The Labor Act, 2074 sets baseline obligations for every employer in Nepal — overlooked provisions are a common source of disputes and penalties for growing businesses.
Employment Contracts
Every employee should have a written appointment letter specifying position, salary, and terms — verbal arrangements, even long-standing ones, create legal ambiguity if disputes arise.
Working Hours & Overtime
Standard working hours and overtime compensation rates are defined under the Act — businesses running extended hours without proper overtime calculation are a frequent compliance gap.
Leave Entitlements
The Act specifies minimum annual leave, sick leave, and other statutory leave categories — tracking these accurately in payroll avoids disputes at year-end or upon an employee's departure.
Termination & Severance
Termination procedures, notice periods, and severance calculations are prescribed by law — improper termination (skipping required notice or documentation) is one of the most common sources of labor disputes in Nepal.
Workplace Safety & Grievance Mechanisms
Businesses above a certain size are required to maintain formal workplace safety measures and grievance-handling procedures — worth confirming which thresholds apply as your headcount grows.
Building HR processes that stay compliant as you scale? Company Sathi's advisory team can review your current employment practices against the Labor Act.
