Employer of Record in Nepal

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

Businesses can only operate smoothly in Nepal if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Nepal below, to avoid any compliance issues.

Onboarding Process

We can help you get a new employee started in Nepal quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.  

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment.

Nepal's labor laws establish a balanced framework for working hours and overtime that aims to protect employees while allowing businesses to meet operational needs. The standard workweek is 48 hours, typically distributed as 8 hours per day for 6 days, with special protections for younger workers. Employers must provide adequate rest periods, including a 30-minute break after 5 hours of work and 12 hours between shifts.

Overtime is permitted but limited to 4 hours daily and 24 hours weekly, with mandatory compensation at 150% of regular wages (time-and-a-half). This increases to 200% for public holidays. Night shift workers receive additional allowances of at least 25% above their regular wage. Employers who violate these regulations face significant financial penalties and potential legal action. By following these regulations, businesses can maintain compliance while creating a healthier, more productive work environment.

Employment laws in Nepal can be intricate, and even unintentional mistakes in contracts, benefits, or termination processes can carry legal and reputational consequences. With an Employer of Record, you gain a local partner that ensures every hire is compliant. The EOR takes care of drafting compliant contracts, processing accurate payroll, managing contributions to statutory benefits, and handling lawful terminations if needed, all according to local employment standards.

This level of protection is especially valuable when expanding into new or unfamiliar regions. Instead of using time and resources to build in-house legal knowledge, you gain immediate access to local expertise. The EOR keeps you ahead of regulatory updates and shields your company from potential compliance gaps, so you can confidently hire and manage employees while minimizing risk. For hiring managers and founders, it's the difference between hiring with uncertainty and building your team on a legally sound foundation.

Payroll Cycle in Nepal

The payroll cycle in Nepal is usually Monthly, with employees being paid as stipulated in employment contract.

When you’re scaling quickly, setting up local payroll systems in each new country slows you down. In Nepal, the administrative load can include government registration, benefits management, and accurate, on-time payment delivery. An EOR gives you a plug-and-play solution that handles all of this while your internal team stays focused on growth, not red tape.

Key Ways an EOR Supports Payroll in Nepal:

• Rapid Payroll Setup: Onboards employees quickly with ready-to-go infrastructure.
• End Administration: Handles salary, tax, and benefits with no extra internal resources.
• Vendor Simplicity: Consolidates payroll across countries for centralized oversight.
• No Entity Required: Operates legally, saving your business the time and resources needed for local incorporation.

Nepal’s immigration framework distinguishes between entry visas and work authorization. Foreign nationals who intend to work in Nepal typically enter on a suitable visa category such as a non-tourist visa or business visa, and then obtain a separate Work Permit from the Department of Labour and Occupational Safety, often referred to as a labor permit or work approval. In many cases, the employer must first secure approval from the Department of Industry or relevant line ministry before the work permit can be issued.

Most foreign employees in the private sector work under a Non-Tourist Visa (for example, an employment visa sponsored by a company, NGO, or international organization) combined with a Work Permit that specifies the employer, role, and duration. The process is document-heavy and requires coordination between the employer, the foreign national, and multiple authorities, so planning ahead and allowing sufficient lead time is essential.

Mandatory Leave Entitlement in Nepal

The annual leave entitlement in Nepal is 1 day of vacation for every 20 days of work. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

An Employer of Record (EOR) helps businesses manage annual leave, paid time off (PTO), and local holidays across the globe, including in Nepal. By partnering with an EOR, companies ensure full compliance with local labor laws in Nepal when it comes to annual leave and time-off management. EOR providers like Playroll offer platforms that simplify tracking and managing employee time off in Nepal. By outsourcing this responsibility to Playroll, you can streamline leave management, ensure compliance, and free up time to focus on other business priorities.

When you hire in Nepal, your benefits strategy needs to align with both the Labour Act 2017 and local expectations around job security and social protection. Employees place strong value on paid leave, provident fund savings, and insurance-style protections, so building a package that respects these norms will make your company much more attractive.

Most benefits are designed for standard, full‑time employees, but several legal entitlements also extend to part‑time and wage-based workers. Understanding which benefits are mandatory and which are market-driven extras will help you stay compliant while tailoring your offer to your budget and talent needs.

• Top mandatory benefits include: contributions to the provident fund, gratuity/accrued severance, paid annual leave and public holidays, and paid maternity and other statutory leave
• Other core protections include: social security contributions where the Social Security Fund (SSF) scheme is applied, and workplace injury/accident compensation
• Top supplemental benefits include: private health insurance for employees and dependants, performance-based bonuses and allowances, and education or training support
• Key legal and tax considerations include: proper registration and contributions for provident fund and any SSF coverage, correct tax withholding on cash and in‑kind benefits, and maintaining payroll and leave records that can be produced for audits in Nepal

For startups and small teams, managing global employee benefits isn’t just complex, it’s a full-time job. In Nepal, understanding what benefits are required, how to deliver them, and how to stay compliant can be overwhelming, especially without local HR expertise. An Employer of Record removes that pressure by taking complete ownership of benefits administration, so you don't have to become an expert in local employment law.

Whether it’s healthcare contributions, pension enrollment, or statutory leave, the EOR ensures everything is delivered accurately and on time. They navigate any country-specific nuances, keep up with legal changes, and ensure each benefit is properly tracked and documented. For founders, that means fewer distractions and more time to focus on growth. Your employees get the security and support they expect from a local employer, and you get to scale your team in Nepal without building complex infrastructure or worrying about compliance missteps.