The primary legal instrument is concerned with labor are Labor Act, 2074 (2017) (“Act”) and Labor Rules, 2075 (2018) (“Rules”). Labor Act has been effective since 19 Bhadra, 2074 (4 September 2017) and the Labor Rules has been effective from 08 Asar, 2075 (22 June 2018). For engaging children who have completed the age of 14 but under the age of 18, legal provisions under Child Labor (Prohibition and Regulation) Act, 2056 (2000) and Child Labor (Prohibition and Regulation) Rules, 2006 (2062) are also applicable.

The requirements under Labor Act are the bare minimum requirements regarding labor and related issues. 

APPLICABILITY:

1. The Act and Rules are applicable to company, private firm, partnership firm, co-operatives, association or other organization (“enterprises”) in operation, or established, incorporated, registered or formed under prevailing laws, regardless of its objective to earn profit or not. 
2. The term “Employer” is defined to cover individuals who have engaged another individual in work. 
3. Further, the Act also extends jurisdiction to file compliant in the Labor Office or Labor Court for representative or employee of an entity registered in foreign country but engaged in promotion of business, sale of its products or other work in Nepal.

THRESHOLD REQUIREMENT

Unlike the Labor Act, 2048 (1992), the provisions of Labor Act, 2074 (2017) is applicable to enterprises regardless of number of employees. However, the requirement of certain arrangement is triggered only if the enterprise has certain number of employees:

If the enterprise has 10 or more employees:

• Collective Bargaining Committee should be formed,
• Labor Relation Committee should be formed,
• Authorized Trade Union or Labor Relation Committee should be consulted with for keeping the employees in reserve for more than 15 days.
• Provision on Retrenchment in the Act shall be applicable.
• Notification of 7 days should be provided to present clarification for termination of employee upon their work performance.
• If the enterprise has 20 or more employees, Safety and Health Committee should be formed.

NON-APPLICABILITY OF ACT:

The provisions of Labor Act and Labor Rules shall not be applicable to:

1. Civil Service,
2. Nepal Army, Nepal Police, Armed Police Force,
3. Entities incorporated under other prevailing laws or those situated in Special Economic Zone to the extent separate provisions are provided,
4. Working Journalists, unless the employment agreement specifically provides that the provisions of Labor Act, 2017 shall be applicable.

TYPES OF EMPLOYMENT:

The nature of employment determines the end date of employment. Employer can hire employee for following types of employment:

1. Regular Employment: The employment contract does not have an end date and the nature of job is such that it is regularly required to the entity.
2. Work based Employment: Employees are hired to perform a specific work or to provide specific service.
3. Fixed term Employment: The employment contract has a specific end date, and the contract is terminated on such date. However, the employment contract will be extended if the project associated is extended or the contract is extended due to nature of job.
4. Casual Employment: The employee is hired for the job for a period of seven or less days in a month. It can be terminated as per the will of employee or employer.
5. Part-time Employment: It is wherein the employee is engaged in work for 35 or less hours in a week.

If a dispute arises concerning the nature of employment, Labor Office shall decide if such employment is of regular nature. For a fixed term employment agreement, decision is made based on following grounds:

• Whether or not the job requires continuity upon expiry of the term of the agreement,
• In case the job requires continuity, if the employer is required to immediately hire a new employee for the job.
• For an employment without a fixed term, if the employee has worked continuously for a period exceeding one year or not.

EMPLOYMENT AGREEMENT

No employee except a casual employee may be engaged in work without a written employment agreement.

Following details must be covered in an employment agreement:

• Type of employment,
• Major responsibilities and position of the employee,
• Salary and other benefits to be received by the employee,
• Terms and conditions of the employment,
• Place and time of signing employment agreement,
• Effective date of employment agreement,
• Statement that the Bylaws shall be an integral part of employment agreement,
• Other terms and conditions of job.

• Foreign nationals should be provided an employment agreement in a language that employee understands or in English.
• Employment Agreement shall at least provide for the minimum requirements under Labor Act.

Fine at the rate of NPR 10,000 and maximum of up to NPR 5,00,000 shall be charged to an employer engaging an employee without providing an appointment letter or employment agreement. Necessary order shall also be given by the Department.

OTHER WORK OPPORTUNITIES:

• Interns: Employer may engage intern in work as per the approved curriculum of an educational institution after signing an agreement with such an educational institution.
• Trainees: Employer can appoint any individual in traineeship with the intention to train in the specific job for the period of one year. A trainee shall receive at least minimum salary, sick leave and other facilities without compromising social security. The employer is not bound to employ a trainee at the end of their term. However, if they are employed, probation shall not be applicable.

If any person is engaged as an intern or a trainee contrary to the provisions of law, employer is subject to a fine at the rate of NPR 10,000 per intern or trainee. The concerned labor Office can issue an order to engage such intern or trainee as regular employee and provide the salary and benefits to them as regular employee.

EMPLOYMENT OF FOREIGN NATIONALS:

1. Work Permit

Obtaining work permit is MANDATORY except in following conditions:

• Foreign nationals enjoying diplomatic immunity,
• Foreign nationals for whom the work permit is exempted under treaty or agreement with the Government of Nepal.
• Work Permit is granted to following foreign nationals on recording their details:

• Foreign Nationals working as Chief Executive Officer or up to three employees or such number of employees as agreed in agreement with Government of Nepal, in an enterprise having foreign investment or operating on foreign aid,
• Technicians deployed in work for less than three months for repairing any machinery or installing new technology or for similar casual work.

2. General Provision for Obtaining Work Permit

General provision for obtaining work permit: Job vacancy should be published in national level Daily Newspaper and should also be uploaded in the Job Portal of the Ministry of Labor. If no skilled Nepali citizen can be found for the job, an application shall be submitted to Department of Labor to obtain work permit.

3. Total Number of Foreign Employees

The total number of foreign nationals should not exceed 5% of the total employees in the enterprise. There is no clarity as to whether the foreign nationals to whom the work permit is granted by recording details are computed for this purpose. 

4. Validity of Work Permit

• The validity period of the work permit shall not exceed the term specified in the consent letter issued by the Ministry of Home Affairs.
• The maximum period of work permit is 5 years for the expert in the technical field and 3 years for others.
• The work permit can be renewed for a further period of 2 years by the Department of Labor after obtaining approval from the Ministry in special situations for foreign nationals who have made a notable contribution to national interest or public welfare or has contributed to educational, science, and technology, not for profit sectors. 
• The work permit should be renewed 30 days prior to its expiry.

5. Work Permit Fee

• NPR 15,000 per person for work permit valid up to six months
• NPR 20,000 per person for work permit valid for a period exceeding six months

6. Grounds for Cancellation of Work Permit

• Revocation of consent provided by Ministry of Home Affairs,
• Failure to pay tax, revenue, fee, or any amounts payable to the Government of Nepal by the person having obtained the work permit,
• Having convicted for a criminal offense by the court,
• If it is inappropriate to engage the foreign national in work in view of national interest,
• If the foreign national fails to comply with obligations under the prevailing laws or acts contrary to public morality.

If any foreign national is engaged in work without obtaining a work permit, the employer shall be subject to a fine up to NPR 2,00,000 and if such n0n-compliance is continued, additional fine at the rate of NPR 5,000 per foreign national per month shall be imposed.

PROBATION

• Probation Period: for an initial period of SIX months
• The employment of an employee on probation may be terminated if the work performance of the employee is unsatisfactory.
• If the employment is not terminated during the probation period, the employment is ipso facto continued upon the completion of probation.

OUTSOURCING

1. Nature of works for which outsourced employees can be engaged

Employees from outsourcing company can be engaged in following works only:

• Security Service
• Facilitation Service: Employees required for all kinds of cleanliness and waste management, agriculture employee including a gardener, office assistant, an employee working in a canteen, etc.
• Business Assistance Service: Driver, employee managing the transportation, loading, and unloading of goods, plumber, electrician, employee providing consultancy service, technical assistant, etc.
• Domestic Help Service: Housemaid, caregiver, etc.

• However, such works should be other than major works as mentioned during the incorporation and works directly related to those major works.

2. License to Labor Supplier/ Outsourcing Company

• Must be incorporated as company under the prevailing laws,
• Licensing Authority: (a) concerned Labor Office, 

(b) Department of Labor, if the outsourcing company supplies employees to areas under jurisdiction of more than one Labor Office.

• Documents to be Submitted: (a) Application, (b) Notarized copy of Company Registration Certificate, (c) Notarized copy of Memorandum of Association and Articles of Association, (d) Tax Clearance Certificate, (e) Notarized copy of citizenships of directors, (e)Details of work or service for which employees will be outsourced, and (f) Other documents, details as prescribed by the Labor office or Department of Labor.
• Bank Guarantee: NPR 15,00,000 (Additional NPR 5,00,000 for each working area if the outsourcing company supplies employees in area under jurisdiction of more than one Labor Office.)
• Nature of work or service for which the outsourcing company will supply the employees should be mentioned in the license along with the territorial coverage. An outsourcing company cannot supply employees for more than two works or services.
• Renewal of License: Annually, within the end of Asoj (mid-October). If the license is not renewed within Asoj (mid-October), the license may be renewed by paying the additional late fee at the rate of 10% per month if the application for renewal is filed within the same fiscal year.
• Suspension of License: The license may be suspended in case of failure to submit the details such as number of employees outsourced, entities the outsourced employees are engaged, name of main employer, etc. before the end of Poush (mid-January), in case of failure to pay the fine in the event of violation of terms and conditions in the license, Act or Rules, etc. The license may be suspended for up to six months at a time.
• Cancellation of License: The license may be cancelled if the licensed outsourcing company submits an application for cancellation or continues the non-compliance even after being subjected to fine.

3. Obligation of Labor Supplier

• Should pay the salary and other benefits, not less than prescribed in the Act, to the employees outsourced in the capacity of employer,
• Should regularly obtain information on whether or not the main employer has arrangement of occupational health and safety; and if not, recommend the main employer for such arrangement,
• Submit the details annually by the end of Poush (mid-January) to the Labor Office or Department of Labor, details such as (a) details of employees outsourced in the last fiscal year, their number, entity they are engaged in and name of the main employer, (b) details of salary, allowance, benefits provided to the employees outsourced and the amount contributed in the social security fund for each employee outsourced, (c) labor audit report, and (d) details of company address, name, contact number of directors, or details of company, if any changed.

4. Obligation of Main Employer

• Cannot obtain outsourced employees from labor supplier where main employer or main employer’s director or family members are engaged,
• Ensure the outsourced employees are provided minimum salary and benefits as required by the Act. The agreement with the labor supplier shall ensure such salary and benefits,
• No discrimination between the main employer’s employees and outsourced employees in any services or facilities provided to employees except salary and allowance,
• Should regularly obtain information on whether or not the labor supplier has paid the salary and benefits to outsourced employees; and if not, recommend the labor supplier for payment and inform the same to the Labor Office or Department of Labor,
• Make the arrangement for health and safety in the workplace for outsourced employees as well, etc.

Supplying the employees without obtaining a license and obtaining such employees and engaging in work shall be subject to fine of up to NPR 2,00,000. Department may also issue the necessary orders.

WORKING HOURS

• Maximum Working Hours: 8 hours a day and 48 hours a week

For a child below 18 years of age: 6 hours a day and 36 hours a week

• Overtime Hours: 4 hours a day and 24 hours a week

Child below 18 years of age cannot be engaged in overtime hours.

• Overtime Payment: 1.5 times the basic salary of the employee. However, other benefits as agreed in collective bargaining may be provided instead of overtime payment. For managerial level employees, benefits as agreed in employment agreement can be provided instead of overtime payment.
• Break: 30 minutes break after consecutive 5 hours of work

      Child below 18 years of age: 30 minutes break after consecutive 3 hours of work

• Additional Break: additional 30 minutes break for pregnant female employees and female employees with a child below 3 years of age.

LEAVE 

• Weekly Off: 1 day every week
• Public Holidays: 13 days in a year including International Labor Day (1 May)

For female employees, one day additional public holiday on International Women’s Day (8 March)

• Annual Leave: 18 days in a year i.e. 1 day for every 20 working days. Unused annual leave may be accumulated up to 90 days.
• Sick Leave: 12 days in a year. Unused sick leave can be accumulated up to 45 days.
• Compensatory Leave: for engaging an employee in work on weekly off or public holiday. It should be provided within 21 days of such weekly off or public holiday.
• Bereavement Leave: 13 days
• Maternity Leave: 14 weeks including pre-natal and post-natal leave

Compulsory leave: since 2 weeks before the expected date of delivery to 6 weeks after the delivery,

Salary: Full salary for 60 days, remaining leave is unpaid

Leave in case of Miscarriage: In case of a miscarriage of fetus of seven or more months, female employee shall be entitled the complete maternity leave.

 Additional Leave: 1-month unpaid leave if the medical practitioner recommends that the female employee or the child requires rest owing to health.

• Paternity Leave: 15 days paid leave
• If wife dies within 60 days of childbirth, the male employee receives the paid leave for the remaining period.

SALARY

• Minimum Salary : NPR 17,300, except for tea estate (including a basic salary of NPR 10,820 and dearness allowance of NPR 6,480 as per a separate notice of the Government of Nepal)
• Annual Increment: Annually at least half a day’s basic salary
• Deduction from Salary: Only in grounds prescribed in Act such as deduction of tax as per the prevailing laws, contribution amount for social security, salary for absence from work, etc. A deduction shall be made in accordance with a ratio as prescribed in Rules.
• Salary during the period of reserve: If employees are kept in reserve, they shall be paid half the salary during such period.
• Festival Allowance: One month’s basic salary once a year.

The concerned labor office may require the employer to pay the amount as well as compensate the employee with the double the amount if the employer deducts the salary and benefits contrary to the provisions of Act or pays the employee lesser than minimum salary as required by the Government of Nepal.

PROVIDENT FUND

• Employee’s Contribution: 10% of basic salary every month
• Employer’s Contribution: 10% of basic salary every month
• Should be deposited in social security fund.

GRATUITY

• Employer’s Contribution: 8.33% of basic salary every month
• Should be deposited in social security fund.

LEAVE ENCASHMENT

• Accumulated unused home leave up to 90 days and accumulated unused sick leave up to 45 days shall be encashed at time of termination at the rate of basic salary.
• Unused home leave and sick leave in excess of accumulation shall be encashed at the end of each year.

MEDICAL INSURANCE

• Coverage: Annual NPR 1,00,000 per employee
• Premium: equally paid by the employer and employee

ACCIDENTAL INSURANCE

• Coverage: NPR 7,00,000 per employee
• Premium: fully paid by the employer

If the employer does not provide the social security benefits including provident fund, gratuity, medical insurance, accidental insurance, the concerned Labor Office shall require the employer to pay such amount and compensate the employee with the double the amount.

OTHER BENEFITS

• Child Care Center: where there are 50 or more female employees, employer shall make the arrangement of childcare center for care of children below the age of 3. 
• Resting Room: where there are 50 or more employees.
• Canteen: where there are 50 or more employees working in the same workplace at the same time.
• First Aid: for emergency primary treatment.

MISCONDUCT AND DISCIPLINARY ACTION

1. Misconducts subject to Warning

• Absence from work without getting leave approved,
• Leaving the workplace without the approval from managerial level,
• Frequent late reporting to work without approval,
• Non-compliance of orders issued in the course of work by senior employee or employer,
• Other misconducts as prescribed in Bylaws.

2. Misconducts subject to deduction of one day’s salary

• Denying accepting the letter or notice of punishment,
• Participating or compelling others to participate in illegal strike,
• Causing the collective delay in work,
• Causing loss to the enterprise by reducing the service or production due to recklessness or negligence,
• Attempting to take benefits by submitting false details,
• Not using the security apparatus provided by employer to employees,
• Other similar misconducts as prescribed in Bylaws.

3. Misconducts subject to withholding annual grade of salary or promotion

• Taking the enterprise’s property outside the premise of the enterprise or allowing unauthorized person to use such property without the approval of the authorized person,
• Attempt of embezzlement of enterprise’s transactions,
• Damaging the property of employer due to recklessness or negligence,
• Preventing the supply of food, water, service of telephone, electricity or obstructing movement within the enterprise,
• Misusing or causing damage to the items kept or arrangements made for health or safety of employees,
• Other similar misconducts as prescribed in Bylaws.

4. Misconducts subject to Termination of Employment

• Causing bodily harm or injury or taking hostage of employer or any employee or service provider or any person related to workplace, or causing disturbance or dismantling in the workplace, with or without using arms,
• Accepting or offering bribe,
• Stealing property of any person in the workplace,
• Embezzlement of property of the enterprise,
• Knowingly causing damages to the property of the employer or property in use of the employer,
• Absence from work for more than consecutive 30 days without getting leave approved,
• Doing any act disclosing confidential information regarding technology and production process of the enterprise with an intention to cause damages to the enterprise or workplace the employee is employed in,
• Working together with the competing employer or operating competing business or disclosing the confidential information of the enterprise to the competing business,
• Convicted in a criminal offence involving moral turpitude,
• Submission of false educational and other certificates required for appointment,
• Consumption of narcotic drugs or alcoholic drinks during working hours,
• Having subjected to disciplinary action more than two times for other misconducts within three years,
• Other similar misconducts where the prevailing laws prescribe the disciplinary action of termination,
• Other serious misconducts as provisioned in bylaws of the enterprise after obtaining the approval from Department of Labor or agreeing in Collective Bargaining Agreement.

5. Sexual Harassment

• The employment of the employee committing sexual harassment may be terminated depending upon the situation and seriousness of the offence.

6. Other Misconducts

• Provision regarding the misconduct and disciplinary action may be made in the bylaws of an enterprise if the concerned regulatory body has provisioned a specific kind of disciplinary action for any specific misconducts.

7. Procedure for Disciplinary Action

• The employee should be provided seven days’ notice to present clarification. The notice should be accompanied with the facts of committing the misconduct and the disciplinary action that shall be taken in case it is proved that the employee had committed the misconduct.
• The clarification should be asked within 2 months from the date of having obtained the knowledge of the occurrence of misconduct.
• The disciplinary action should be taken within 3 months from the date of initiation of the procedure.
• Authority to issue disciplinary action: Chief executive officer or the managerial level employee who is delegated the authority in Bylaws of the enterprise.
• Appeal on the disciplinary action taken by the enterprise: should be filed within 35 days from the date of having obtained the notice of such disciplinary action. The appeal should be filed in the Labor Court.

TERMINATION OF EMPLOYMENT

1. Grounds of Termination
2. Expiry of the Term 

• For employees in fixed term employment, the employment is terminated upon expiry of the term provided in the employment agreement.
• However, if the employee’s employment is linked to a project, the employment continues if the term of the project is extended, or if the term is extended to complete the given work.

2. Completion of Work

• For employees in work-based employment, the employment is terminated upon completion of the work specified in the employment agreement.
• However, if the employee’s employment is linked to a project, the employment continues if the term of the project is extended, or if the term is extended to complete the given work.

3. Casual Employment

• Voluntary termination by employee or employer at any time.

4. Voluntary Resignation

• Employee may voluntarily resign from the employment. 

5. Unsatisfactory Work Performance

• If the performance of the employee is found unsatisfactory in three or more consecutive performance review, the employment may be terminated.
• The performance review shall be done as per the grounds mentioned in bylaws and pre-informed to the employee.

6. Bad Health

• If the employee is physically or mentally disabled or injured and the medical practitioner recommends that the health condition has rendered the employee unable to work or he\she requires a long time for treatment effecting in the work of the enterprise, the employment of such employee may be terminated.
• However, if the employee suffers the accident in the course of employment or suffers from occupational health hazard, the employment may not be terminated for the entire period of treatment if the employee is undergoing treatment in hospital and for a period of one year if the employee is undergoing treatment at home. Such employee should be provided full salary for such period.
• The employment of the employee undergoing treatment due to reasons other than mentioned above shall not be terminated for a period of six months unless the medical practitioner recommends that the employee would not be able to return to work.

7. Compulsory Retirement

• For regular employees
• Upon completion of 58 years of age.

2. Notice Period

Except for termination due to misconduct, employee or employer terminating the employment relationship shall provide the notice as follows:

Term of Employment	Notice Period
Of up to 4 weeks	1 day
4 weeks to one year	7 days
Exceeding one year	30 days

3. III.Retrenchment

• Grounds of Retrenchment: 

• Financial difficulty
• Excess number of employees due to merger
• Partial or full close down of the enterprise due to any other cause.

• Notice: A notice stating the ground for retrenchment, possible date of retrenchment and likely number of employees to be retrenched 30 days in prior to Labor Office and authorized trade union of the enterprise, if any or effective trade union or Labor Relation Committee.
• Priority Order in Retrenchment:

• Foreign Nationals
• Employee subjected to disciplinary action more often
• Employee with poor work performance
• Last appointed employee among the employees engaged in similar nature of work.

• Compensation: One-month’s basic salary for each year of service. For employees who have not completed one year of service, the compensation amount should be calculated proportionately. Retrenched employees receiving unemployment allowance shall not be entitled to compensation.
• Re-hiring of Retrenched Employee: If the enterprise starts operation or requires employees within 2 years of retrenchment, retrenched employees should be provided the priority. Such retrenched employees should be provided a notice of 15 days. However, new employees may be hired other than retrenched employees if enterprise cannot hire retrenched employees due to the reason of (i) installation of new technology or change in production process, or (ii)age or physical capability of the retrenched employee. 

The concerned labor Office can issue the order to reinstate the employee in wrongful termination. 

TRANSFER OF EMPLOYEES

1. Transfer within an Enterprise

• Employee may be transferred to another office, branch, or department within an enterprise provided that such transfer shall not adversely affect terms, conditions and benefits of service and nature and position of the job.
• The nature of job and position may be altered in following conditions:

• Transfer is effected with the consent of the employee,
• Transfer due to promotion of the employee,
• Transfer as agreed in collective bargaining,
• Transfer to the job in accordance with the training, skill, or academic qualification of the employee.

2. Transfer to another Enterprise

• Employee may be transferred from one enterprise to another enterprise with the consent of the employee.
• The agreement between the sending and the recipient enterprise should provide the following details:

• Name and address of the sending and the recipient enterprise,
• Name and position of the person representing each enterprise,
• Name, address, and position of the employee being transferred and the date of appointment in the enterprise the employee is employed in,
• Existing salary and benefits of the employee,
• Amount of provident fund and contribution in social security fund of the employee and the date on which such amount is deposited,
• Whether the tenure of service shall be added, and if not, the consent of the employee that the tenure shall not be added,
• If the benefits provided to the employee in the recipient enterprise is lesser than the existing benefits received by the employee, the consent of the employee to such arrangement,
• Other matters as determined necessary by the Parties.
• A copy of such an agreement shall be provided to the employee being transferred.

SETTLEMENT OF DISPUTE

1. Individual Claim

• The employee should submit a written application to the employer.
• The employer should provide a notice for negotiation within 7 days of receiving the application.
• The dispute on an individual claim can be settled through negotiation. Unless the time is extended in mutual consent, the dispute should be settled within 21 days.
• If the dispute cannot be settled or the employer does not provide notice for negotiation, the application can be filed for settlement of the dispute in the concerned Labor Office.
• Labor Office facilitates to settle the dispute through negotiation between the employee and the employer within 21 days. If the dispute cannot be settled, the Labor Office should provide a decision within 15 days.
• The appeal against the decision of the Labor Office can be filed at Labor Court within 35 days.

2. Settlement of a Collective Claim/Dispute

• The collective claim should be submitted in writing to the employer.
• The claim should be submitted through (a) Collective Bargaining Committee in an enterprise with 10 or more employees, or (b) by a committee of representatives supported by 60% or more employees by signing.
• The employer should notify in writing the date, place, and time for discussion on a collective claim submitted within 7 days of receiving the claim.
• If the dispute cannot be settled within 21 days (or within the extended time agreed between parties) or if the employer does not provide the notice for discussion on the collective claim submitted, the dispute can be submitted to the concerned Labor Office.
• Labor Office should facilitate negotiation between the parties and settle the dispute within 30 days.

If the dispute is settled through negotiation or through negotiation at the concerned Labor Office, the agreement reached i.e., Collective Bargaining Agreement is binding on both Parties, employees, and employer. If the dispute cannot be settled even through negotiation facilitated by the concerned Labor Office, the dispute can be submitted to arbitration or employees may choose to initiate a strike.

1. Arbitration

• The dispute should be submitted to the arbitration in following circumstances:

• If the agreement has been done between the collective bargaining committee and the employer that the dispute concerning collective claim shall be submitted to arbitration for settlement,
• If the collective dispute arises in the enterprise operating the essential services,
• If the collective dispute arises in the enterprise within the special economic zone,
• If it is prohibited to hold a strike due to an emergency imposed under the Constitution of Nepal.

• If the Ministry is of the belief that economic difficulty is likely to be caused due to strike or lock-out or it is reasonable to settle the dispute through arbitration, the Ministry may order to settle such dispute through collective bargaining.
• For initiating the arbitration, the application should be submitted to the Ministry.
• The cost of arbitration shall be borne by the Nepal Government.
• The claimant should submit the claim to the arbitration tribunal. The tribunal will send a copy of the claim along with the notice to submit the objection or counterclaim by the other party.
• The Tribunal shall issue the award within 30 days upon completion of the hearing.
• The award of the arbitration tribunal is final. However, in the dispute referred for arbitration by the Ministry, the award is final only if any party to the dispute does not submit in writing their objection within five working days.

2. Strike

• The collective bargaining committee can initiate a strike in following circumstances:

• If it is not mandatorily required to submit the dispute to the arbitration,
• If the arbitrator fails to hold arbitration,
• If the tribunal cannot be constituted or the decision to initiate arbitration cannot be taken within 21 days from the date of application for arbitration in the Ministry,
• If the tribunal cannot issue an award within 30 days after hearing,
• If the employer does not implement the award or legally challenge the award,
• Except in circumstances mandatorily requiring the settlement of the dispute through arbitration, if the party submits an objection to the award of the tribunal within 5 working days of issuance of the award.

• Notice: The written notice along with the claim must be provided to the employer at least thirty days prior to the strike. The local Administration and the concerned Labor Office should also be notified of the strike.
• The strike must be canceled if the Ministry orders for the dispute to be submitted to the arbitration.
• Salary: If the strike is done in accordance with the Act i.e., if it is lawful, the employees are entitled to half of the salary for the period of the strike. However, if the strike is against the provisions of the law, employees are not entitled to any salary for such a period.

3. Lockout

• Enterprise may start the lockout after obtaining approval from the Department of Labor after submitting the application stating the rationale for the lockout in the following circumstances: 

• The strike is initiated or continued without providing the employer with prior notice,
• The collective dispute cannot be settled by following the procedure in the Act.

• If there is a possibility of damage to the enterprise due to riots, violence by the employees during the strike, the employer can stop the lockout without prior approval.
• However, the notice of such lockout along with the justification must be provided to the concerned Labor Office or the Department and the Local Administration within 3 days. Local Administration shall immediately arrange for the security of the enterprise.
• A lockout cannot be done in an enterprise operating essential services. 
• The lockout may be declared unlawful if the Department finds the lockout unjustifiable if the lockout is likely to cause disturbance in peace and security of the country or if it is hampering the economic interests of the country. 
• If the lockout is unlawful, employees are entitled to the full salary for the period. If the lockout is lawful, the employees are entitled to half of the salary for the period.

Disclaimer: This note shall not be treated as legal opinion and it is advised to consult a lawyer for legal advice. This note is for general understanding only. 

Please note that the copyright for this note vests on Vidhi Legal Concern.