Global HR Compliance in Nepal

Hiring employees in Nepal can provide international companies with a cost-effective, loyal workforce and specialised capabilities in technical and service roles. But navigating Nepal’s employment regulations requires close attention to procedural detail, government enforcement patterns, and the real risks of informal hiring models.

Whether you’re building a remote team, contracting staff for a development project, or formalising long-standing local arrangements, maintaining compliance is critical. The legal framework is evolving, with tighter enforcement around documentation, tax remittance, and foreign worker eligibility. Mistakes, even unintentional ones, can lead to reputational risk, fines, or delays in work authorisations.

Acumen International enables you to hire legally in Nepal without setting up a local legal entity. Through our Global Employer of Record (EOR) solution, we become the formal employer on paper, assuming responsibility for payroll, tax, social security, and documentation, while you retain full control over the employee’s role, reporting, and performance.

This guide outlines key employment compliance considerations in Nepal, and how Acumen supports your workforce structuring end to end.

Why Global Employers Choose to Hire in Nepal

Hiring in Nepal is often driven by a combination of operational efficiency and role-specific strategy. Some of the most common drivers include:

• Service delivery at scale: Nepal’s workforce is increasingly integrated into regional support, customer operations, and financial processing teams. English fluency and loyalty make it suitable for offshore hubs with long retention cycles.
• Specialist technical capabilities: Especially in software development, QA, and systems support, Nepalese professionals offer cost-accessible technical talent with strong upskilling potential.
• Project-based hiring: NGOs, international contractors, and donor-funded initiatives often hire local talent for short-term or cyclical delivery without needing to establish an entity.
• Cost control: Compared with larger APAC markets or even nearby alternatives like India or Bangladesh, Nepal offers attractive total employment cost ratios without sacrificing skill.

But these benefits only materialise when the employment structure is sound. Attempting to engage talent informally or via offshore contracts often triggers misclassification risk, tax non-compliance, or permanent establishment exposure.

Employment Contracts in Nepal

All employment in Nepal is governed by the Labour Act, 2017 (2074 BS), which sets mandatory minimum conditions for contracts, pay, leave, and termination. The law permits multiple forms of employment, but documentation must match the chosen model.

Recognised Employment Types:

• Regular employment (default for open-ended full-time roles)
• Time-bound employment (for fixed-duration contracts)
• Task-based employment (for project or deliverables-specific roles)
• Part-time employment (≤35 hours per week)
• Casual/ad-hoc employment (max 7 days per month)

Written contracts are required for all but the most limited ad-hoc roles. Any clause that undermines statutory entitlements, such as reduced leave or below-minimum wages, is automatically void.

Working Hours and Leave

Working Hours

Standard hours are limited to 8 hours per day, 6 days per week (48 hours total). Employers must provide a minimum 30-minute break after 5 hours of continuous work.

Overtime

Permitted only with employee consent and capped at 4 hours per day and 24 hours per week. Overtime must be compensated at 1.5x the base hourly rate.

Annual Leave

Employees earn 1 paid leave day per 20 days worked. Leave accrues continuously and may be carried forward if unused within the calendar year.

Sick Leave

After 1 year of service, employees are entitled to 15 days of half-paid sick leave annually. For absences longer than 3 days, employers may require a valid medical certificate.

Maternity Leave

Female employees are entitled to 52 days of paid maternity leave, available for two pregnancies. If the child does not survive, entitlement extends to future pregnancies. This leave can be split before and after childbirth.

Other Leave

• Obsequy Leave: 13 days for death of close family
• Home Leave: 15 days per year for permanent home visits
• Unpaid Leave: Available by mutual agreement or for public service duties

Minimum Wage and Compensation

As of the latest update, Nepal’s legal minimum wage is NPR 17,300 per month. This covers both unskilled and skilled categories unless a specific sectoral wage agreement applies. Minimum wage is reviewed by the Ministry of Labour and Employment and may adjust based on inflation and political considerations.

Employers are advised to verify current rates at the time of hire, particularly in sectors such as construction, garments, and hospitality, where floor wages may differ under tripartite agreements.

Compensation must be paid in Nepalese rupees through traceable channels. Payslips are mandatory and must include gross salary, itemised deductions, and net payable.

Probation and Confirmation

The maximum legal probation period in Nepal is 6 months. If the employment is not terminated at the end of this period, it is considered automatically confirmed. During probation, employees retain full access to statutory leave, wages, and notice protections unless otherwise stated in the contract.

Termination, Notice, and Severance

Termination Conditions

Termination rules depend on contract type:

• Fixed-term contracts end automatically on expiry unless extended
• Open-ended contracts require valid cause, mutual agreement, or compliance with notice periods
• Dismissals for misconduct or redundancy must follow specific legal processes

Notice Periods

• 15 days for employees with less than 1 year of service
• 1 month for employees with more than 1 year of service
• No notice required during valid probation or in proven gross misconduct cases

Severance

Where employment is terminated without cause during the contract term, the employer is liable for remaining period’s salary and benefits. Dismissal during probation may be exempt from severance unless otherwise agreed.

How Acumen International Helps You Hire in Nepal

Direct Employment Without a Local Entity

We enable you to employ full-time workers in Nepal without opening a branch, subsidiary, or representative office. Acumen acts as the legal employer on paper, absorbing all compliance responsibility while you retain full operational management of the role.

Full-Scope Compliance Coverage

We handle employment contracts, payroll processing, income tax and social contribution filings, leave tracking, and termination documentation—all aligned with the Labour Act and enforced local norms. You receive compliant, inspection-ready records without needing legal or HR staff on the ground.

Remote, Cross-Border, and Project Roles

Hiring in Nepal often involves complex local arrangements, whether you’re staffing a donor-funded development programme, employing Nepali professionals for fixed-duration assignments, or formalising long-standing freelance or casual work structures.

We tailor your employment model to the realities of your project, ensuring full compliance with the Labour Act and local enforcement standards.

Acumen Internationa; helps:

• Navigate unique constraints on short-duration or assignment-based roles, including reporting duties. and tax exposure
• Structure fixed-term and task-based employment legally, with compliant documentation.
• Transition informal or recurring contractors to full-time employment without regulatory gaps.
• Avoid misclassification risk when combining international funding and in-country delivery teams.

Immigration and Global Mobility Support

For foreign nationals relocating to Nepal, or Nepalese professionals working abroad, we assist with immigration filings, work permits sponsorship, visa options, and documentation management under local Department of Labour and Immigration law.

Model Employment Costs with the Global Payroll Calculator

Use our Global Payroll Calculator (GPC) to estimate total employer costs, tax liabilities, net take-home pay, and social security contributions for Nepal-based hires. Compare multiple roles or jurisdictions and plan with confidence before committing to expansion.

Global Workforce Support Across 190+ Countries

Nepal may be one part of your regional or global growth plan. With Acumen, you manage hiring, payroll, and compliance through a single provider, avoiding fragmentation, duplicate contracts, or inconsistent legal interpretation across markets.