Comprehensive Guide to Hiring Employees in Nepal

Nepal is one of the more famous South Asian countries thanks to being home to the mighty Mount Everest. Besides the instant fame this brings, it also points to the fact that the Himalayan kingdom often has harsh conditions to live up to. Being a landlocked country, Nepal depends on imports from India and donations from several international organizations and countries.

The country is gradually growing despite the recurring issues with governmental stability over the years. The leading sectors for growth in Nepal are agriculture, tourism, and manufacturing. Moreover, Nepal’s affordable minimum wage and colossal talent pool attract several international employers. With an improved average internet speed recently, Nepal has also seen growth in the scope of digital marketing and IT services.

Nepal is attractive to investors thanks to the economy’s lower operational costs. Nepal has seen steady hiring trends over the years, as data from the World Bank states that the country has added around 4 million jobs to its name. The data span ten years. The country has a GDP of USD 36.29 billion and attracted an FDI of around 19478.70 NPR Million.

When you begin recruitment and selection in Nepal, you must follow all employment-related laws. For recruitment, refer to the New Labor Act. As you navigate how to hire employees in Nepal, following the related norms is essential. The corporate structure in Nepal is also business-friendly and enables better scope for recruitment and selection in Nepal companies.

Things to Know Before Hiring in Nepal

Once you begin recruitment and selection in Nepal, there are specific norms to stick to. Following the same, help hire employees in Nepal correctly while ensuring you do not end up paying fines or penalties.

Employment Contract

An employment contract with the company letterhead sanctions every employment role in Nepal in written form. 

• These employment relationships are mandatory for employment relationships. The contract follows all norms that the Labor Regulation of 2018 lays down. 
• An employment contract in Nepal is in Nepali, but for foreign employees, it is mandatory to have a copy of the same in English or any other language as applicable.
• Recruitment in Nepal concludes once the employer draws up a contract for a fixed or indefinite timeline. Such applies to full-time and part-time jobs in Nepal. 

The pointers mentioned on a contract for recruitment and selection in Nepal are-

• Employer and employee details
• Employee role and job profile
• Company policies and restraints
• Duration of the work contract
• Probation period
• Salary and benefits
• Work hours and overtime
• Annual leaves and holidays
• Notice period 
• Termination and severance clauses

Probation and Termination

As per the Labor Act in Nepal, employment probation is around six months.

• An employer may terminate the employee’s role once he gives notice per the applicable period.
• However, termination with just cause is possible sans giving any notice.

Notice period

The notice period for terminating a job in Nepal depends on the service tenure, as mentioned below-

Employment laws

When conducting a recruitment drive in Nepal, one must follow the laws governing employer-employee relationships. The Labor Act in Nepal aims to bring on more inclusiveness and promote non-discriminatory practices. 

Working hours and breaks

Note down the permitted hours for work when you hire staff in Nepal-

• The standard working hours for staff in Nepal are 48 hours every week, ranging between Sunday and Friday.
• Employees can work overtime up to 24 hours weekly at a pay rate of 1.5 times or 150% of the fixed salary.

Payroll

• Once you establish a company and hire employees in Nepal, make a monthly salary payout for employees. However, a bi-weekly salary applies on mutual agreement. 

Minimum wage

• The minimum wage to hire employees in Nepal is (Nepali rupee) NPR 15,000 per month.

Bonuses

• The Nepali government has mandated bonus payments yearly for employees who have completed six months of employment with a company.
• The annual bonus is payable during a festival that the employee observes.
• The bonus comprises a month’s salary.

Holidays for employees 

Official public holidays in Nepal are listed below in order of occurrence over the year-

Other Leaves

Vacation Leave

1. Employees are entitled to 18 days of annual vacation leave.

Maternity and Paternity Leave

1. Mothers get 12 weeks of maternity leave.

2. Fathers can also take paid paternity leave of 15 days.

Sick Leave

1. Employees can avail of 15 paid sick leaves in a year.

2. The leave is applicable for employment of over one year.

3. The remuneration is 50% of the standard salary. 

Social security

• Employees must pay contributions towards the social security fund at 11% of their monthly salary.
• Employer’s share for the social security fund stands at 20%.

Taxation

• Nepal’s corporate tax rate is 25%. For some sectors, the rate could be 20% or 30%.
• The standard VAT rate is 13%, while some sectors have zero VAT applicable.
• The income tax brackets apply on a progressive basis and have separate slabs applicable to married taxpayers and individual taxpayers-

The Cost of Hiring an Employee in Nepal

Here are the main heads under recruitment fees in Nepal and costs for the recruitment process in Nepal-

• Job advertisement cost
• Hiring and legal costs
• Visa and permit costs
• Payroll and salary
• Taxes and social security payments
• Bonus payment
• Vacation and leave costs
• Onboarding and training cost
• Licensing costs
• Verification costs

What Does a Company Need to Hire Employees in Nepal?

Employers in Nepal can employ permanent, part-time, or intern employees. However, to hire foreign employees in Nepal, companies must prove that the local workforce is unavailable for the job. Drawing up an employment contract is a common practice, and this needs to mention all vital aspects of the employment. The documentation considered mandatory for hiring in an organization in Nepal are-

1. Application for a work visa 
2. Work permit
3. Copy of passport of an employee
4. Employment contract
5. Notarized certificate for company incorporation
6. Company tax clearance certificate
7. Business licenses for operations

Various Options for Hiring Employees in Nepal                                                         

For all processes of recruitment and selection in Nepal, there are two basic structures to follow-

• EOR service: For all needs related to recruitment and selection in Nepal, outsource the same to an EOR service provider. Such solutions providers have suitable mechanisms and systems to handle hires and draft contracts in the country. It eases the management aspect and covers all legal norms to the core.
• Internal hiring: You can set up a traditional team for HR and hiring staff. It involves hiring the HR team first. It will need extensive paperwork. This team further engages in research related to the Maltese market for jobs. Finally, as per the applicable laws of the land, the team will close a hiring chapter on your behalf.

The Steps to Hiring in Nepal

The recruitment and selection in Nepal follow a simple and set structure that begins with finding new hires and onboarding the same onto the company payroll. Read on.

1. Advertise  openings for recruitment

• Begin the hiring process in Nepal by posting open positions on job boards, newspapers, and social media sites.
• merojobs .com and jobsnepal.com are the top sites to make a post on.
• Use local references and industrial networking to have access to prospective candidates.

2. Shortlist employees

• Candidates send in online applications via resumes and cover letters.
• Quickly shortlist candidates who fit in well with the job requirements.
• Arrange for the interview and inform the candidates via email or call.

3. Interview rounds for selection

• Interview single or multiple rounds but ensure to avoid asking discriminatory questions. 
• Discuss all expected work duties with the candidate and engage in some discussion about the candidate’s expectations.

4. Background checks

• After shortlisting, employers can confirm the candidate’s information by conducting a background check. 
• During recruitment and selection in Nepal, a background check is permissible. 

5. Job offer and work contract

• Share the formal offer letter and draft the employment contract per laws for recruitment and selection in Nepal.

6. Onboarding and training

• After the employment contract is in place, the employee can join the organization.
• Per the requirements, employees undergo the necessary training.
• Post-training, the employer wraps up an employee’s recruitment and selection in Nepal.

Let Multiplier be Your EOR Platform in Nepal

As you engage in recruitment and selection in Nepal, you realize that the process can start once you register your company as a subsidiary or a legal entity. However, if you can negate this requirement and still operate remotely when you partner with a reputed PEO-EOR firm such as Multiplier.

The recruitment and selection in Nepal processes become legally backed since Multiplier tackles all issues linked to how to hire employees in Nepal. Our SaaS-based Employer of Record solution helps employers navigate hiring, onboarding, payroll, taxation, and local compliances in 150+ economies.