Labour Laws and Legislation

Labour Legislation in Nepal:

Labour Legislation refers to laws, rules,

regulations and judicial decisions related to labour
relations. It plays important roles like protective and
regulatory role in the development of labour
relations.
Protective role:
It promotes and protects the rights and interests
of workers .It helps to make contractual relations for
employment by specifying:
Terms and conditions of employment
Working conditions
Compensation, including minimum wages and
accident-related compensation
Sexual harassment
Benefits and services for workers and their family.

Regulatory role:
It concerns with promotion and maintenance of

better labour relations. It specifies:

Right-to-work
Unions and related matters
Collective bargaining
Disputes and their settlement
Equal employment opportunity
Fair and equal treatment on the job for
compensation
Employment of disabled workers
Health and safety measures
Industrial actions etc.

Nepal had no effective labour legislation till 1959. It

was only on June 28,1959, more than eight years after the
advent of Democracy, for the first time the labour lawNepal Factory and Factory workers Act,1959 was enacted.
The Act extending to the 41 sections had the provisions
relating to t he workers health, safety, working hours and
a few welfare provisions. But the most significant feature
of the Act was the recognition of workers 'right to form
trade unions and strikes. The Act, however, did not
mention anything about the wages.
Another striking feature about this Act was that it was
amended on May28,1961 before it was actually
implemented. The Act was enforced after two and half
years of its enactment.
The first amendment made some important provisions
concerning the wages, job security, work committee and
methods of settling industrial disputes. However, the rules
necessary for the implementation of the different
provisions of the Act came to force only in May22,1964.

The important legal landmarks provided by the Legislation

were
Nepal Factory and Factory Workers Act,1959
It was the first labour law enacted and amended three
times. It covered factories employing 10 0r more workers. The
important provisions of this Act were:
Payment of wages, overtime and minimum wages to workers.
Provident fund for permanent workers.
Welfare provisions, consisting of:
Leave, working hours, pension, provident fund, maternity
benefits, compensation for injury/disability/death, medical
facilities, rest room for taking rest by workers, childrens
arrangements etc
Workers right to form union
Tribunal to settle disputes
Work committees to harmonize labour relations
Employment of foreign citizens
Right to strike and lockout etc

Bonus Act, 1974

This Act regulates the payment of bonus to employees
and workers. It specifies:
The bonus shall not exceed to ten percent of net profit.
The amount of bonus to an individual will depend on the
amount of monthly salaries and wages paid, but shall not
exceed six months wages and salaries.
Labour Act, 1992(as amended in 1998)
This Act replaced the Nepal Factory and Factory
Workers Act of 1959. The main provisions of this Act
relate to:
Employment and job security, firing of workers.
Working hours
Remunerations and yearly pay increment
Health, safety and security
Welfare provisions

 Special provisions for organizations like tea gardens,

construction work, transport, hotels, travel and trekking etc.

Conduct and punishment
Settlement of labour disputes etc
The amendment of Labour Act in 1998 brought
companies within the scope of this Act. It also specified the
provisions for employing non-citizens. It lays down
conditions under which workers can go on strike.
Trade Union Act, 1993
The main provisions of this Act are:
It provides legal basis for organizing the trade union. A
minimum of ten workers should get together for
unionization. They should constitute at least 25% of total
workers in the organizations.
It specifies the objectives of trade union as:
1. Improve working conditions and work for socio-economic
progress of workers.

2.

Try to maintain good labour-management relations.

3. Increase productivity and assist in organizations
development.
4. Work for making the workers dutiful and disciplined.
It makes provisions for recognition of authorized trade union
for presenting demands to management.
The provisions has been made for Registrar of Trade Unions.
Organization level trade unions can form trade union
association. Trade Union Associations can form Trade Union
Federation.
The framework for labour legislation in Nepal is still in an
early stage. Policies laws and institutions are still in
developing process.
Child Labour Act,2000
The Child Labour Act, 2000 has made the following
provisions:
Children below 16 years have been defined as child.
Children below 14 years must not be employed as labour.

 Children must not be employed in hazardous jobs as

specified; examples are tourism-oriented jobs,

workshops\lab\cold storage, public transport and
construction. Tobacco-based work, carpet dyeing,
beer and liquor, plastic, glass, insecticides, matches
etc.
Permission should be taken from the authorized
government agency for employment of child.
Child labour must not be used from 6PM in the
evening to 6AM in the morning.
Child labour must not be employed for more than 6
hours per day or 36hours per week.
There should be no discrimination in wage payment
for child labour.
Labour Department has the power to inspect
organizations employing child labour.
Punishment ranging from three months imprisonment