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The Labour Act, 1992 lays down the legal framework and the basis for the rules, regulation and guidance on the proper management of any establishment employing 10 persons or more. It details with matters relating to employment and security of employment, working hours and minimum wages, welfare of employees, employer-employee relations and the settlement of labour disputes. The Bonus Act of 1974, as amended subsequently, provides a legal basis for the payment of bonus to the workers and employees of factories and commercial establishments.


Normal working hours are fixed at 48 hours per week, 8 hours a day. Continuous working hours should not exceed 5 hours. There should be a break of half an hour. Overtime work is remunerated at one and half times the normal wage. In addition to 12 public holidays, workers are entitled to one day's leave for every 20 days, 15 days medical leave and one month leave without pay every year. Female employees are entitle to 45 days maternity leave with full pay. The compulsory retiring age for worker is 55. However, in the case of skilled worker whose services are indispensable, the retirement age could be extended upto 60 years.


The wages payable to workers in Nepal are comparatively very low. The low cost of living enables workers to offer their services at relatively low wages. The minimum wages rates set by the government are generally lower than the going wage rates for workers. Salaries of middle management executives, technical grade officers, engineers and other professionals are generally lower than in other developing countries. Permanent employees of a factory should contribute 10 percent of the monthly salary to a provident fund and the management should make a matching contribution. Gratitutes are payable to workers who have worked for over 5 years.


Nepal has a history of maintaining good industrial relations during the past few decades when industrial activity gradually expanded in the country. Labor unrest, lockouts and strikes do not occur as frequently as they do in other developing countries. The Labour Act lays down guidelines and procedures for the settlement of disputes between employers and employees. These guidelines and procedures provide a favorable environment for the harmonious development of industrial relations.


Nepal has an easily trainable and keen work force. Unskilled labour is cheap and abundant. Semi-skilled and skill labour are available in sufficient numbers, particularly in vocations such as metal work, wood work and painting. The government has established technical institutions to develop skills at the technical level in civil and electrica; engineering, radio electronic, air conditioning/refrigeration, general mechanics and auto mechanics. Training programmes are also geared to industrial and vocational training in wood working, general fitters, tailoring and so on. The programs on entrepreneurial and management development and the colleges of higher learning provide educated persons to be groomed for managerial positions in both public and private sector industries.

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Ministry of Industry
Foreign Investment Promotion Division
Singha Durbar
Kathmandu, Nepal
Tel: 216692
Fax: 220319
Tlx: 2610MOI NP

Copyright 1996 by Foreign Investment Promotion Division, Ministry of Industry, HMG

Webmaster: Anita Shrestha, AMAA, INC