Learn about the legal processes for employee termination and severance in Nepal
In Nepal, the Labor Act of 2017 (2074), along with its Regulations of 2018 (2075), stipulates the legal requirements for notice periods during employment termination.
The employer is required to provide the following notice periods to an employee, depending on their tenure of service:
An employee intending to resign from their position must provide the following notice periods to their employer:
It's important to note that the employer or employee may waive the notice period by providing a sum equivalent to the salary payable during the notice period in lieu of notice.
In Nepal, severance pay is governed by the Labor Act of 2017 (2074) and the Labor Regulations of 2018 (2075).
Employees are entitled to severance pay under the following conditions:
The calculation of severance pay in Nepal is based on the employee's length of service, as per Section 53(1) of the Labour Act, 2017 (2074):
For service less than one year, severance pay is calculated on a proportionate basis.
An employee is not entitled to severance pay if:
The employer is required to pay the severance amount to the employee as a lump sum upon termination of employment. Employers must ensure timely payment to avoid penalties and legal complications.
Terminating an employee's contract in Nepal requires adherence to the provisions of the Labour Act of 2017 (2074) and its accompanying Labour Regulations of 2018 (2075).
There are two main types of termination:
Voluntary Resignation: An employee may resign at any time by submitting a written resignation letter to the employer. Resignations must be accepted by the employer within 15 days.
Involuntary Termination by the Employer: If an employer decides to terminate an employee's employment, they must follow appropriate procedures:
Employers in Nepal can terminate an employee's employment for the following valid reasons:
An employee who believes their termination was unfair or unjustified can file a complaint with the Labour Office within 45 days of termination. The Labour Office will investigate and attempt to resolve the dispute through conciliation. If unsuccessful, the employee may file a case with the Labour Court.
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