Types of Employment and Employment Agreement in Nepal

May 19, 2025

Employment is the state of having paid work. Employment disputes are addressed by the labor law of the country. Labor can be define as a work done specially through physical. Labor law is a kind of tools that balance the relationship between workers, employing entities, trade unions and the government. So, collectively labor law is the tripartite relationship between employee, employer and union. Whereas, it also concerns the employee's right at work.

The applicable laws and rules of labor law and are as follows;

1. Labor Act, 2074 (2017)

2. Labor Rules, 2075 (2018)

The Labor Act has been effective since 19 Bhadra, 2074 whereas, Labor Rules has been effective from 8 Asadh, 2075.

Types of employment according to the Labor Act, 2074 are as follows

1. Regular employment- Regular employment is that employment which does not have end date and works regularly. 

2. Work based employment- Work based employment is that employment where employer provides any particular work or service for performance.

3. Time based employment- Time based employment is that employment where employer provides a work for a certain period of time and it needs to be completed within a time period.

4. Casual employment- Casual employment is that employment where is employee is hired for the job for a period of seven or less days in a month.

5. Part time employment- Part time employment is that employment where labor has to perform a work in thirty five hours or less than thirty five hours a week.

Employment agreement

Employment agreement is a document signed by the both employer and employee when starting a new job. Employment agreement set forth the rules, rights and responsibilities for both employer and employee. An employment agreement lays out the terms and conditions for newly hire employee as well as employer due to which it helps to establish an understanding between an employer and employee.

The applicable laws for the employment agreement in Nepal is, Labor Act, 2074 and Labor Rules, 2075.

Employment agreement includes following things;

1. The employee's salary,

2. The employee's benefit,

3. Work responsibilities

4. Protection on confidential information

5. Probationary period

6. Performance Reviews

7. Termination

Labor Act, 2074 sec 11 has stated no employee should engage as a labor without employment agreement. Labor Rules, 2075 rule no 4 has talked about the component of employment agreement, they are as follows;

1. Employment types

2. Major responsibilities and position of employee

3. Salary and other benefits to be received by the employee

4. Terms and conditions of the employment

5. Place and time of signing the employment agreement

6. Effective date of employment agreement

7. Other terms and condition of employment. 

SADA Associates provides expert services in the field of Business Taxation in Nepal, Foreign Direct Investment (FDI) in Nepal,  Intellectual Property Registration in Nepal, Employment and Immigration in Nepal, Dispute Resolution and Arbitration in Nepal, and Corporate and Commercial compliance and regulatory matters in Nepal. For more information Contact us. 

Please note that this guide is published for general information only and should not be considered as legal advice. You are requested to seek legal advice for specific factual situations. Please note that copyrights for this article vests on Sada Associates.