Labor Legislation of Nepal

By Anil Khadka

Labor Legislation of Nepal

Labor Act, 2048 and Labors Rules, 2050 normally applicable to enterprises having more than 10 employees. Bonus Act, 2030 and Rules 2039

Trade Union Act, 2049 and Rules, 2050

Child Labor Act

Labor Act, 2048

Hiring and Terms of Employment (Chapter 2)
Section Provision
3

Explanation

Classification Management should classify the of Job position in company and send the same to labor office Appointment For the purpose of filling the of Employee vacancy advertisement should be published

4 (1)

4 (1)

Appointment Appointment letter should be given of Employee whilemploying employee.

Probationary Period (Section 4)

Permanent employee after completion of probationary period. (Section 4 of sub-section 2) A maximum period of maximum 240 days. (Section 4 of subsection 2) Public holidays and weekly days off are counted while counting probationary period. (Section 4 of sub-section 2) The Labor Act does not envisage hiring of employees on contract which is very common in the service sector. (Section 4 of sub-section 3)

Mode of Hiring
Permanent

Temporary

Contract

Piece rate worker

Out-sourcing (Security, driving, cleaning etc.)

Conformation as Permanent Employee

Company may terminate probationary service any time, without compensation or prior notice

Conformation letter should be given to the employees who have satisfactorily completed probationary period.
Conformation letter should provide detail terms and conditions of services such as facilities, remuneration, scope of work etc.

Working time for female and minor: 6 am to 6 pm female may deputed other time with consent. (Section- 5)
The labor act permits hiring of workers on contract basis only if the production is required to be increased during certain period. (Section-7)

Maintenance of Record (Section-9)

Separate record to be maintain of the employees. Personnel record should include:
Name, address, DOB and details of citizenship Date of appointment, post and nature of job. Salary and mode of payment Department, leave record or other records

Enterprise should maintain a attendance register

Working Hours
Maximum working hour 8hrs/day or 48hrs/week.

Maximum overtime 4hrs/day or 20hrs/ week.

Maximum working hours for minor below 16 years6hrs/ day or 36hrs/week. Working time for female and minor: 6 am to 6 pm female may deputed other time with consent.

Lunch and weekly off: 30 minutes and one day off in a week.

Retrenchment and Layoff

Grounds for Retrenchment:
Damage in machine, shortage of raw materials, lack of supply of fuel, stockpiling of goods and natural catastrophe.

Layoff:
In case of curtailment of production/ service required Approval of labor office up to 15 days Approval of labor department is required for more then 15 days. Maximum layoff should not exceed 3 months. Retrenchment compensation: Retrenched employee are entitled to 1 month salary for each year of service rendered.

Termination from service

Voluntary retirement Compulsory retirement Probationary Contract employee

Dismissal for misconduct

Dismissed by Department of Labor Retrenchment Disability

Salary/ Remuneration and Benefits

Increment once a year @ day salary.

Contractual employees are not entitled to any extra benefits except provided for the contract.
Overtime payment one and half salary. Salary payment gap maximum 1 month.

Leaves and Holidays

Home Leave: Paid leave of 1 day for every 20 working days. Leave encasement: up to 6o days if accumulated. Public holidays: 13 days in a year and labor relation committee has to decide in the beginning of the year. Sick leave: 15 days half paid sick leave Obsequies Leaves: Maximum 13 days as per the custom of employees Special leaves: If there is no any accumulated leave maximum 6 months during service period not exceeding 30 days in a year and shall not entitled salary . Maternity leave: 52 days pre and post delivery twice in a life time.

Establishment of Welfare Fund

One welfare officer shall have to appoint if there are more then 250 workers/employees. Welfare fund: to deposit 70% amount remaining after distribution of bonus.

Household fund: 5% of net profit.

National level welfare fund: 30% remaining after distribution of bonus Labor relation committee is authorized to operate the welfare fund. Welfare fund can be utilize to provide immediate financial assistance, education, sports, lending on reasonable rate, relief in case of emergency, etc.

Deduction of Remuneration
To realize any amount as fine not exceeding @ rate of 33% of monthly salary until fine not fully realized. To realize any amount to compensate the loss due to negligence @ rate of 25% of monthly salary until fine not fully realized. To realize any advance or excess money @ rate of 25% of monthly salary until fine not fully realized or as per negotiation. To realize any amount pursuance of government order or court decree up to 50% of monthly salary until fine not fully realized.

Arrangement Against Health and Safety

Cleaning, use of disinfectants, drainage etc

Ventilation, light, temperature

Disposal of refuse, dirt, filth Prevention of accumulation of dirt, fumes etc Protective measures for noise pollution No overcrowding Adequate water Separate modern toilet Non smoking zone declaration Compulsory medical checkup

Protection of eyes
In enterprise where glass, mercury, concrete, cement, explosive etc. are used. Protective devices shall have to arrange for welding, gas-cutting.

Provision for safety against fire

Emergency exit Fire extinguishes device Alarm or any signaling device shall has to manage

Protection form chemical substances

Arrangements for protective equipment's.

Dangerous machines to be fenced

A strong fence around dangerous machinery. Only an adult or trained can inspect, lubricate or adjust when the machine is in motion.

Lifting and carrying of excessive weight

Adult male55kg Adult female 45 kg Minor male (16-18) 25kg Minor female (16-18) 20 kg Minor male and female (14-16)

15 kg.

Pressure plant
Ensure that safe working pressure is not exceed License of pressure plant to be provided by factory inspector after inspection.

Use of machinery, tools or equipment

Machinery, tools or equipment shall have to be operated by trained and experienced person. Fence dangerous means for operating energy. Proper condition of repair and maintenance tools and equipment.

Investigation of accident or professional disease

Need to inform to labor office within 3 days If any worker/ employees dies or injured

Compensation Against Injury

All the expenses incurred on treatment shall be paid by enterprise. Full remuneration shall be paid when the treatment in hospital and half of the remuneration for treatment undergone at home. Lump sum of five years salary shall be paid for physically disable employees or the compensation paid to on the basis of percentage of disability. If any worker/employee dies while doing the work designated by proprietor shall have to pay lump sum amount of 3 years remuneration. Any kind of injury or death due to natural calamities shall not be entitled any compensation. Double compensation shall not be received

Retirement Related Benefits

Eligibility-Completion of 3 yrs permanent service Disqualification: Person dismissed on misconduct. of one months salary for every year service rendered for the service for 7 yrs. 2/3 of one months salary for each year of service for more than 7 to 15 years of service. 1 month salary for each year of service for more than 15 yrs. Every enterprise shall have to establish a separate fund in a separate account Employer can choose either gratuity or compensation in case of retrenchment.

Gratuity

Provident fund
As deposited in his/her PF account Contribution: @ 10% of salary by both employer and employees. Entitled to receive after the retirement.

Punishment for Misconduct

Types of punishment
Reprimand/Warning Withholding annual grade increment Suspension up to 3 months Dismissal from service

Grounds for Warning/Reprimand

Violation of any provisions of Labor Act, rules, by-laws, any other instruction or misconduct with costumers. Frequent absence or late coming without permission Misuse of or damage to the equipment/tools installed for the safety or security of the workers.

Grounds for Withholding annual grades

In case commits embezzlement in the transaction of enterprise. In case participates or compels any other person to participate in any authorized strike or in a strike which is declared illegal In case strikes without fulfilling the legal requirements or intentionally slow down the work against interests of the Enterprise;

Grounds for suspension

Creation of disturbance within company premises with the intention of affecting the service or works. Offer or accept bribes. If it is certified that one has Come to duty after consuming alcohol.

Ground for Dismissal

If an employee causes bodily harm or injury, detains the officials of the company with or without arms or causes any violence or destruction or assaults within the premises of the company. If he/she steals the property of the company. If he/she is absent continuously for more than 30 days without obtaining approval of leave. If he/she divulges the secrecy of the company to unauthorized person. If punished for criminal offence involving moral turpitude If he/she has been punished twice for any misconduct.

Procedure for awarding punishment

Hearing Opportunity
Should be given 7 days time to submit explanation in writing. Should state facts of misconduct and possible punishment that may be awarded. Action should be initiated within 2 months from the date of committing of the misconduct.

Punishment should be awarded within 2 months from the date of submission of explanation

Settlement of personnel claims or complaints

In respect of personal grievances

Dispute should be submitted to management in writing The disputes should be settled negotiating with concerned worker/employees within 15 days. In case the dispute remains unsettled concerned worker/employees may file petition to the Labor Office. Labor Office is also required to negotiate with both worker/employees and management and settle the dispute within 15 days. In case the dispute cannot be settled through negotiation Labor Office should be given its decision on it.

Settlement of collective Disputes

Collective Bargaining
Charter of demand to be submitted to management with signature of at least 51% employees if there is no trade union. If there is union, it is authorized to submit charter of demand on behalf of workers/employees Agreement to be made within 21 days from the date of submission of charter of demand If both parties cannot reach an agreement Labor Office negotiates and tries to settle the dispute with in 15 days.

Other measure
Arbitrator or Tripartite Committee with in 15 days.

Coercive Measures
Workers/employees may go on strike

Management may lock out the enterprise

In Respect of facilities and Benefits

In case the enterprise fails to pay the benefits and facilities to be given to the employees or delays its payment complaint should be filed to the Labor Office. Such Complaint should be filed within 6 months form the date when the facilities/benefits become due.

Labor Office makes enquiry and examine the proofs and gives its decision
It may also ask the enterprises to pay compensation in case the delay or non payment of facility is proved.

Coercive measures for settlement of Interest disputes

For Employees- Strike

Employees may go on strike if negotiation held in labor office fails to reach settlement Procedure to be followed to go on strike Resolution to go on strike should be passed by at least 60% of the total worker/employees. Notice of strike should be given to management at least 30 days in advance stating its reason. Notice should be given to the Labor Department, Labor Office and Local Administration as well.

For management-Lockout
Management may lock out the enterprise in the following grounds
In case strike is called without giving notice or it is continued. In case the dispute cannot be settled through the negotiation held before the labor office. Notice of lock out should be given to the workers 7 days in advance Prior approval of government required except in some circumstances. In case there is possibility of damage no prior approval required but notice of lock out should be given to Labor Office and Department within 3 days. Restriction: Tenure of the collective bargaining agreement is of two years and no new demands can be submitted during the tenure of collective bargaining agreement.

Labor Relation Committee

Equal representation of proprietor and worker/ employees. Minimum of 4 and maximum of 20 members. Nepali citizen attained age of 18 can be a member. Tenure will be 2 years.

Functions, duties and power of welfare officer:

Maintaining a cordial relationship.

Solving individual and collective problems.

Motivate and create the work environment. Make a decision having a mutual discussion and dialog. To rendered necessary suggestion to the proprietor related to salary, wages and other benefits. Manage to examine the health of worker/ employees and many more.

Trade Union Act

Right to Organize-Trade Union

Who can join:

All workers and employees (except managers, head of department, secretary, section or unit) of the concerned enterprise.

Registration requirement
At least 25% workers should be the member and signature of 10 member and signature of 10 members is required to form union.

Restriction
No membership more than one union at a time.

Registration of Trade Union Association

Registration required: 50 enterprise level trade union, 5 thousand worker of similar nature enterprise with the prescribed particulars. Register provide certificate within 15 days from the receipt of application when documents complied with the acts.

No trade association of the enterprise shall be eligible to be member of more than 1 trade union association.
Registration remains valid for 1 year if member of such trade union association declines upto 10%.

Registration of Trade Union Federation:

At least 10 trade union association Register provide certificate within 15 days from the receipt of application when documents complied with the acts. No trade union federation of the enterprise shall be eligible to be member of more than 1 trade union federation. Registration remains valid for 1 year if member of such trade union federation declines upto 10%. Registrar may refuse to register the trade union if the necessary particulars not attached, when 25% of worker of concerned enterprise are not a member, name coincides. Trade union shall be required to be renewed in every 2 years, trade union association and trade union federation to be renewed in every 4 years.

Operation, Management and Recognition of the trade union:

Trade union shall be an autonomous body and corporate body with a perpetual succession. Objectives:
To engage in economic and social development of worker by improving working efficiency. To maintain good relationship among worker and employer and assist to enhance the productivity. To make worker dutiful and disciplined. To educate employees to enhance the skill and knowledge. To provide necessary advice to GON to formulate labor policy.

Functions, Duties and Power of Trade Union:

To carry out objectives of trade union Participate in election of authorized trade union To abide by the decisions made by trade union.

Recognition of the Authorized Trade Union:

Authorized trade union shall be recognized for the collective bargaining. Collective bargaining shall remains valid for 2 years form the date of issue of the certificate by the registrar.

Bonus Act, 1974 and Bonus Rules, 1982

Bonus:
Allocation: an amount equal to 10% of net profit. Eligibility: permanent employee, temporary employees, employees working at least 6 months in a year. Disqualification: Casual, substitute and employees/workers who have committed theft or caused damage to companys property, who are participating in illegal strike, creating violence or breaching discipline. Up to the amount equal to six month of wage for worker receiving monthly salary up to Rds.5000. For 5001-15000 up to 4 months wage. More than 15,000 up to 3 months salary.

Submission of Balance-sheet and profit-loss statement :

Make available to labor department within 6 months from close of fiscal year. Labor department may exercise all remarking and checking power if their is false statement. If fails to submit statement at least 5% of net income shall have to distribute as a advance bonus and the remaining amount distributed.

Detail to submit in department of labor within 7 days of bonus distribution.

Distribution of Bonus:

Within period of 8 months from close of fiscal year. Maximum 3 month can be extended if the reason found genuine or may allow to distribute 2 years at a time in following fiscal year. Bonus to be given to the agent or to a member of family.

Settlement of Dispute of Bonus:

Labor office shall settle dispute having negotiation with both parties.

In case dispute remains unsettle labor may ask necessary documents and account statement form both party and take decision on the basis of document and accounts.

If both the parties can not reach the agreement may apple to labor court with in 35 days.

Grounds for Penalty and Punishment:

Those who breaches this act may penalize with upto 5 thousand.

Party dissatisfied with penalty may appeal in the district court with in 35 days.
If any enterprise offence the punishment made under this act manager of such enterprise shall be liable to punishment. In case of any hindrance/ obstruction arises to implement this GON may punish to that party.

Records and Accounts

Name and address of employees entitled to bonus. Date of bonus payment.

Bonus amount received.

Credited amount for the welfare fund.

Child Labor Act, 2056 and Child Labor Rules, 2062

Child: Not having completed the age of 16 Prohibition to engage in work:

Child not attained the age of 14 Risky business (cigarette manufacturing, biri, carpet, weaving, dying, wool cleaning, public transport etc.) Without his/ her will More than 6 hours in a day or 36 hours in week After 6pm and before 6am More than 6 days in a week.

Provision Relating to Engaging a child in work

Information to be given to the labor office when operating risky business with detail.

Approval to be obtained form labor office and from father, mother or guardian of child to engage in work.

certificate of qualification has to obtain from labor office after test by medical practitioner which will be valid for 1 year.

Enterprise shall have to submit detail of enterprise and child to the labor office.

As a worker child shall not discriminate on the basis of sex, race, religion, caste or tribe etc.

Enterprise shall ensure that the proper cleanliness, ventilation light and temperature of workplace.

To settle the dispute regarding age birth registration certificate shall has to check or examination by a medical practitioner.

Enterprise should maintain a proper record of child,

Notice to be displayed in notice board about the matter relating to works in which child should not be engaged.

Provisions Regarding Inspection:

Proprietor shall have to make available all the matter required to examine the enterprise engaging children. Any enterprise engaging child below age of 14 or with out their will shall immediately handover to parents or guardian. If enterprise fails to make necessary provision to engage children at work all the facility given to the enterprise shall be suspended.

Punishments and Appeals:

Those who employee child below 14 shall be liable to imprisonment of 3 months or 10000 maximum or both.

Those who engage child without their shall be punished with 1 year imprisonment or Rs.50 thousand fine or both.

Those who engage child without prior approval, without obtaining qualification certificate, beyond the prescribed time limit, not providing a fair remuneration and benefits and not following a health and safety shall be imprisonment of 2 months or fine upto Rs.5000 or both. Those who engage child with out notice to labor office, without maintaining a record, without affix notice related to work in notice board shall be liable to 1 month or 3000 fine or both.

Leave and other facilities:

Home Leave: Paid leave of 1 day for every 20 working days.

Leave encasement: up to 6o days if accumulated. Public holidays: 13 days in a year and labor relation committee has to decide in the beginning of the year. Sick leave: 24 days paid sick leave Obsequies Leaves: Maximum 15 days as per the custom of employees Special leaves: If there is no any accumulated leave maximum 6 months during service period not exceeding 30 days in a year and shall not entitled salary . Educational Leave: 10 days in a year with out overlap the education of child. Gratuity Fund: Child serving 1 or more than 1 year shall get gratuity fund of 1 months salary for every service rendered year. Provident fund: As deposited in his/her PF account Contribution: @ 10% of salary by both employer and employees. Others: medical facility, insurance of child, 10% of salary as a tiffin allowance, 1 month salary as dahisn allowance, injury or disability facility.