Labour Law in Nepal

2019-11-21 17:28:11

Nepal’s Labor Act, 2074 received the approval of the president and became effective from the date Bhadra 19, 2074. The Labor Act, 2074 replaced the previous Labor Act 2048 completely, which has ceased to be in effect. The New Labor Act has been passed for provisions for the rights, interests, facilities, and safety of workers and employees working in enterprises of various sectors.

Gradual development seen in various fields has resulted in different specific meanings of what is meant by labor law. It is generally used about profession circumstances that require a trade association, while the term employment law is normally used for workplaces where the legal relation is direct between the employer and the employee. In some fields, the term may be used to refer to such a law that excludes trade unions. Historically, the origin of the term began with the labor union campaigns.

Labor law is involved with the labor relations framework that provides for calm and peaceful industrial relations between employers and organized workers, and usually includes rules on forming a union, requirements under which the union becomes bargaining agent, strikes and lockouts, method for negotiations, and other structural elements that then allow the employer and the union to bargain a collective understanding and fill in the rest, particular to rules and conditions relating to the workplace.

The major provisions of the New Labor Act are briefly outlined below.

  • Entity Registered in Foreign Country:

The New Labor Act has made provisions about the settlement of a dispute with the entity registered in a foreign country, however, undertaking sales and market activities in Nepal through a representative or hiring labor in Nepal. Under the New Labor Act, the representative or the labor hired by the foreign entity may file a complaint before Labor Office or Labor Court if such entity violates the terms and conditions of the employment agreement.

  • Payment through Banking Channel:

The Ministry may require several employers to pay employees only through banks or commercial institutions.

  • Provident Fund and Gratuity:

The Labor Rules guides ideas regarding installing provident fund and gratuity and also give more flexibility to employers on keeping provident fund and gratuity until a fund are established under the Contribution-Based Social Security Act 2074 (2017).

  • Distribution of Service Fee:

The Labor Rules prescribes a fair division of the service fees received from consumers by corporations such as hotels, restaurants, etc. among workers, management, and employers' and workers' unions.

  • Workplace Safety:

A safe work atmosphere is a fruitful one. No matter the size or type of the business, ideas for safety in the workplace has been made a requirement for all staff. Safety measures protect employees as well as material and business property. A company with 20 or more employees must also establish a Health and Safety Committee, which includes employees' representatives, to provide advice on workplace safety issues.

  • Workers’ Compensation:

In case a worker or employee is injured while doing the work designated by the Enterprise, the whole amount incurred on the treatment needs to be paid by the Proprietor on the recommendation of the medical practitioner recognized by the Government of Nepal.

  • Special Requirements for Large Employers:

Employers with 50 or more employees, including for-profit, nonprofit and government entity employers, usually are expected to offer health insurance to each full-time employee. For 2015 and after, employers employing at least a specific number of employees will be subject to the “Employer Shared Responsibility”.

  • Labor Suppliers:

Labor supply is the total hours (adjusted for the intensity of effort) that workers wish to work at a given actual wage scale. More hours leads to earning higher incomes, but require a cut in the amount of opportunity that workers enjoy. Consequently, there are two effects on the amount of labor supplied due to a change in the real wage rate.