Employer of Record in Nepal: A Comprehensive Guide for 2026

Introduction

Found the right talent in Nepal? Hiring them is only the beginning. Managing employment contracts, payroll, tax deductions, statutory contributions, and compliance requirements can add complexity to workforce management.

An Employer of Record in Nepal helps businesses hire employees without establishing a local entity while supporting compliant employment and payroll administration. Skuad's global EOR solution helps organizations hire, onboard, pay, and manage employees in Nepal and across 160+ countries, with payroll support in 70+ currencies.

In this guide, we'll cover key aspects of employment in Nepal, along with how Skuad supports hiring, payroll, compliance, work permits, and workforce management through its global EOR solution.

Nepal at a glance

• Population: 29.5 million
• Currency: Nepalese rupee (NPR)
• Capital city: Kathmandu‍
• Languages spoken: Maithili, Nepali, Bhojpuri, Tharu, Tamang
• GDP: USD 42.91 billion

How does employment regulation work in Nepal?

Employment in Nepal is governed by labor regulations that define employment relationships, working conditions, employee entitlements, and employer responsibilities. Employers hiring in the country should understand Nepal's employment laws to support compliant workforce management and align with local employment requirements.

What are the types of employment contracts?

Employment contracts define the terms and duration of the working relationship between an employer and an employee. They generally fall into two main categories based on the nature and length of engagement.

Definite contract

A definite contract is used for employment arrangements with a defined duration, project, or assignment. It is commonly adopted for roles linked to specific business needs or temporary engagements.

Indefinite contract

An indefinite contract is used for ongoing employment relationships without a predetermined end date. It is the most common arrangement for long-term positions and supports workforce stability and continuity.

Clear employment agreements and well-structured workforce practices can help employers maintain consistency in payroll administration, employee benefits, and workplace compliance.

Employee entitlements of the new labor law are as follows:

What are the major public holidays in Nepal?

Nepal has several public holidays observed throughout the year, covering national, religious, and cultural occasions.

What are contractors and full-time employees in Nepal?

Organizations expanding in Nepal can hire either full-time employees or independent contractors, depending on their business needs and workforce strategy. Skuad supports both hiring models through its global employment platform.

Contractors are typically used for short-term, project-based, or specialized work, while full-time employees support ongoing and long-term business operations. Skuad facilitates onboarding, contracts, payroll, and payments across both employment types.

Employers should evaluate both models based on role requirements, commitment level, and overall operational goals.

Here’s how Skuad helps you:

EOR for full-time employees

• Hire employees in Nepal and 160+ countries without establishing a local entity.
• Support compliant employment contracts and onboarding
• Manage payroll, statutory deductions, and salary payments
• Administer employee benefits and leave entitlements
• Support employment lifecycle management, including offboarding
• Facilitate salary payments in 70+ currencies

Contractor management

• Streamline contractor onboarding and agreement management
• Support invoice collection and payment processing
• Help maintain compliant contractor engagements
• Facilitate contractor payments in 70+ currencies
• Centralize contractor records and documentation
• Simplify management of distributed contractor teams

Whether hiring contractors or full-time employees, Skuad helps businesses build and manage teams in Nepal through a centralized global employment platform.

Full-time employee or contractor, Skuad supports both in Nepal. See pricing.

What are the key things to know about hiring in Nepal?

A company aiming to hire employees in Nepal must implement the local laws and satisfy the criteria laid down by the government. The general manager of the company in Nepal must issue an appointment letter to the selected candidate. The government encourages companies to prefer employing Nepalese professionals over international candidates.

Based on performance, work efficiency, attendance, and discipline, the employer must grant a permanent position to the employee after the latter completes one year of service with no interruption.

The appointment letter by the employer must contain the listed details:

• Post-appointment
• Remuneration
• Any applicable service conditions

Employment status in Nepal is defined by the contract type. Regular employment covers ongoing roles with no fixed end date and carries the full set of statutory benefits, while work-based, time-based, casual, and part-time arrangements are used for specific tasks, fixed periods, or limited hours.

Nepal's labor law does not restrict the hours during which women can work, and it is built on non-discrimination and equal pay for equal work. Where a female employee works early in the morning or late at night, the employer must arrange transportation to and from the workplace and maintain a safe working environment.

Employee health benefits in Nepal are listed below. An employer must:

• Ensure proper cleanliness and hygiene at the workplace by disposing of unwanted products and files appropriately.
• Facilitate light and ventilation, along with the maintenance of a suitable room temperature for the employees.
• Prevent the collection of dark and other contaminated substances that could affect the health of workers.
• Provide the required personal equipment, such as safety goggles or noise protection devices, to protect employees based on the work.
• Arrange potable water for employees during working hours.
• Declare all or some zones in the office as non-smoking zones.
• Arrange for a compulsory annual health checkup of employees at companies where the nature of work or the working environment can adversely affect the health of employees.

Employment termination rules in Nepal

Every employee in Nepal must have a written employment contract before starting work, except for casual workers. The contract sets out the type of employment, job description, remuneration, working hours, benefits, and termination terms. For time-based roles, it also states the end date.

New hires can be placed on probation for a maximum of six months under Section 13 of the Labour Act 2074. During probation, the employer can end the contract if the employee's performance is unsatisfactory. If the employer does not terminate the contract by the end of the six months, the employee is automatically confirmed as a regular employee.

The termination procedure for employment in Nepal follows a defined process. The table below provides an overview of the steps involved.

An employee may resign by submitting a written resignation to the employer. The employer must accept it within 15 days and notify the employee; otherwise, it is deemed accepted from the next day. A resignation may be withdrawn by mutual consent and is considered cancelled if the employee continues working after it takes effect.

Why use an EOR in Nepal for hiring?

Business expansion is a long-drawn process that calls for extensive planning, especially when expanding to a foreign country. It is complicated and can take up to several months to complete, but by choosing the EOR route for hiring employees in Nepal, you can fast-track the expansion process.

What are the benefits of hiring through an EOR in Nepal?

Hiring through an Employer of Record (EOR) in Nepal allows companies to expand their workforce quickly while staying fully compliant with local labor laws.

• Compliance with local regulations: Ensures employment contracts, payroll, and statutory contributions align with Nepal's labor requirements
• Simplified payroll and administration: Handles payroll processing, tax deductions, employment documentation, and HR administration in one system
• Workforce expansion without entity setup: Enables hiring in Nepal without establishing a local legal entity
• Centralized workforce management: Provides a unified structure to manage hiring, payroll, onboarding, and compliance across regions

What are the types of visas in Nepal?

Foreign nationals who wish to enter Nepal may require a visa depending on their nationality, purpose of travel, and applicable visa types. Certain travelers may be exempt from visa requirements based on bilateral travel agreements and official government rules.

Visa type

Who needs a visa?

• Most foreign nationals require a visa before or on arrival
• Some travelers may be exempt based on nationality agreements
• Certain nationalities must obtain a visa in advance through Nepalese embassies/consulates
• Visa on arrival is available for eligible countries at designated entry points

What are the work visa requirements needed for submission?

• Completed Nepal Work Visa Application form (obtained online)
• Work Permit obtained from the Department of Labor
• Letter of Recommendation authorized by the relevant ministry
• Appointment letter or work contract
• Tax clearance of the hiring company
• Passport photocopies
• A Nepal visa photocopy

Understanding visa requirements for Nepal requires clarity on eligibility rules, application steps, and necessary documentation. Employers and international travelers often need additional guidance to ensure full compliance with immigration regulations.

Skuad’s global immigration support helps manage cross-border mobility by assisting organizations and individuals with visa-related processes, including:

• Supporting work permit and visa applications for foreign employees joining your team
• Coordinating required documentation with the relevant immigration authorities
• Tracking documentation requirements, permit validity, and key deadlines across the permit lifecycle
• Ensuring your workforce remains aligned with changing immigration and compliance requirements

Work permits in Nepal

Understanding payroll & taxes in Nepal

How to pay employees in Nepal?

Employers in Nepal typically pay salaries through bank transfers and other electronic payment methods. Salary payments are made according to the terms of the employment contract and applicable employment regulations. Timely and accurate payroll administration is an important part of maintaining compliance and employee satisfaction.

How does payroll management work in Nepal?

Effective payroll management involves more than processing salary payments. Employers are generally responsible for:

• Maintaining accurate employee and payroll records
• Calculating employee earnings and applicable deductions
• Withholding and remitting taxes and statutory contributions
• Managing payroll reporting and recordkeeping requirements
• Maintaining payroll data for compliance and audit purposes

Payroll administration in Nepal extends beyond salary disbursement. Employers must calculate and withhold applicable taxes, manage statutory deductions, maintain payroll documentation, and fulfill reporting obligations in accordance with local requirements.

Skuad supports payroll administration through a centralized platform that helps organizations manage employee payroll, statutory deductions, reporting requirements, and payroll records while helping maintain compliance with local employment and payroll obligations.

Tabulated below are Nepal payroll tax rates and their details.

How to set up a subsidiary in Nepal?

Setting up a subsidiary in Nepal enables organizations to build a local presence, employ staff directly, administer payroll, and conduct business operations through a registered entity.

What are the steps to incorporate a subsidiary in Nepal?

Step 1: Reserve a company name

Step 2: Prepare incorporation documents

Step 3: Register the company with the relevant authorities

Step 4: Obtain a tax identification number (PAN)

Step 5: Register for applicable tax and social security obligations

Step 6: Obtain any required licenses or industry-specific permits

Establishing a subsidiary involves registration, regulatory compliance, and ongoing administrative obligations. For organizations that prefer not to establish a local entity, Skuad supports employment, payroll administration, and workforce management in Nepal through its EOR services.

Professional Employer Organization (PEO)

A Professional Employer Organization in Nepal is responsible for providing every HR-related function for your organization. However, an Employer of Record (EOR) service takes complete charge of putting your services and employees as required on their payroll.

When working with a PEO, employment contracts are maintained and managed by your company. This allows the organization to retain direct oversight of employment relationships and related responsibilities.

Organizations seeking additional support may choose an EOR solution. An EOR manages employment contracts and related employment administration on behalf of the employer through a service agreement.

Ready to manage your workforce in Nepal?

At this point, you should have a clear understanding of hiring, payroll, tax obligations, work permits, and workforce management requirements in Nepal. Understanding these requirements can help support compliant and effective workforce operations.

Skuad helps organizations hire, onboard, pay, and manage employees in Nepal through its Employer of Record (EOR) solution. With payroll support in 70+ currencies and hiring capabilities across 160+ countries, Skuad helps organizations manage global teams while maintaining compliance with local employment requirements.

Start hiring in Nepal without entity setup. Book a demo.

FAQs

1. What is an employer of record in Nepal?

An Employer of Record (EOR) in Nepal acts as the legal employer on behalf of a company. It manages employment contracts, payroll, and compliance without requiring a local entity.

2. What services does an EOR provide in Nepal?

An EOR supports onboarding, payroll administration, tax withholding, statutory contributions, and employment compliance. This helps businesses manage employees more efficiently.

3. What are the compliance risks of getting employment wrong in Nepal?

Common risks include worker misclassification, payroll errors, and failure to meet statutory obligations. These issues may result in penalties and compliance challenges.

4. Is an EOR or setting up a local entity better for hiring in Nepal?

An EOR is often suitable for companies seeking to hire quickly without entity setup. A local entity may be more appropriate for long-term operations in Nepal.

5. How quickly can an EOR onboard an employee in Nepal?

An EOR can generally onboard employees within days once the required documentation and employment details are finalized. This can help organizations begin operations more quickly compared to establishing and registering a local entity.