Amendments to the Bonus Act and Labor Act, 2074 (2017)

Some Nepal Laws Amendments Act, 2075 (2019) (“Laws Amendment Act”) has been published on the Nepal Gazette on March 03, 2019 (Falgun 19, 2075) with immediate effect. The Laws Amendment Act has also amended certain provisions of the Bonus Act and Labor Act which are briefly discussed below:

1. Major Amendments in the Bonus Act, 1973 (2031) (“Bonus Act”):

   1.1. Ceiling of Bonus Payable to Employees (Section 7(3))

1.1.1. The Laws Amendment Act has changed the ceiling of bonus payable to employees each year as follows:

 1.2. Provisions relating to Welfare Fund (Section 13)

1.2.1. Section 13 of the Bonus Act provided that seventy percent (70%) of the amount remaining after distribution of bonus should be deposited in the “welfare fund established in accordance with Section 37 of the Labor Act, 2048 (1992)”.  The provision of the Section 13 has been amended.

1.2.2. The amended provision provides that the amount should be deposited with the “welfare fund established in accordance with the prevalent laws of Nepal”. However, such amendment does not have material effect on the deposit of the surplus amount after distribution of bonus.

1.2.3. The reference of the Labor Act used in various places in the Bonus Act has also been amended in the context of change in the Labor Act.

2. Major amendments in the Labor Act:

    2.1. Advertisement Requirement Exempted for Hiring Certain Foreign Nationals  (Section 22)

2.1.1. Pursuant to Section 22 of Labor Act, the employer is required to advertise the vacant positions in the national level daily newspaper in the process of hiring foreign national. If no  application is submitted by Nepali national or if no Nepali national is selected for the post, then the employer may apply for the approval of Department of Labor for hiring foreign national.

2.1.2. The Laws Amendment Act has exempted the advertisement requirement for certain employees. A Proviso has been added under Section 22 (3) of the Labor Act to provide such exemption. Pursuant to the Proviso advertisement is not required to hire foreign nationals in technical or expert positions under an investment agreement entered into with any ministry, department, investment board of the Nepal Government and the associations, organizations or other competent entities having full or partial ownership of Nepal Government by taking approval of Nepal Government or line ministry.

    2.2. Gratuity and Pension (Section 53 (7))

2.2.1. The Laws Amendment Act has repealed Section 53 (7) of the Labor Act which prevents the employees receiving pension to receive gratuity. The implication of removal of Section 53 (7) would be that the employees will be entitled to both the pension and the gratuity.

2.3. Implementation of the Decision (Sec. 166)

2.3.1. The Laws Amendment Act has added two more Sub-Sections in Section 166 of the Labor Act. The Sub-Section (6) and (7) have been added which require the concerned party to implement the decision made by the Department, Office or competent authority in accordance with the Labor Act and Labor Regulations. Further, the Department or the Office can take action against the concerned party who denies implementing such decision given by Department, Office or the competent authority.

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