Nepal’s agricultural sector remains the principal economic activity in the country and has employed about 65% of its working population. Despite the country’s challenges with poverty and reliance on remittances, Nepal has managed to strive towards economic growth since the 1950s through a series of five-year plans.
More information about average salaries in Nepal can be found here.
Employers are taxed at a flat rate of 10% of the employees salaries to contribute towards the country’s provident fund.
Employees are taxed 10% as a contribution towards the country’s provident fund.
The minimum wage is approximately NPR 123 hourly which sums up to NPR 925 per day.
The payroll cycle follows from contract to contract but customarily salaries are paid out monthly.
13th month salary
There is no obligatory rule but it is customary to pay the 13th month salary as bonus.
The general work hours are 8 hrs a day and 40 hrs a week which may stretch to 48 hrs as well. Overtime work hours are restricted at 4 hrs a day and 20 hrs a week
In Nepal, overtime is usually paid at 1.5 times the normal wages.
The list of public holidays in Nepal can be found here.
All employees are entitled to 1 day of paid annual leave for every 20 working days of employment.
If the employment contract is for a period of 1 year, the employee is entitled to a maximum of 15 days of half paid sick leave. If the term of employment contract is less than a year, the no. of sick leaves are calculated on a pro-rata basis.
For female employees, they are entitled to a continuous leave of 52 days with full pay which may start before or after the delivery of the child. Such a leave can only be obtained two times during the period of service in the same organisation if there are no mishappenings.
Paternity leaves vary from employer to employer. The usual paternity leave period is 15 days with full pay.
An employment contract may be terminated on account of voluntary termination by either employer or employee, retirement, expiration of contract or termination by dismissal.
The employers should follow the following notice period in the event of a termination of contract for reason apart from termination by dismissal.
Employees are eligible to severance pay from the first day of employment at a fixed rate of 8.33% of the basic remuneration.
The employee may be under probation for a maximum period of 6 months.
Nepal established a labor code in 2017 to have a mandatory social insurance program for private-sector employees and daily workers. Insured employees are expected to contribute 11% of their monthly earnings while employers are to pay 20% of their payroll. The coverage for this scheme includes old-age benefits, disability and work injury benefits, survivor benefits, sickness and maternity benefits.
ESOPs in Nepal may be offered to workers as a way to motivate them for a long-term commitment to their company. However, this benefit has only been recently offered by an e-commerce company in 2019.
The Standard VAT rate in Nepal is 7.5%