The Labor Act, 2017 and Labor Rule 2018 provides specific legal provisions governing the employment of foreign nationals within the country. The provisions about foreign nationals are outlined in Chapter 6 of the Labor Act, which emphasize the conditions, restrictions, and procedures for obtaining labor permits for foreign workers.
Restriction on Employing Foreign Nationals
As per Section 22(1) of the Labor Act, employers in Nepal are not allowed to employ foreign nationals without first obtaining a labor permit from the Department of Labor. However, Section 22(2) introduces an exception, allowing the employment of foreign nationals only when skilled Nepali workers are not available. In such cases, the employer must first publish a vacancy announcement in a national daily newspaper to seek qualified Nepali citizens.
If no suitable Nepali candidates apply or are selected, the employer can then apply to the Department of Labor for a foreign worker’s labor permit by submitting proof of the recruitment attempt and non-selection of local candidates. This process is detailed in Section 22(3).
Certain exceptions apply, where government bodies, investment boards, or agencies partially or wholly owned by the Government of Nepal, as well as foreign experts working under approved investment agreements, are not required to publish such advertisements prior to hiring foreign workers.
Following the application, the Department of Labor evaluates the request and supporting documents. If deemed appropriate, it issues the labor permit for the foreign worker as per Section 22(4). Furthermore, Section 22(5) mandates that employers who hire foreign workers must train Nepali workers with the goal of gradually replacing the foreign personnel.
The procedures, fees, and other arrangements for foreign labor permits are to be followed as prescribed by the government under Section 22(6).
Application for Labor Permit
According to Rule 7 of the Labor Rules, 2075, an employer intending to hire a foreign worker must submit a formal application to the Department of Labor using the format prescribed in Schedule-1 of the Rules. This application must be submitted before employment and must include the following:
Documents and Information to be Submitted:
- Details of the original advertisement published in a national daily (as per Section 22(3) of the Labor Act, 2074), including:
- Job title, number of workers required, and key responsibilities
- Minimum educational qualification, experience, and training requirements
- Selection procedure
- Deadline and location for submission of applications
- List of documents to be submitted by applicants
- Supporting Documents:
- Copy of the applicant’s passport, valid for at least six months
- Biodata (CV) of the foreign worker
- Proof of the employer’s tax clearance
- Details of any Nepali applicants who responded to the advertisement, including their qualifications and selection process
- A workforce replacement plan outlining how the employer will train Nepali workers to eventually replace foreign employees
- If applicable, a copy of the work agreement approved by the Government of Nepal or the Ministry of Home Affairs
- The job advertisement must also be uploaded on the Ministry of Labor’s employment portal, as required by Rule 7(3).
According to Labor rule,2075 rule 8 mention that license should be provided to the foreign citizen if he/she can be eligible to obtain license in Nepal .
Obligation of Foreign Workers to Obtain Labor Permits
According to Section 23(1) of the Labor Act 2074, every foreign individual intending to work in Nepal must obtain a labor permit. Even if other laws do not explicitly mention this requirement, Section 23(2) reinforces that foreign workers are obliged to obtain a permit, except where diplomatic immunity or bilateral/multilateral agreements with the Government of Nepal exempt them from this obligation.
Special Cases for Issuing Permits
Notwithstanding the conditions mentioned in Sections 22 and 23, the Labor Act also allows flexibility. In specific cases, the Department may directly issue labor permits to foreign individuals, especially those working in establishments with foreign investment or foreign aid, such as executive heads or a limited number of technical employees, as per the prescribed number. This special provision ensures that essential foreign expertise can be retained while balancing the policy of promoting domestic employment.
Application Process for Foreign Nationals Seeking Labor Permits in Nepal
As per the Rule no. 9 of the Labor Rules, 2075, Foreign nationals who wish to work in Nepal must have follow a defined legal process to obtain a labor permit from the Department of Labor, as outlined in Rule no 9 of the Labor Rules, 2075. This rule provides detailed procedures for submitting an application, required documents, and the conditions under which the labor permit may or may not be granted.
1. Application Submission
As per Sub-rule (1), a foreign national must have apply using the format specified in Schedule-3 of the Labor Rules. The application must be submitted directly to the Department of Labor.
2. Required Documents
The following documents must be attached to the application:
- A certified copy of the passport (valid for at least six months)
- Certified copies of academic certificates, skill or training qualifications, if required
- An offer or acceptance letter from the employer in Nepal
- A work agreement letter from the Government of Nepal, Ministry of Home Affairs (if required)
3. Review and Verification
The Department will review the application and:
- May interview the applicant or conduct a skill test
- Verify if the job requires foreign expertise or if qualified Nepali workers are available
4. Denial of Permit
If sufficient Nepali manpower is available for the position, the labor permit will not be granted.
5. Approval and Issuance
If the application is found valid:
- The Department will issue a labor permit in the format provided in Schedule-4
- The permit will be issued within 30 days upon payment of the required fee (as per Rule no.10(1))
6. Rejection of Notification
If the application is rejected:
- The Department must inform the applicant in writing within 7 days, stating the reasons
Labor Permit and Approval Fees in Nepal
As per the Ruleno.10 of the Labor Rules, 2075 to regulate the employment of foreign nationals in Nepal, the Labor Rules, 2075 prescribe a fee structure for issuing labor permits (under Rule no 7) and labor approvals (under Rule no 9). These fees are mandatory and must be paid at the time of application submission.
Fee Structure:
As per Rule no. 10(1) of the Labor Rules, the following fees apply:
- NPR 15,000 per person for labor permits/approvals valid for up to six months
- NPR 20,000 per person for labor permits/approvals valid for more than six months
Payment via Diplomatic Missions:
According to Rule no. 10(3):
- If an application is submitted through a Nepali Embassy or diplomatic mission abroad, the equivalent fee is may be paid in convertible foreign currency to the concerned mission.
Government Revisions:
Under Rule no. 10(2):
- The Ministry of Labor may revise the above fees as needed by publishing a notice in the Nepal Gazette.
Validity Period of Labor Permit or Labor Approval
As per Rule no.11 of the Labor Rules, 2075, the duration of labor permits or labor approvals granted to foreign nationals in Nepal is primarily determined by the employment contract approved by the Ministry of Home Affairs. According to Rule no. 11 of the Labor Rules, 2075, the standard validity of a labor permit or approval is tied to the time period mentioned in the official work agreement of the foreign national.
In general, the rules are specifying the following durations:
- For highly skilled technical foreign workers, labor permits or approvals can be issued for up to five years.
- For other foreign workers, the validity is limited to a maximum of three years.
However, in exceptional cases, the Department of Labor may, with the approval of the Ministry, grant an additional labor permit or approval for up to two more years. This extension applies to foreign workers who have to made significant contributions to the national interest, public welfare, or fields such as education, social service, science and technology, or non-profit sectors.
This rule ensures that Nepal balances the temporary use of foreign expertise with the long-term goal of building local capacity.
Issuance of Labor Permit:
According to Labor rule 2075 rule no. 8, after an employer submits an application for a labor permit to hire a foreign worker (as per Rule 7), the process to verifying and granting the work permit is governed by Rule 8 of the Labor Rules, 2075 (श्रम नियमावली, २०७५). This rule ensures that permits are issued only after thorough a review of the application and supporting documents.
Below are the key steps outlined in Rule 8 for issuing a labor permit:
Investigation and Inquiry
- Initial Review:
Once the application is received, the Department of Labor is conducting an initial review of the documents and details which is submitted. - Additional Inquiry:
If the Department needs more clarification, it can direct concern with office to submit a report within seven (7) days.
Permit Issuance
- Granting Labor Permit:
If the application is found to be valid and documents are in order, the Department shall:- Approve the request
- Issue the labor permit within thirty (30) days
- Use the official format prescribed in Schedule-2 of the Labor Rules
- Charge a fee as specified in Rule 10(1)
- Rejection of Labor Permit:
If the application is not found to be satisfactory, the Department must:- Inform the applicant to writing a letter within seven (7) days
- Also, department should be Clearly state reasons for rejecting the labor permit application.
Employment Conditions for Foreign Nationals in Nepal
As per the Chapter 6, Sections 24 and 25 of the Labor Act, 2074 lays down clear provisions for regulating the employment of foreign nationals in Nepal. These provisions ensure transparency, legal compliance, and fair treatment of foreign workers while balancing national interests.
1. Short-Term Technical Employment
Under Section 25(b) of the Labor Act 2017, foreign technicians may be allowed to enter Nepal without a long-term labor permit for performing urgent tasks such as:
- Repairing or maintaining machinery
- Installing new technology
- Other emergency technical services
This provision applies only if the period of stay does not exceed three months, making it easier for companies to receive specialized technical support quickly and efficiently.
2. Language of the Employment Agreement
To promote transparency and avoid disputes, Section 25 mandates that the employment contract between the employer and a foreign worker must be written in a language understandable to the worker either in the worker’s native language or in English. This ensures that the worker clearly understands:
- The nature of the job
- Terms of service
- Compensation and benefits
- Other working conditions
3. Right to Transfer of earnings
Foreign workers who are legally employed under a valid labor permit are entitled, as per Section 26, to repatriate their earned salary in convertible foreign currency to their home country. This provision upholds international labor rights and allows lawful transfer of income.
4. Minimum Employment Standards and Validity of Contract –
- According to Section 27(1), the remuneration, benefits, and working conditions for foreign workers must not fall below the minimum standards prescribed by the Act or its subsidiary rules.
- The employment terms must be explicitly mentioned in a time-based or task-based contract.
- If the contract specifies a fixed duration, it shall be valid for that period. If not specified, Section 27(2) limits the validity to a maximum of three years by default.
- Any additional administrative or procedural requirements related to foreign workers are governed by Section 27(3) and shall follow the procedures prescribed by relevant authorities.
Limitations and Record-Keeping of Foreign Workers in Nepal
According to Rule no. 13 of the Labor Rules, 2075, to ensure transparency and effective regulation, the Government of Nepal has established specific guidelines for the employment and monitoring of foreign workers within the country.
1. Permitted Number of Foreign Workers:
In establishments has been operated under foreign investment or foreign aid, if an agreement exists between the Government of Nepal and the relevant foreign government or agency, the number of foreign workers allowed will be determined by that agreement. If no such agreement exists, than labor permits may be granted for up to three foreign nationals in such establishments after proper record-keeping.
2. Maximum Limit of Foreign Workforce:
In general, unless diplomatic immunity or a special agreement applies, an employer cannot hire more than 5% of the total workforce from foreign nationals.
3. Mandatory Record Maintenance:
o As per Section 23(2) of the Labor Act, 2074, foreign workers who do not require labor approval (due to special agreements or immunity) and those who receive labor permits or approvals under Rule 8 or Rule 9, must have their records maintained by the Department of Labor using the format prescribed in Schedule-4.
o Employers must also ensure that all foreign workers (whether exempt from permits or not) are registered with the Department using Schedule-5 and must pay the applicable fee according to Rule 10(1) unless explicitly exempted.
4. Penalty for Non-compliance:
If it is found that any foreign worker has been employed without proper registration, the employer is required to pay double the standard fee as per Rule 10(1). After this penalty is paid, the worker shall be officially registered.
Revocation and Monitoring of Labor Permits in Nepal
As per Labor Rules, 2075 (Rules 14 and 15),to maintain lawful employment and protect national interests, the Government of Nepal has established clear provisions regarding the revocation and monitoring of labor permits or approvals granted to foreign workers.
Grounds for Revocation of Labor Permit or Approval
The Department of Labor holds the authority to cancel or revoke a labor permit or approval if any of the following conditions are met:
- Cancellation of Work Agreement: If the Ministry of Home Affairs cancels the original work agreement provided to the foreign worker.
- Non-Payment of Government Dues: If the permit holder fails to pay taxes, fees, or any revenue due to the Government of Nepal within the specified time.
- Criminal Conviction: If the permit holder is found guilty by a court in any criminal offense under existing laws.
- National Security Risk: If the individual is found unsuitable for employment in Nepal from the standpoint of national security.
- Violation of Legal or Moral Standards: If the foreign worker breaches the responsibilities set by law, acts against the code of conduct, or engages in behavior contrary to public morality and decorum.
Monitoring of Foreign Workers (Rule no.15)
The Department of Labor is also responsible for monitoring the activities and legal status of foreign workers in Nepal. This includes:
- Regular inspection of workers who have to obtained labor permits under Rule no. 8 or 9, and those whose records are maintained under Rule 13(3).
- If a foreign national is found working without proper authorization or registration, the Department will immediately instruct the concerned employer to terminate their employment.