Nepal PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Nepal to companies willing to enter the Nepali market or hire local/expat employees in this region.

The common approach requires establishing a subsidiary in Nepal.  Meanwhile, our solution allows you to set up the operations in Nepal within days hence save time and money.  WeHG would engage candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% flexible but will work on your behalf.

Nepal fast facts

Population, million: 29
Land area:  147,516 km²
Capital: Kathmandu
Local currency: Nepalese rupee (Rs, रू) (NPR)

GDP per capita:$ 3,318
GDP in currency:$ 94

Nepal, country of Asia, lying along the southern slopes of the Himalayan mountain ranges. It is a landlocked country located between India to the east, south, and west and the Tibet Autonomous Region of China to the north. Its territory extends roughly 500 miles (800 kilometres) from east to west and 90 to 150 miles from north to south. The capital is Kathmandu.

Hiring, Negotiating and Doing Business in Nepal

Necessity of written employment contract

As per the New Labor Act, no foreign national can be engaged in work without the employment agreement which should be entered into either in language understandable by such foreign national or in English language. Unless otherwise provided in the agreement, the employment agreement continues for three years.

Different forms of engagement: employment, contracting, work with private entrepreneur

Of the total population of 29 million, 42% is aged 14 years or under. Of the total workforce, 92%, or about 10 million people, live in rural areas, and are involved in agro-based activities. The 1998/99 National Labor Force Survey showed that some 4,225 manufacturing enterprises employ 385,000 workers. Self-employment in subsistence farming is the predominant form of employment in the country. About 20% of both rural and urban workers are wage laborers; most of them are in informal sectors.

Obviously, most of the engagement or employment is in the informal
sector. There is a huge difference in the involvement of females in household chores and extended activities. The male population has high involvement in getting an education, seeking employment and owning economic enterprises. Currently, two areas of employment—self employment in the informal sector and employment abroad—are gaining much ground in Nepal.

The modern sector has a very narrow base of employment in the nonagriculture contexts of Nepal. Whether in rural or urban areas, most of the production and service related activities are organized by the households themselves. Self-employment and unorganized forms of employment are therefore dominant. Currently, movements to organize adults, particularly women, are contributing to further consolidation of employment in the informal sector. Mobilization and expansion of easy access to financial resources through Grameen Bank, Nirdhan Bank and similar programshave helped to provide an economic basis for such economic development.

Nepal Employment Contract

Types of employment agreements

  • Direct employment contract or Employer/labour contract: some skilled workers or professionals hired for specific job for specific period falls under this type. Master of garment industries, mechanics of a steel mill, tea-tasters of tea-estate are some of the examples.
  • Indirect employment contract or Employer/contractor/labour contract: Intermediary supplies labour to the employee, with or without his supervision on the labour falls under this type. Workers of the Thekedar of carpet weaving, security men on contract, workers sent overseas by manpower
  • Direct commercial contract or Employee/nominal self-employed contract: Employer hires the labour directly, who are self-employed but in small scale for some specific service, falls under this type. Household handloom weavers, wood carver, wool spinners are some examples.
  • Indirect commercial contract, or Employer/goods, service producer contract: Petty contractor taking order from employer adds value on goods by employing other labour, falls under this category. Fabricators, petty-building contractors, sweater knitting contractors are some examples.

Nepal working hours

No worker or employee shall be deployed in work for more than 8 hrs. per day or 40 hrs. per week


The maximum overtime is 4 hours a day  and 20 hours a week.

Vacation leave in Nepal

1 day for every 20 worked days

Nepal Maternity Leave

98 days. Fully paid up to 60 days.

Nepal Severance Laws

Notice period. 

  • For up to 4 weeks – 1 day
  • 4 weeks to 1 year – 7 days
  • Exceeding 1 year – 30 days

Nepal Tax

Personal income exemption refers to those amounts which can be deducted from an individual’s total income for the purpose of reducing the taxable income (taxable base). The income tax laws of Nepal provide two (sometimes three) types of exemption according to the family unit of the taxpayers: individual, couple, or family (dependency). At the beginning years, there were three units of the taxpayers, but when income tax Act 2002 was introduced in Nepal, the units were reduced down to two types for the resident taxpayer under the PIT system: an individual and a couple. The former denotes only an individual natural person while the latter denotes other than an individual (i.e., couple, family or a dependent individual). 

Social security contributions due by an employer and an employer

  • Employers Contribution: 10% of basic
  • remuneration.
  • Employees Contribution: 10% of basic
  • remuneration.
  • Deposited to Social Security Fund.
  • Eligible since the first day of employment.

Health Insurance Benefits in Nepal

  • Fully paid up to 12 days .
  • Eligibility: Proportionate basis for those
  • who has not completed 1 year of service.
  • Half paid up to 15 days.
  • Eligibility: Completion of 1 year of service. 

Additional Benefits in Nepal

Labor Code of Nepal provides employees with such guaranties:

  • Population and Workforce in Nepal
  • Private Sector Size & Employment
  • Social Protection
  • The Employee Provident Fund Nepal
  • The Social Security Fund Nepal
  • Strategies for the implementation of social security plans
  • Employment Injury Scheme
  • Maternity Benefit Scheme 
  • Sickness Benefit Scheme 
  • Medical Benefit Scheme
  • Unemployment Benefit Scheme
  • Rate of contribution for social security schemes
  • Social Security Protection Administration
  • Implementation Plan for Social Security Fund
  • Conclusion and Recommendations
  • Nepal Social Security Protection Programs
  • Annual Accidents by Description 
  • National Social Protection Framework (2011-2020)

General market practice benefits/additional allowances

Inadequate employment opportunities at home, desire to see foreign
lands and escape from the acute national political conflict are the motivations for Nepalis to migrate abroad. Nepali foreign migration has been of three kinds: official migration to countries other than India through overseas employment companies recognized by the Ministry of Labor, free movement to India as permitted by the 1950 treaty and further movement from there to a third country through Indian or Nepali agents, and overstaying abroad after entry as visitors or students or unauthorized entry to countries like in Iraq via another country.

On August 31, 2004, 12 innocent Nepali migrant workers were
mercilessly killed, without even a ransom demand, by Ansar al-Sunna, an Islamic extremist group, after being abducted while entering Iraq. It has been reported that there are still around 15,000 Nepalis working clandestinely in Iraq and thousands are still waiting in Amman, Kuwait and Mumbai to enter that country. As they have difficult conditions back home, Nepali workers tend to accept any kind of dangerous or menial work which people from other countries would not normally like to do. Regardless of the channels used, Nepali workers have serious problems before, during and after migration.

Nepal Holidays

13 days including May day. Additional 1 day to female employees including Intl Women Labor Day.

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.

FAQ Nepal

  • Working hours in Nepal

    No worker or employee shall be deployed in work for more than 8 hrs. per day or 40 hrs. per week.

  • What are the main holidays in Nepal?

    13 days including May day. Additional 1 day to female employees including Intl Women Labor Day.

  • What are payroll taxes in Nepal?

    • Employers Contribution: 10% of basic
    • remuneration.
    • Employees Contribution: 10% of basic
    • remuneration.
    • Deposited to Social Security Fund.
    • Eligible since the first day of employment.
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