Leave Rules in Nepal: What the Labour Act Requires
Nepal's Labour Act, 2074 sets minimum leave entitlements every employer must provide. Annual (home) leave accrues at 1 day for every 20 days worked, and sick leave is 12 days per year on full pay. These are floors, not targets. Your policy can be more generous, never less.
The main entitlements
Annual or home leave
Accrues at one day per twenty days worked, roughly 18 days a year for full-time staff. It is accumulable up to 90 days, and the balance is payable on termination.
Sick leave
12 days per year on full pay, accumulable up to 45 days. Employers may request a medical certificate for longer absences.
Public holidays
At least 13 days a year, with additional entitlement for female employees for festivals such as Teej.
Maternity and paternity leave
Maternity leave is 98 days, with 60 days paid, plus protections around returning to work. Paternity leave is 15 days.
Mourning leave
13 days of kriya leave where applicable.
Where employers get caught
Not accruing monthly
Leave accrues as work is performed. Granting a full annual quota in Shrawan creates a problem when someone leaves in Kartik having used more leave than they earned.
Losing track of the accumulation cap
Annual leave accumulates up to 90 days and sick leave up to 45. Untracked balances become an unexpected settlement liability.
Forgetting that leave is payable at exit
Accrued unused annual leave is paid out on termination. If the balance is wrong, the settlement is wrong, and this is exactly what gets disputed.
Confusing the leave types
Sick, annual and public holidays have different rules, different caps, and different encashment treatment. Pooling them into one number loses all of it.
Leave and final settlement
At separation you settle accrued unused annual leave, salary for days worked in the final month, any notice-period amount due, and statutory dues. Each of these depends on an accurate leave balance, which depends on having accrued correctly every month since the person joined.
This is why a spreadsheet leave register is risky. Reconstructing three years of accrual after the fact is guesswork, and guesswork is what turns into a labour dispute.
A practical setup
- Accrue automatically each month rather than granting annually
- Enforce the caps in the system, not in someone's memory
- Keep leave types separate, each with its own rules
- Let employees see their own balance, which prevents most disputes
- Keep an approval trail for every request
EK ERP does monthly accrual, per-type caps, an approval workflow, employee self-service balances, and carries the balance straight into final settlement.
Disclaimer: This is a general summary of the Labour Act, 2074 and associated rules. Provisions vary by employment category and are amended over time. Confirm against the current Act or take legal advice for specific cases.