Labour Act, 2017

The Labour Act, 2017 covers a wide range of areas related to employment contracts, working hours, remuneration, social security, leave entitlements, occupational health and safety, labor rights, dispute settlement, termination of employment, the welfare of workers, and guidance to fair labour practices [May be Insert Illustration]. 

As an employer or someone thinking about opening a business, here are keys things you must know what the act mandates you to do and not do since this will have a bearing on your business costs, workers’ motivation, and operations:

Do’s

→Equal remuneration for equal work regardless of gender;

→Employment contracts with a probation period of six months except for casual employment (less than 7 days a month) [Read the act to understand the classification of employment].

Don’t

→ No forced labour;

→ No employment of children;

→ No discrimination based on religion, color, sex, caste, tribe, origin, language, ideological  conviction, or similar grounds;

→ No sexual harassment.

Workers’ Right

→ Social Security Fund;

→ Right to form and operate trade unions as well as a remedy for infringement of any rights;
→ The employees’ job shall remain intact despite the change of ownership or any employer;

→ In case of retrenchment, if the enterprise resumes operations within 2 years, employment preference will be given to retrenched employees.

Working Hours and Remuneration

• Maximum working hours: 8 hours per day in a total of 48 hours a week with one holiday per week;
• Overtime work cannot be made compulsory  except if it causes adverse effects on the life, safety, and health of any person or a serious loss or damage to the employer;
• Overtime work must be compensated at a rate of 1.5 times the regular remuneration and cannot exceed four hours per day. 

Transportation for female workers

In case the work timing for female labour is before sunrise and after sunset, the employer has to make transportation arrangements to and from the workplace.

Social Security Fund

Refer to the Social Security Fund Act. 

Leave Entitlements 

*Accumulation of home leave and sick leave up to 90 days and 45 days respectively.

Occupational Health and Safety

As an employer, you are responsible for ensuring a safe and healthy working environment. 

• The employer must frame, implement, and register a policy on safety and health with the Labour Office. In case of more than 20 or more laborers, a safety and health committee must be formed within an enterprise
• The employer is also obliged to make necessary provisions for preventing and controlling infectious diseases;
• In case employees aren’t registered with SSF, the employers shall make provisions for, providing medical treatment and compensating workers for occupational diseases
• The Act also has industry-specific provisions for industry or service of special nature — tea estate, construction, transport, tourism, domestic, seasonal, and foreign enterprise doing business in Nepal.

How do you resolve/settle disputes?

• An enterprise with 10 or more than 10 laborers would form a labour relation committee to hold discussions, settle grievances, improve working conditions, and more;
• Individual disputes can be resolved through mediation or through the labor office in case the communication by the employer for the notice sent is not within the prescribed time limit of 7 days;
• Collective disputes are settled through collective bargaining, negotiation, mediation, or arbitration. Strikes are permitted for the settlement of collective disputes; 
• Employers have a right to lock out an enterprise on obtaining approval by the Department of Labour in case of strikes are not settled or conducted as per the Act. 

How can employment be terminated? 

• when the contract period ends;
• on the grounds of incompetence/poor work performance;
• incapacity of employees due to health conditions;
• retrenchment due to financial problems, or enterprise closure;
• When the employee reaches the age of compulsory retirement of 58.