Labour Act 2074श्रम ऐन २०७४
The Labour Act 2074 is Nepal's principal employment statute, in force since 2074 BS (2017 AD) and applied together with the Labour Rules 2075. It sets employment types, working hours, overtime, leave entitlements, probation and notice, and the funded gratuity and social security model.
Also called: Labour Act 2017, Labor Act 2074, Nepal labour law, Labour Rules 2075
Key facts
- In force since
- 2074 BS (2017 AD)Applied with the Labour Rules 2075.
- Working hours
- 8 a day, 48 a weekWith one weekly day off.
- Overtime
- 1.5 times basicCapped at 4 hours a day and 24 a week.
- Probation
- Six months maximumConfirmation follows, or the engagement ends.
- Employment types
- FiveRegular, work-based, time-bound, casual and part-time.
What the Act covers
The Act is the reference point for almost every HR policy question a Nepali company will face. Rather than reading it end to end, most HR teams need the handful of provisions that drive payroll and leave configuration.
- Employment types: regular, work-based, time-bound, casual and part-time, each with its own rules on contracts and termination.
- Working hours: eight a day and forty-eight a week, with at least one day off each week.
- Overtime: paid at one and a half times basic remuneration, capped at four hours a day and twenty-four a week.
- Probation: a maximum of six months, after which the employee is confirmed or the engagement ends.
- Leave: weekly rest, public holidays, home leave, sick leave, mourning leave, maternity leave and paternity leave, each with a defined entitlement.
- Festival expense: one month's basic remuneration once a year.
- Gratuity and social security: funded monthly into the SSF or an approved fund rather than settled at exit.
Why it matters for how you configure payroll
Most compliance failures in Nepali payroll are configuration failures rather than deliberate ones. A leave policy that grants annual leave as a flat number of days instead of accruing it against days worked, an overtime rate calculated on gross rather than basic, or a probation period quietly running past six months are all ordinary settings that drift out of line with the Act.
Writing the entitlements into the system once, and letting it accrue and calculate rather than doing it by hand, is what keeps the policy and the practice the same document.
Labour Act 2074, answered
Six months. At the end of it the employee is either confirmed in the role or the engagement ends. There is no provision for running probation indefinitely.
Overtime is paid at one and a half times basic remuneration, and it is capped at four hours in a day and twenty-four hours in a week.
Eight hours a day and forty-eight hours a week, with at least one day off per week. Hours beyond that are overtime and carry the higher rate.
- Labour Act 2074 (2017) and the Labour Rules 2075.
This page explains general practice in Nepal. It is not legal or tax advice, and statutory figures are revised from time to time. Check the current Act, rule or notice before acting on it.
Related terms
- Employment Typesरोजगारीका प्रकारNepal's Labour Act 2074 recognises five employment types: regular, work-based, time-bound, casual and part-time. The type decides how the contract can end, what entitlements apply, and what has to be in writing.
- Probation Periodपरीक्षणकालProbation is the initial period during which an employer assesses a new employee before confirming them. Nepal's Labour Act 2074 caps it at six months, after which the employee is confirmed or the engagement ends.
- Overtimeअतिरिक्त समयOvertime is time worked beyond the standard eight-hour day or forty-eight-hour week. Under Nepal's Labour Act 2074 it is paid at one and a half times basic remuneration and is capped at four hours a day and twenty-four hours a week.
- Working Hoursकामको समयNepal's Labour Act 2074 sets working hours at eight a day and forty-eight a week, with at least one day of rest each week. Time worked beyond that is overtime and carries the higher rate.
- Home Leaveघर बिदाHome leave is Nepal's annual paid leave entitlement. Under the Labour Act 2074 an employee earns one day of home leave for every twenty days worked, and unused days accumulate up to a ceiling of ninety.
- GratuityउपदानGratuity is a retirement benefit an employer funds throughout an employee's service rather than paying as a lump sum at exit. Under the Labour Act 2074 the employer deposits 8.33% of basic salary every month into the Social Security Fund or an approved retirement fund.
- Annual BonusबोनसThe annual bonus is a share of an enterprise's net profit distributed to its employees under the Bonus Act 2030. Ten percent of net profit is set aside for the purpose, and what remains after distribution goes to welfare funds.
- Festival Expenseचाडपर्व खर्चFestival expense is a statutory payment of one month's basic remuneration, made once a year at the festival the employee celebrates. It is the Nepali equivalent of a thirteenth-month salary, and it is an entitlement under the Labour Act 2074 rather than a discretionary bonus.
- Maternity Leaveप्रसूति बिदाMaternity leave in Nepal is ninety-eight days under the Labour Act 2074, of which sixty days are paid at full remuneration. It can begin before the expected delivery date, and the entitlement is the employee's regardless of length of service.
- Minimum Wageन्यूनतम पारिश्रमिकThe minimum wage is the lowest remuneration an employer in Nepal may lawfully pay, fixed by the Government of Nepal on the recommendation of the Minimum Remuneration Fixation Committee. It is published as a basic component plus a dearness allowance and is revised on a recurring cycle.
- Mourning Leaveकिरिया बिदाMourning leave is thirteen days of leave granted to an employee who has to perform funeral rites, under Nepal's Labour Act 2074. It is commonly called kriya bida.
- Notice Periodसूचना अवधिA notice period is the time between notifying the other party that employment will end and the last working day. In Nepal the requirement depends on the ground for ending the engagement and on what the contract says.
- Paternity Leaveपितृत्व बिदाPaternity leave in Nepal is fifteen days of paid leave for an employee whose spouse has given birth, granted under the Labour Act 2074. It is sometimes referred to as maternity care leave.
- Public Holidaysसार्वजनिक बिदाPublic holidays are the days off an employer must grant in addition to the weekly rest day. The Labour Act 2074 sets thirteen days a year, with one additional day for female employees, and the specific dates follow the government's annual calendar.
- Sick Leaveबिरामी बिदाSick leave is paid leave for illness. Under Nepal's Labour Act 2074 an employee is entitled to twelve days a year at full remuneration, and unused days accumulate up to forty-five.
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