Hiring in Nepal

The terms set out role, salary in NPR, working time, leave, notice and any restrictive covenants. The EOR is the counterparty to the employee, which is what removes the need for your own entity.

English is common for commercial roles, but Nepali is the language of the Labour Office and the courts, so a bilingual version is worth having.

Time-bound, work-based, casual and part-time employment are all recognised, but most EORs default to regular, open-ended terms.

Set probation from day one. If employment is not ended by the close of probation, it is confirmed automatically.

Some EORs shorten probation as policy because they, not you, carry the dismissal risk. Ask before you agree a start date.

Overtime is paid at 1.5 times the normal rate, capped at 4 hours a day and 24 hours a week.

Professional hires are not carved out by salary, so overtime remains a statutory matter rather than a purely contractual one. Put the position in writing either way.

The government declares far more public holidays than 13 each year and many offices close for the major festivals, so budget for market practice rather than the statutory floor.

Sick leave is 12 days on full pay, maternity leave is 98 days with 60 fully paid, and fathers get 15 days. Unused home leave accrues up to 90 days and sick leave up to 45, and both are cashed out on exit, so confirm who carries that liability.

Either side may terminate on notice or pay in lieu. Retrenchment compensation is one month's salary per year of service, unless the employee qualifies for the Social Security Fund's unemployment allowance.

The EOR runs the process as the legal employer and will want the paperwork in order, including final pay, accrued leave, any festival allowance due and statutory compensation. Employees can challenge a dismissal at the Labour Office, so keep a documented reason.

Private medical cover is common for professional roles, because the fund's medical benefit only applies after six months of contributions.

EORs often bundle benefits through a group scheme. Ask what is included in the fee and what is billed on top.

Employer contributions add 20% of basic salary, not gross, so the split between basic pay and allowances drives the real cost. That is before the EOR fee.

The festival allowance is the trap. Every employee is owed an extra month's basic salary each year, normally paid before Dashain, so a budget built on 12 monthly payments will fall short.

Ask whether the EOR sponsors directly or refers to a partner. A partner-model EOR often cannot sponsor at all, and the local advertising requirement and the plan to replace the hire with a Nepali citizen sit with the sponsor, not with you.

Set start dates after approval, not before.

Get the data processing terms in the service agreement, not just the privacy notice. Sending personal data outside Nepal is generally read as needing the employee's specific consent, so build it into onboarding.

Ask where payroll data is hosted and who in the partner chain can see it.

Incorporation here is slow and capital-heavy: foreign investment needs Department of Industry approval, a minimum of NPR 20 million outside the IT sector, and typically 3 to 5 months to register. Profit repatriation also runs through Nepal Rastra Bank.

Permanent establishment risk is about what people do, not where payroll sits. Revenue-generating activity can create exposure regardless of the employment route.