Foreign nationals working in Nepal generally require a labour/work permit. Employers must demonstrate the need for foreign expertise where suitably qualified Nepali workers are unavailable, and the relevant work permit must be obtained before employment. Foreign workers also require the appropriate working/non-tourist visa, supported by the labour permit and employment agreement. Work permits are administered by Nepal’s Department of Labour and Occupational Safety.

• Employers must register with the relevant tax authorities and comply with Pay-As-You-Earn (PAYE) withholding requirements. 
• Payroll is generally processed monthly, with employers responsible for calculating and withholding income tax and remitting statutory deductions. 
• Nepal operates a mandatory Social Security Fund (SSF) for covered employees. Social security contributions are generally 20% for the employer and 11% for the employee, calculated on basic remuneration, for a combined contribution of 31%.

• Contract Types: Employment may be permanent, fixed-term, work-based, casual, or other forms recognised under the Labour Act. Written employment contracts or employment particulars are required.
• Probation: Up to six months.
• Working Hours: Standard working hours are 8 hours per day and 48 hours per week. Overtime is permitted within statutory limits and is generally paid at 150% of the ordinary wage rate. Overtime may generally not exceed four hours per day or 24 hours per week. 
• Notice Periods: At least 1 day for employment of up to four weeks; 7 days for employment of more than four weeks but not exceeding one year; and 30 days for employment exceeding one year. Pay in lieu may be provided where the required notice is not given. 
• Termination: Employment may be terminated for legally recognised reasons, including expiry of a fixed-term or completion of project-based work, redundancy, misconduct, or other grounds permitted under the Labour Act. Employers must generally provide proper and sufficient grounds for termination.
• Severance: Statutory severance and gratuity obligations may apply depending on the circumstances of termination and the employee's participation in the Social Security Fund.

• Social Security: Employees generally contribute 11% of basic remuneration to the Social Security Fund, while employers contribute 20%. The employer contribution incorporates pension, gratuity and other social protection components. 
• Annual Leave: Home leave is generally provided at one day for every 20 days worked, which equates to approximately 18 days for a full year of continuous work. Accumulation is permitted subject to statutory limits. 
• Sick Leave: 12 days of paid sick leave per year. Sick leave may be accumulated up to 45 days subject to statutory conditions. 
• Maternity Leave: 14 weeks of maternity leave. The first 60 days are paid, with social security arrangements potentially covering applicable maternity benefits. Additional unpaid leave may be available where medically required.
• Paternity Leave: 15 days of paid paternity leave. 
• Public Holidays: Employees are generally entitled to statutory public holidays, with additional provisions applying to female employees in certain circumstances.
• Festival Allowance: Employees are generally entitled to a festival allowance equivalent to one month's basic remuneration each year. 
• Insurance: Employers are subject to statutory employee protection and insurance requirements, including provisions relating to medical and accident coverage.
• The current national minimum wage is NPR 19,550 per month, effective from July 2025.

• Tax Residency: Individuals are generally treated as resident where they meet the applicable residence or ordinary-abode tests under Nepalese tax law. Residents are generally subject to Nepalese taxation under the applicable resident rules, while non-residents are taxed on Nepal-source income.
• Non-Residents: Non-resident individuals are generally subject to a 25% flat tax rate on taxable Nepal-source income. 
• Tax Year: Nepal's income tax year runs from approximately mid-July to mid-July, corresponding to the Nepali fiscal year.
• System: Nepal uses a progressive personal income tax system. For FY 2025/26, the standard resident individual rates range from 1% to 39%, with the 1% first-bracket charge functioning as Social Security Tax for taxpayers not covered by the relevant SSF arrangements. 
• Double Taxation Treaties: Nepal has entered into double taxation agreements with a number of countries.