Quick answer
Under Nepal’s Labour Act, 2074, an employee is entitled each year to a festival allowance equal to one month’s basic salary, and each month to gratuity of 8.33% and a provident fund contribution of 10% from the employer, matched by 10% of the employee’s own. Where the employer is in the Social Security Fund, these are paid there instead: 20% from the employer and 11% from the employee.
Most employees in Nepal learn what they are owed from colleagues, and colleagues are often wrong. The Labour Act, 2074 sets a floor that applies to every employee of every size of organisation from the first day of work. An employer may give more. It may not give less.
On this page
The benefits at a glance
Percentages are of basic salary, not gross. Your appointment letter states the basic figure, which is why it matters how the salary is split.
| Benefit | What the Labour Act provides |
|---|---|
| Festival allowance (Dashain bonus) | One month’s basic salary, once a year |
| Gratuity | 8.33% of basic salary every month, from the employer |
| Provident fund | 10% of basic salary from the employee and 10% from the employer, every month |
| Social Security Fund | Where the employer is enrolled: 11% from the employee and 20% from the employer, in place of the two lines above |
| Probation | At most six months |
| Notice on resignation | By length of service — thirty days once you have worked more than a year |
| Working hours | Eight hours a day, forty-eight a week; overtime at one and a half times the wage |
Dashain bonus — the festival allowance
Every employee is entitled to a festival allowance equal to one month’s basic salary each year. It is paid before the festival the employee chooses according to their religion and culture — for most, Dashain — which is why everyone calls it the Dashain bonus.
An employee who has not completed a year receives it in proportion to the months worked. It is compulsory, not a favour, and it is taxable as part of your salary income. It is separate from the profit bonus under the Bonus Act, which depends on the organisation making a profit.
Gratuity — and how to calculate it
Gratuity is 8.33% of your basic salary for every month you work, starting from your first day — there is no waiting period under the current Act. It is the employer’s contribution alone; nothing is deducted from you for it.
Provident fund and the Social Security Fund
The provident fund is your long-term saving: 10% of your basic salary is deducted from you and the employer adds another 10%.
Where the employer is registered in the contribution-based Social Security Fund (SSF), the two schemes are combined: 11% of basic salary from you and 20% from the employer, 31% in all, deposited in your SSF account every month. That contribution funds a medical and maternity scheme, accident and disability cover, a dependants’ scheme and an old-age scheme, under the Fund’s own rules.
What your payslip should show
To see what tax should be deducted from a given salary, use the income tax calculator, which applies the current slabs and the SSF rules. A salary certificate states the same figures for a bank or an embassy.
- Basic salary and each allowance, separately.
- Your deductions: provident fund or SSF, tax (TDS), and anything else, each named.
- The employer’s contributions made on your behalf.
- Net pay — what reaches your bank.
Probation, the contract and notice
- Probation can be at most six months. If you are kept on after it, you are confirmed.
- An appointment letter or contract is required, stating your post, pay, and terms. The employment contract tool shows what one should contain.
- Notice: the Act sets the minimum by length of service — thirty days once you have worked more than a year, less for shorter service. Your contract may say more; see the resignation letter guide.
Leave
Unused home and sick leave can be accumulated up to the limits the Act sets and is paid out when you leave. To apply for leave, see the leave application guide.
| Leave | What the Act provides |
|---|---|
| Weekly off | One day a week |
| Public holidays | Thirteen days a year, with one more for women |
| Home (annual) leave | One day for every twenty days worked |
| Sick leave | Twelve days a year, fully paid |
| Maternity leave | Fourteen weeks, of which sixty days are fully paid |
| Paternity leave | Fifteen days, fully paid |
| Mourning leave | Thirteen days |
If you are not getting these
This page is a plain-language summary, not legal advice. The Act, its rules and the Social Security Fund’s own procedures are the authority, and they are amended from time to time.
- 1Check your appointment letter and payslips, and write down what is missing and since when.
- 2Raise it in writing with your manager or HR, politely, quoting the benefit.
- 3If nothing changes, the Labour Office for your area takes complaints, and trade unions and legal-aid organisations can advise.
- 4Keep copies of everything — the letter, the payslips, your messages.
Common questions
Is Dashain bonus compulsory in Nepal?
Yes. The Labour Act, 2074 entitles every employee to a festival allowance equal to one month’s basic salary each year, paid before the festival of the employee’s choice. Those with less than a year of service receive it in proportion.
How is Dashain bonus calculated?
It equals one month’s basic salary. If you have worked less than a year, it is your basic salary divided by twelve, multiplied by the months worked.
Is Dashain bonus taxable in Nepal?
Yes. The festival allowance is part of your employment income and is taxed along with your salary.
How is gratuity calculated in Nepal?
At 8.33% of basic salary for each month worked, from the first day of employment, paid by the employer. A year of gratuity is roughly one month’s basic salary.
How much is the SSF contribution in Nepal?
31% of basic salary in total: 11% deducted from the employee and 20% paid by the employer, deposited monthly in the employee’s Social Security Fund account. It replaces the separate provident fund and gratuity contributions.
How long is the probation period in Nepal?
At most six months under the Labour Act, 2074.
