How to Hire and Pay Employees in Nepal: A Step-by-Step Guide for Global Employers

Nepal’s on your radar, and it should be. There’s rising talent in Kathmandu and beyond—skilled professionals fluent in English, with strong backgrounds in finance, engineering, and customer support.

But once you start looking into how to legally hire someone in Nepal, you realize that a cookie-cutter approach to hiring is not going to work. For example, contracts require local clauses you’ve never seen. Payroll has rules that shift depending on social security contributions and tax slabs. And that’s before you even get to onboarding.

If you’re looking to build a team in Nepal without drowning in a sea of compliance complexities, this guide walks you through the steps. From legal obligations to payroll calculations, we’ll show you how to hire and pay employees in Nepal—confidently and compliantly.

Understand legal and compliance requirements for hiring in Nepal

Before you make an offer or start onboarding, you’ll need to set up a few essentials. Hiring in Nepal comes with specific legal responsibilities that employers can’t afford to overlook.

Key labor laws and employer obligations

The Labour Act 2017 and Labour Rules 2018 are your legal anchors. Together, they outline everything from working hours and leave policies to the specifics of hiring, firing, and paying employees.

Here’s what you need to check off:

• Register with the Social Security Fund (SSF) and enroll your employees.
• Sign an employment contract—written, clear, and in both Nepali and English.
• Notify the Labour Office within 15 days of hiring.
• Keep records on salaries, attendance, and working hours.

Stay updated via the Ministry of Labour, Employment and Social Security, which publishes changes to employment law.

Checklist: What you need to hire compliantly in Nepal

• A registered local entity or an approved Employer of Record
• Bilingual employment contracts
• Labour office registration confirmation
• Social Security Fund number
• Employee details (national ID, PAN, bank info)

Hiring model options: Local entity vs. global EOR

If you’re planning to hire a small team—or just want to test the waters—you’ve got two paths:

1. Set up a local entity. Gives you complete control but also full responsibility. Expect setup times of several weeks and ongoing compliance work.
2. Use an Employer of Record (EOR). The faster, leaner option. An EOR legally employs the worker on your behalf and handles payroll, taxes, and compliance, while you manage their day-to-day work.

Need flexibility without figuring out the legal maze? Go with an EOR when expanding to Nepal.

Define salary, payroll, and employee benefits in Nepal

You can’t pay someone properly if you don’t understand how payroll actually works in Nepal. Here’s the breakdown.

Wages and payroll calculations

As of mid-2024, the minimum wage in Nepal is NPR 17,300 per month (roughly US$130). But roles in tech, finance, and operations often start well above that.

Your payroll structure will likely look like this:

• Basic salary (fixed monthly rate)
• Allowances (transport, housing, internet, etc.)
• Gross salary = Basic + Allowances

From that gross, here’s what gets deducted:

• TDS (Income Tax). A progressive tax starting at 1% and scaling based on income. For current rates, check the Inland Revenue Department.
• SSF. You contribute 11%, and the employee kicks in 10%, based on basic salary.
• Provident Fund (PF). 10% each from you and your employee, usually through the Employees Provident Fund.

Sample calculation (monthly)

Basic Salary: NPR 40,000
Allowances: NPR 10,000
Gross: NPR 50,000

• TDS. NPR 3,000 (approx.)
• SSF. NPR 4,400 (your part) + NPR 4,000 (employee’s)
• PF. NPR 4,000 (both sides)

Take-home pay: Around NPR 39,000
Total employer cost: About NPR 58,400

Statutory benefits and leave entitlements

Here’s what every full-time employee in Nepal is entitled to:

• Public holidays. At least 13 days per year
• Sick leave. 15 days
• Casual leave. 12 days
• Home leave. 30 days
• Maternity leave. 98 days (60 paid)
• Festival bonus. Equal to one month’s pay
• Gratuity. Based on tenure, starting at 8.33% annually

Some sectors offer additional perks, so always check the industry standard.

Tactical steps to hire employees in Nepal

Time to go from plan to people. Here’s how hiring works in real life.

Finding the right talent

You’ve got options:

• Post on sites like MeroJob and RamroJob
• Use LinkedIn for mid-to-senior roles
• Partner with local recruiters who understand the landscape

Onboarding checklist

Once you’ve made an offer, here’s what you’ll need:

• Signed contract and offer letter
• PAN (tax ID) and citizenship ID
• Bank account info
• SSF registration
• Labour office notification filed

Onboarding usually takes 1-2 weeks—faster if the documents are ready.

How to pay employees legally and efficiently in Nepal

Payroll isn’t just about paying on time—it’s about doing it right.

How payroll is paid

Most employers pay via direct bank transfer. If you’re local, banks like Nabil Bank or Global IME are standard. If you’re international, a payroll partner or EOR can streamline this with currency conversion and local compliance built in.

Payroll must be completed monthly, and payments need to go out within seven days of the end of the cycle.

How to handle TDS

You’ll deduct income tax at the source and send it to the Inland Revenue Department by the 25th of the following month. Miss that window, and you could face fines or interest.

Tips and resources for a successful application

Want to set yourself up for smooth hiring in Nepal? Here’s how:

• Make sure employee documents are clean and consistent
• Stay on top of legal updates through local authorities
• Use digital systems to track pay and benefits
• If something seems unclear—ask. Local expertise matters

Using support from EOR providers

An Employer of Record (EOR) is your shortcut to hiring in Nepal without setting up a business there. They’re your local employer partner—handling all the legal pieces so you can focus on expanding your operations.

Here’s what an EOR covers:

• They draft legal employment contracts
• They run compliant local payroll (taxes, SSF, PF—done)
• They register with labor offices and file government reports
• They keep your employee compliant, from onboarding to offboarding

And you? You keep your team growing without a global legal team.

Pebl simplifies global hiring in Nepal

We built Pebl to simplify global hiring, especially in countries like Nepal, where the rules can be nuanced. Through our Global Payroll services, you can hire anywhere without opening a single entity.

We’re not just payroll. We’re your full-stack global employment partner—onboarding, compliance, contracts, benefits, and more.

Looking to hire in Nepal? Let’s talk.

This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.

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