10 things you need to know before signing an employment contract in Nepal ?

When we get a job at a company, we should go over a few things before signing an employment contract. To avoid future disputes, you should understand all of the contract’s terms before signing.

Section 17 of Nepal’s Labor Act 2017 requires all workers to sign a contract. An employment contract is an agreement between a worker and an employer that covers aspects of the job such as working hours, location, notice periods, and employment rights and responsibilities. Work type, type of job, working hours, and place of work must all be mentioned in an employment contract, according to Rule 4 of the Labor Regulation 2018.

An employment contract should outline the terms of your employment as well as all relevant rights and responsibilities for both the worker and the employer.

Position/Job Title

In the case of an employment contract, you should include the Job Title.

The job type should be mentioned in the job title. In Nepal, there are two kinds of companies: government and non-government. The threshold should be clearly stated in the employment contract. Internship, Trainee, Senior, Junior Assistant, and Senior Engineer are all acceptable reasons for exemption.

Job description

The job description should be included in the employment contract. The nature of the job should be mentioned in the job description.

If your contract does not include a job description, the employee will be unsure of what to do and what not to do. Working people face similar challenges. Before accepting a job, make certain that you understand the responsibilities of your position.


The employment contract should also include information about remuneration/salary/bonuses. Before signing the employment contract, the salary and amount of salary should be negotiated. You should write about the stated salary in detail. You should also be aware of how and when you will be compensated. Any additional incentives and perks, such as paid bonuses, health benefits, travel expenses, and other reimbursements, should be specified in your contract. It may also include the criteria that will be used.

Employment Duration

Before signing the employment contract, the length of time it will be kept should be specified. Unless the contract is permanent, the start and end dates must be clearly stated in the contract.

When discussing the contract for the first time, the probationary period should be mentioned. 

Job termination

The job’s termination should also be mentioned in the employment contract. It should be mentioned in the termination of the job that, according to the principle of hearing, clarification will be requested, and if the mind is not understood, it will be dismissed from the job.

Working hours and location

The company’s working hours differ from one another. Working hours should be specified and will take the form of a daily time period, office hours, or a set number of hours per week that you are expected to work.

If your job requires overtime or work outside of normal hours, the rules governing this should be established, such as the overtime rate or convertible hours you can use in a “time off in lieu” system.

Vacation and sick leave

The company should specify holidays in the employment contract.

How many vacation days are you entitled to, and when does the holiday season begin? When you are expected to take your “main holiday,” or the majority of your vacation time.

Sick leave may have an impact on other aspects of your contract, such as termination, working hours, and notice period. This is also subject to local law, but the procedure for informing your employer about your illness is frequently spelled out in your contract.

Leave should be written clearly and legally. House leave is mentioned in section 43 of Nepal’s Labor Act 2017. House leave means that the worker will be paid for one day of house leave every twenty days of the working period. According to Section 44 of the Labor Act of 2017, the employer is entitled to 12 days of paid sick leave.

Similarly, employees who request sick leave for more than three consecutive days must provide a certificate of examination from a recognized doctor.

 Pension / Nepal Social Security Fund / Gratuity Scheme

The amount to be paid after retirement should be specified in the employment contract. Nepal’s social security fund, gratuity scheme, and pensions are used in various ways. An old age pension scheme would provide retirees with monthly pensions, ensuring their financial independence. In the event of the pensioner’s death, the scheme also covers dependents. It is common for businesses to provide pensions to all of their employees.

Policies, restraints, and rights

Non-competition, non-solicitation, non-dealing, and non-poaching clauses are commonly included in employee contracts.

Employers value restrictive clauses because they protect the company, its clients, and other employees. They frequently take effect following the termination of employment.

 Dismissal / Punishment clause

The company must clearly state in the employment contract what must and must not be done. Don’t give advice the first time something goes wrong. A punishment/dismissal clause must be included in the contract so that if the work is spoiled even after a warning, the employee can be fired without explanation.

The firm has long provided corporate legal services. If you have any questions, please contact us at 9849517735 or info@corporatelawyerenepal.com

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