures are finished. In Nepal, any corporation may open a business using the national currency without a minimum share capital requirement.

You can focus on managing your business while we take care of the administrative and legal aspects of recruiting personnel in Nepal if you work with us. You can count on us to help you take advantage of the huge potential of the Nepalese market without having to worry about compliance issues.