Minimum Wage
The primary legal instrument concerned with the fixation of minimum wage in the country is Labour Act 2017, where labour is defined as “a worker or an employee or a person employed with any job title who performs a physical or intellectual work for the employer”. The Ministry of Labour and Employment declares minimum wage rates on the recommendations of the permanent Minimum Wage Fixation Committee consisting of representatives from the Government of Nepal, trade unions and employers’ associations. The Committee is formed by the Ministry of Labour and Employment under article 107 of the Labour Act 2017. Where the Committee cannot come to a consensus, the Ministry can fix the minimum wage on its own. On recommendations of the Minimum Wage Fixation Committee, the Ministry sets the minimum wages for workers every two years. The grounds for the recommendation of the minimum remuneration are determined by the Committee, which can be used to recommend the minimum wage for workers applicable to the whole of Nepal or enterprises or industries of any specific sector or a specific sector of employment.
Under article 93 of Labour Law, the Government of Nepal has established the Labour Office. Labour inspectors are authorised to ensure the implementation of labour law, including minimum wage provisions. A worker paid less than the minimum wage may apply to the Labour office, which then obliges the employer to provide the two-fold amount of the minimum wage to the worker for each day of violation.
Source: §88, 94 (a), 106-107, and 163 of the Nepal Labour Act, 2017
For updated minimum wage rates, please refer to the section on minimum wage.
Regular Pay
The Labour Act 2017 defines remuneration as “basic remuneration to which a labour is entitled, including an allowance”. Every worker is entitled to receive the remuneration and benefits from the date they start the work. The employer is obliged by law to pay remuneration following the provisions of the employment contract. The maximum wage period is one month. A worker engaged for less than one month must be paid the due wages within three days of the completion of work. Similarly, casual workers are to be paid immediately on completion of work. The law requires employers to pay wages at intervals of not more than one month between the dates for payment of remuneration.
Where a worker’s employment is terminated due to misconduct, the employer is liable to pay all amounts, including remuneration, not later than fifteen days of the termination of employment. No deduction can be made from workers’ wages except those authorised by the Labour Act. These include, among others, tax or fees levied under existing laws, a contribution for provident fund, insurance or other social security benefits, an amount for a specified service or facility provided by the employer to the worker; wage for absences; an amount for the book value of the goods lost or loss in cash caused wilfully or negligently or the amount equivalent to the production cost concerning the manufactured goods; an amount specified in the collective agreement; membership fees charged by trade unions; and loan or payment made in advance to the worker by employer.
In case of dismissal or termination of the contract, the amount deductible under the law is deducted from any amount payable to such worker.
Source: §2, 34-35, 38 and 148 of the Nepal Labour Act, 2017
