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Nepal Employment Contract Guide 2025
12 clauses every contract must have, what to check before signing, red flags to reject, and what the law says employers cannot include.
A written employment contract is mandatory under Labour Act 2074. Employers must provide a written, signed contract within 7 days of hiring. This is not optional — failure to provide one is a violation subject to penalty. Both parties must hold a signed copy. [Source: Labour Act 2074, Section 9]
Contract cannot give you less than the law. No employment contract clause can waive your rights under Labour Act 2074 or the Constitution. If a clause gives you less than the legal minimum (e.g., fewer leave days, lower overtime rate), that clause is void — the law applies automatically. [Source: Labour Act 2074, Section 3]
12 Clauses Every Nepal Employment Contract Must Have
1
Full Name & Address
Full legal names and addresses of both employer and employee. Must match citizenship/registration documents.
[Labour Act 2074, S.9]
2
Job Title & Duties
Clear job title and description of duties. Employer cannot assign substantially different duties without consent and updated contract.
[Labour Act 2074, S.9]
3
Salary & Allowances
Gross salary, basic salary (minimum 60% of gross), and each allowance listed separately. Frequency of payment (monthly). Mode of payment (bank transfer preferred).
[Labour Act 2074, S.9; Labour Regulations 2075, Rule 66]
4
Work Location
Primary work location. If multi-site or remote, this must be explicitly specified. Transfer to another city requires your consent unless your contract allows it.
[Labour Act 2074, S.9]
5
Working Hours
Daily and weekly hours (max 8/day, 48/week standard). Shift times if applicable. Overtime arrangement and rate (minimum 1.5× per law).
[Labour Act 2074, Sections 28, 31]
6
Leave Entitlements
Home leave (≥13 days), sick leave (≥12 days), public holidays (13 days), maternity/paternity leave. These are legal minimums — contract may give more, never less.
[Labour Act 2074, Sections 34–45]
7
Probation Period
Maximum 6 months (extendable once by 3 months for max 9 months total). During probation, 7-day notice on either side. Full contract rights apply after probation ends.
[Labour Act 2074, Section 14]
8
Termination & Notice
Grounds for termination, notice period (minimum 30 days), show cause process, and any disciplinary procedures. Severance/gratuity entitlement.
[Labour Act 2074, Sections 54–59]
9
SSF & Social Security
Employer's obligation to register employee in SSF and deposit contributions (11% employee + 20% employer of basic salary). Employer SSFID/ERN should be included or available on request.
[SSF Act 2074, Section 7]
10
Confidentiality & IP (if applicable)
Confidentiality terms must be specific and reasonable in scope. Blanket non-disclosure of "all information ever known" is usually unenforceable. IP assignment must be for work created in the course of employment.
[Nepal Contract Act 2056]
11
Dispute Resolution
How disputes will be handled — internal grievance process first, then Labour Office, then Labour Court. Venue of litigation should be Nepal (not foreign jurisdiction for Nepal-based employees).
[Labour Act 2074; Nepal Contract Act 2056]
12
Date & Signatures
Dated and signed by both parties. Both employer and employee must receive a copy. No contract is valid without both signatures.
[Labour Act 2074, S.9; Nepal Contract Act 2056]
Red Flags — Clauses to Challenge or Reject
These clauses are either illegal, unenforceable, or highly problematic. If you see them, ask for removal or clarification before signing.
| Red Flag Clause | Why It's Problematic | What to Do |
|---|---|---|
| "No SSF — we pay you extra instead" | SSF registration is mandatory. Waiving it is illegal regardless of any cash-in-lieu offer. | Refuse and insist on SSF registration |
| Basic salary below 60% of gross | Violates Labour Regulations Rule 66. Reduces SSF base unlawfully. | Request correction before signing |
| Non-compete clause (blanket, broad) | Extremely broad non-competes may not be enforceable in Nepal courts without reasonable limits on scope/time/geography. | Request narrowing or legal review |
| "No overtime pay — included in salary" | Overtime pay is a legal right. A blanket waiver is void — law overrides contract. | Insist on separate overtime terms |
| Notice period longer than 30 days for employee | The law only mandates 30 days for employer; however contract can require more from employee — check if reciprocal. | Negotiate symmetry |
| "Company may change job description at will" | Substantial changes to duties without consent may amount to constructive dismissal. | Add "with employee's written consent" |
| Bond / training recovery clause (disproportionate) | Recovery of training costs is legal if proportionate; however demanding multiple years' salary back for any reason is unenforceable. | Negotiate cap and pro-rata reduction |
| Governing law = foreign jurisdiction | Nepal employees should have disputes heard under Nepal law in Nepal courts. | Request Nepal law + Labour Court clause |
Digital vs Paper Contracts
Electronic contracts are legally valid in Nepal under the Electronic Transactions Act 2063. An employment contract signed via e-signature (DocuSign, Adobe Sign, or even signed PDF returned by email) is enforceable — provided both parties have valid copies. A PDF sent by email with both signatures is sufficient. [Source: Electronic Transactions Act 2063; Nepal Contract Act 2056]
✅ Valid Digital Evidence
- Signed PDF (both parties' signatures)
- DocuSign or similar e-signature
- Email with attached signed contract
- Employer portal contract (with audit trail)
❌ Not Sufficient on Its Own
- Verbal agreement only
- WhatsApp/Viber message exchange only
- Unsigned HR policy document
- Offer letter only (no full contract)