1. Social Security Regulation, 2018 (2075)
The Government of Nepal (“GoN”) has framed the Contribution Based Social Security Regulations, 2018 (2075) (“Social Security Regulations”) by exercising the power conferred to it under Section 69 of the Contribution based Social Security Act (“Social Security Act”). The Social Security Regulations has been published in Nepal Gazette on November 19, 2018 (Mangsir 03, 2075) with immediate effect.
The Social Security Regulations has prescribed certain matters as required by the Social Security Act. Such matters include (a) the procedure for participation in Social Security Schemes (b) registration of the employer and employee with Social Security Fund (c) operation of fund, etc.
2. Social Security Schemes Operation Directives, 2018 (2075)
The Social Security Fund (the “SSF”) has formulated the Social Security Schemes Operational Directives (“Directives”) to operate the Social Security Schemes pursuant to Section 10 of the Social Security Act. The Directive has been approved by the Ministry of Labor, Employment and Social Security on November 22, 2018 (2075/08/06) and has been effective thereof.
3. Laws dealing with Social Security Schemes
The Social Security Schemes are subject to the following laws, regulations, directives and notifications:
|Legal Sources||Effective Date|
|Labor Act, 2074 (“Labor Act”)||September 04, 2017|
|Labor Regulations, 2075 (“Labor Regulations”)||June 22, 2018|
|Contribution Based Social Security Act, 2074 (“Social Security Act”)||August 13, 2017|
|Contribution Based Social Security Regulations, 2075 (“Social Security Regulations”)||November 19, 2018|
|Social Security Schemes Operational Directives, 2075 (“Directives”)||November 22, 2018|
|Gazette Notice Requiring Enrollment of Employer to the Social Security Fund (“Enrollment Gazette Notice“)||November 12, 2018|
4. Requirement of Enrollment By Employer
4.1. The Enrollment Gazette Notice does not specify the sector or nature of industry, business, service or transaction subject to the enrollment with SSF. Therefore, all employers are required to be registered with the SSF.
4.2. The Enrollment Gazette Notice requires the Employers to enroll with the SSF within the timeline as below:
|Employers by Region (Location)||Timeline||Date|
|Employers and Outsourcing Companies within Kathmandu Valley||Within 3 months from Mangsir 06, 2075 (November 22, 2018)||Within Falgun 05, 2075 (February 17, 2019)|
|Employers of Province Number 3 (except Kathmandu Valley)||Within 3 months from Mangsir 15, 2075 (December 01, 2018)||Within Falgun 14, 2075 (February 26, 2019)|
|Employers of Province Number 1||Within 3 months from Poush 01, 2075 (December 16, 2018)||Within Falgun 30, 2075 (March 14, 2019)|
|Employers of Province Number 2||Within 3 months from Poush 15, 2075 (December 30, 2018)||Within Chaitra 14, 2075 (March 28, 2019)|
|Employers of Gandaki Province and Province Number 5||Within 3 months from Magh 01, 2075 (January 15, 2019)||Within Chaitra 30, 2075 (April 13, 2019|
4.3. Upon enrollment of employers within the aforementioned timeline, they are required to enroll their employees with the SSF within 3 months after registration of the employers.
4.4. Submission of Application
The required list of the documents to be submitted along with the application for enrollment of the employers with the SSF and the detailed process for registration is provided in the link below: Registration
5. Social Security Schemes
The Social Security Fund has introduced the following Social Security Schemes:
(a) Medical Treatment, Health and Maternity Protection Scheme
(b) Accident and Disability Protection Scheme
(c) Dependent Family Protection Scheme and,
(d) Old Age Protection Scheme
The Employer and the Employees are required to contribute certain amount of the employee’s basic salary each month to the Social Security Fund. The rate of contribution is as follows:
7. Allocation of Contribution
The total amount of contribution made by the Employer and Employee will be allocated to the different schemes in the following manner:
|S.N.||Social Security Schemes||Allocation|
|1||Medical Treatment, Health and Maternity Protection Scheme||1%|
|2||Accident and Disability Protection Scheme||1.40%|
|3||Dependent Family Protection Scheme||0.27%|
|4||Old Age Protection Scheme||28.33%|
8. Schemes their Coverage and Exclusions
8.1. Medical Treatment, Health and Maternity Protection Scheme
The Medical Treatment, Health and Maternity Protection Scheme comprises of (a) Medical Treatment and Health Safety Schemes and (b) Safe Motherhood Schemes for the Contributor or Contributors Wife. The Contributor who have contributed in the Fund for a period of 3 (three) months are entitled to facilities under this scheme. However, Contributors should contribute for 12 (twelve) months within a period of 18 (eighteen) months in order to benefit from the Maternity Safety Schemes.
8.1.1. Coverage under Medical Treatment, Health and Maternity Protection Scheme
Pursuant to number 5 of the Directive, Contributors get the following benefits out of this Scheme:
8.1.2. Scope of Health Benefits
Contributors are entitled to following health benefits:
|S.N||Scopes of Benefits||Entitlement||Contributor’s Cost|
|1||Treatment at Hospital||Amount not exceeding NPR 100,000 p.a.||20% of the claim amount|
|2||Cost incurred for the regular pregnancy test of the Contributor or Contributors Wife, hospital admission, operation and treatment of child for 3 months||Amount not exceeding NPR 100,000 p.a.||20% of the claim amount|
|3||Treatment without admitting to hospital as per the prescription of doctor||Amount not exceeding NPR 25,000 p.a.||20% of the claim amount|
|4||Maternity Care/Miscarriage after 24 weeks of pregnancy/stillbirth||Amount equivalent to one month’s minimum remuneration per child.||Up to two children.|
Contributors are not entitled to following treatment under this Scheme:
8.2. Accident and Disability Protection Scheme
Accident and Disability Protection Scheme comprises of (a) Accidental Benefits and (b) Disability Benefit.
This scheme is applicable from the date of contribution to the Contributor who requires treatment for the employment related accident. However, the Contributors who have not contributed for a minimum period of 2 (two) years shall not be entitled to the benefit related to the treatment of occupational diseases and other benefit relating to the treatment of occupational health diseases.
8.2.1. Scope of Benefits
8.3. Dependent Family Protection Scheme
This benefit is provided in the event of death of the Contributor. Dependent Family Protection Scheme comprises of (a) pension benefits to husband or wife, (b) Scholarship to the children of the Contributor, (c) benefits provided to dependent family members and (d) funeral expenses
The Pension benefit is provided to husband or wife of the Contributor in the event of death of Contributor due to accident or occupational diseases. The husband or wife is entitled to lifetime pension benefit equivalent to 60% of last drawn basic remuneration of the Contributor.
This Scheme covers the children who have not completed 18 years of age in the event of death of the Contributor. The amount of such scholarship shall be 40% of the last drawn basic remuneration of the Contributor and it shall be entitled every month.
This benefit is provided to the dependent parents living joint with the Contributor in case the Contributor does not have husband or wife or children. The dependent parents will be entitled to 60% of the basic remuneration for life time.
In case of death of Contributor for any reason whatsoever the dependent family member or the nominee will be entitled to funeral expenses of NPR 25,000.
8.4. Old Age Protection Scheme
The Old Age Protection Scheme will be operated by the total amount of 28.33% of the employee’s basic salary (10+10% provident fund and 8.33% gratuity) deposited in the SSF. The contributing employees shall receive (i) pension, or (ii) retirement scheme benefits.
8.4.1. Participation in Pension Scheme
The Old Age Protection Scheme applies to the employees working with the employer prior to Shrawan 01, 2076 (July 17, 2019) if they accept the Scheme under the collective bargaining agreement.
8.4.2. Benefits under the Pension Scheme:
Upon completion of the retirement age, the total sum amount of contribution made by the employer and the employee and the amount of accrued from the investment made by the Fund will be divided by 180 months (15 years) and such amount will be provided as pension every month during the employee’s lifetime. Upon death of the Contributor prior to the retirement age, their heir shall receive the total lump sum amount of the contribution made by the employer and the employee and the accrued benefit received from the Fund.
8.4.3. Eligibility for Pension Entitlement:
The Contributor should have completed the age of 60 and should have contributed for at least 180 months or 15 years.
8.4.4. Retirement Benefits:
The Contributors working prior to Shrawan 01, 2076 (July 17, 2019) contributing 28.33% for provident fund and gratuity shall be entitled to receive a lump sum amount of the contribution and income accrued on such amount upon retirement.
9. Opt-In and Opt-Out
9.1. Pursuant to Section 6 of the Social Security Act, employees do not have the option to opt in or opt out of the Schemes and all employees are required to participate in all schemes (No option to participate in some schemes).
9.2. However, the following employees have the opt-in option for the following scheme (a) existing employees having employment relationship prior to Shrawan 01, 2076 (July 17, 2019), (b) under the Collective Bargaining Agreement, (c) to Old Age Protection Scheme. Until they exercise the opt-in option they are not included in the Old Age Protection Scheme and get the principal and accrued income of their provident fund and gratuity.
10. Transfer of PF and Gratuity
10.1 The Directives also deals with the PF and Gratuity for pre-enrollment and post-enrollment period. Pursuant to Directives, the existing employee (the employee whose provident fund and gratuity has been accumulated) are provided certain options in relation to the management of the provident and gratuity for pre-enrollment period (up to the date of starting of contribution to SSF). Such employee can choose to either (a) transfer the amount to SSF; or (b) get it paid out; or (c) continue to maintain the amount in the retirement fund where it has been deposited.
**DISCLAIMER: This document is prepared for general understanding and should not be taken for any legal purpose without consulting legal professionals. ** The copyright of the document is vested with PLA.