How to Hire Employees In Nepal

Hiring in Nepal for the first time can be overwhelming, especially when navigating unfamiliar employment laws. Whether you hire independent contractors, set up a legal entity, or use an EOR service, understanding the local employment landscape is crucial for success. Playroll’s comprehensive guide can help you get started if you're hiring locally or relocating a team member.

Companies can hire employees in Nepal in the following three ways:

Setting up a local entity. Entity establishment reduces risk exposure and enables direct hiring, but can be costly and time-consuming – making it less practical for companies seeking quick and flexible solutions for hiring in Nepal.
Partnering with an Employer Of Record. An EOR, like Playroll, is a third-party entity that serves as the legal employer of your international workforce which hires, pays, and manages compliance with Nepal’s labor laws and tax regulations.
Hiring independent contractors. Hiring contractors gives companies a flexible, affordable alternative to hiring local employees, though it involves unique misclassification risks.

Good To Know

Nepal has a traditional economic system and a majority of the population engages in subsistence agriculture.

Nepal has managed to strive towards economic growth since the 1950s through a series of five-year plans.

According to a World Bank report, Nepal has successfully added four million jobs in the last decade, and this has been due to its shift from agriculture to services and modern industries.

The second-most significant industry in the country is tourism, and it forms the avenue for the largest foreign income.

Employment and Labor Laws in Nepal

Businesses can only operate smoothly in Nepal if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Nepal below, to avoid any compliance issues.

Onboarding Process

We can help you get a new employee started in Nepal quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment.

Employer of Record in Nepal

An Employer of Record (EOR) acts as the legal employer for workers in Nepal, taking on key responsibilities to ensure compliance with local labor laws and regulations. The EOR facilitates the hiring process for businesses that want to employ workers without establishing a legal entity in the country.

The employer of record in Nepal is responsible for:

Employment Compliance: Ensure all employment contracts comply with Nepal's labor laws and regulations, including proper classification of employees.
Payroll Management: Calculate, process, and distribute employee salaries in accordance with Nepal's payroll laws, including deductions for taxes and social security contributions.
Tax Filing and Contributions: Handle the registration, filing, and payment of employer taxes and social security contributions to the relevant authorities.
Employment Contracts: Draft and maintain compliant employment agreements, detailing salary, benefits, working hours, and termination terms in line with Nepal's legal requirements.
Benefits Administration: Provide mandatory employee benefits as required by Nepal's labor laws, such as health insurance, pension contributions, and statutory leave.

Payroll Management in Nepal

Payroll Cycle in Nepal

The payroll cycle in Nepal is usually Monthly, with employees being paid as stipulated in employment contract.

Employment Taxes in Nepal

The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in Nepal tailored to your needs.

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Work Permits & Visas in Nepal

In Nepal, work permits and visas are essential for employers hiring foreign workers. The application process involves submitting various documents, paying fees, and ensuring that the employee meets the eligibility criteria. The main visa types for foreign workers are the Employment Visa, Business Visa, and Organization Visa. Employers must provide job offers, verify qualifications, and ensure compliance with local labor laws to sponsor a foreign worker for a visa.

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Annual Leave & Company Policies In Nepal

Mandatory Leave Entitlement in Nepal

The annual leave entitlement in Nepal is 18 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

An Employer of Record (EOR) helps businesses manage annual leave, paid time off (PTO), and local holidays across the globe, including in Nepal. By partnering with an EOR, companies ensure full compliance with local labor laws in Nepal when it comes to annual leave and time-off management. EOR providers like Playroll offer platforms that simplify tracking and managing employee time off in Nepal. By outsourcing this responsibility to Playroll, you can streamline leave management, ensure compliance, and free up time to focus on other business priorities.

Employment Termination and Severance Policies in Nepal

Disclaimer

THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

ABOUT THE AUTHOR

Jesse Weisz

Jesse is an experienced R&D Analyst at Playroll, a leading Employer of Record (EOR) provider. With a strong background in data analysis and market research, Jesse specializes in identifying emerging trends and driving innovation in global HR solutions. She is an all-rounder, critical thinker and success-seeker (often inextricably linked to being a late-night tea drinker).