Nepal’s Labour Act 2074 (2017) requires every employer to maintain a daily attendance register for each employee — recording working hours, overtime, and leave. Non-compliance can result in fines up to NPR 100,000 and potential imprisonment.
The Labour Act 2074 is the primary legislation governing employment relationships in Nepal. It sets out detailed obligations around working time, attendance records, overtime limits, and employee welfare. This article explains what employers need to know about attendance tracking requirements under the Act.
Key Takeaways
- Every employer must maintain a daily attendance register for each worker
- Maximum working hours are 8 hours per day, 48 hours per week
- Overtime is capped at 24 hours per week and must be paid at 1.5x the normal rate
- Records must be maintained and made available for inspection by labour inspectors
- Penalties for non-compliance include fines up to NPR 100,000
Working Time Provisions Under the Labour Act
The Nepal Labour Act 2074 establishes clear limits on working time and rest periods:
Standard working hours
| Provision | Requirement |
|---|---|
| Maximum daily hours | 8 hours |
| Maximum weekly hours | 48 hours |
| Maximum overtime per week | 24 hours |
| Overtime pay rate | 1.5x normal hourly rate |
| Rest break (6+ hour shift) | Minimum 30 minutes |
| Weekly rest day | At least 1 day per week |
| Night work (10 PM – 4 AM) | Requires employer consent, overtime rate applies |
Overtime rules
Overtime under the Labour Act is regulated, not discretionary:
- Employers may not require workers to work more than 24 hours of overtime per week
- All overtime must be compensated at 1.5 times the normal hourly rate
- Workers must consent to overtime work
- Night work between 10 PM and 4 AM attracts the overtime rate regardless of total hours
For employers in manufacturing, hospitality, and other shift-based industries, these overtime rules have direct payroll implications. Without accurate attendance tracking, overtime calculations become guesswork — and that creates compliance risk.
Attendance Register Requirements
What the Act requires
Section 51 of the Labour Act 2074 requires employers to maintain an attendance register. The register must record:
| Field | What to record |
|---|---|
| Worker’s name | Full name of the employee |
| Date | Each working day |
| Arrival time | Time the worker started work |
| Departure time | Time the worker finished work |
| Overtime hours | Hours worked beyond the standard 8-hour day |
| Leave taken | Type and duration of leave |
| Rest breaks | Duration of rest periods |
Format requirements
The Act requires the register to be:
- Maintained at the workplace or a designated location
- Available for inspection by a labour inspector at any time
- Kept in a manner that allows verification of compliance
While the Act does not prescribe a specific format (paper or digital), digital systems provide significant advantages:
- Tamper-resistant timestamps
- Automatic overtime calculation
- Easy export for payroll processing
- Searchable records for inspector requests
- Backup and storage for the required retention period
How Long to Keep Records
The Labour Act requires attendance records to be maintained for a minimum of 2 years. For payroll-related records, the Inland Revenue Department of Nepal may require retention for longer periods under the Income Tax Act.
Best practice is to maintain all employment records for at least 5 years to cover both labour and tax obligations.
Consequences of Non-Compliance
| Violation | Penalty |
|---|---|
| Failure to maintain attendance register | Fine up to NPR 50,000 |
| Paying less than prescribed overtime rate | Fine up to NPR 100,000 |
| Exceeding overtime limits | Fine up to NPR 50,000 |
| Not providing weekly rest day | Fine and potential imprisonment |
| Obstructing labour inspector | Fine and potential imprisonment |
Labour inspectors can conduct surprise inspections at any workplace. They will request to see the attendance register, payroll records, and employment contracts. If records are missing or incomplete, the employer bears the burden of proving compliance.
Special Provisions
Women workers
The Labour Act includes additional protections for women workers:
- Night work (10 PM – 4 AM) requires the worker’s consent
- Employers must ensure safe transportation for women working night shifts
- Maternity leave of 98 days (14 weeks) is mandatory and cannot be refused
- Women cannot be employed in work that is hazardous to reproductive health during pregnancy
Young workers
Workers under 14 are prohibited from working. Workers aged 14-18 are classified as child workers with additional restrictions:
- Maximum 6 hours per day
- Cannot work in hazardous conditions
- Must be provided with rest breaks and health checks
Apprentices and trainees
Apprentices under the Labour Act are subject to working time limits but may have different overtime provisions depending on the terms of the apprenticeship agreement.
Practical Steps for Nepal Employers
1. Implement a digital attendance system
Paper registers are legally acceptable but operationally risky. Digital systems provide:
- Automatic timestamps that cannot be altered
- Overtime calculation based on configured thresholds
- Exportable records for payroll processing
- Backup and archival for the required retention period
2. Configure overtime correctly
Set up your system to:
- Track daily hours against the 8-hour standard
- Flag overtime automatically when the threshold is crossed
- Apply the 1.5x overtime rate in payroll calculations
- Alert when weekly overtime approaches the 24-hour cap
3. Set up leave tracking
Record leave types as required by the Act:
- Annual leave: 24 days per year for workers with 1+ years of service
- Sick leave: 12 days per year
- Maternity leave: 14 weeks (98 days)
- Paternity leave: 15 days
- Bereavement leave: as applicable
4. Prepare for inspections
Keep records accessible and organised. A labour inspector can request to see:
- The attendance register for the current period and previous 2 years
- Employment contracts for all workers
- Payroll records showing overtime payments
- Leave records and balances
How Leave Balance Supports Nepal Compliance
Leave Balance includes attendance tracking, leave management, and overtime calculation — all included in the flat rate of $10/month with no per-user fees.
Features relevant to Nepal Labour Act compliance:
- Automatic clock-in/out creates daily attendance records with timestamps
- Overtime tracking with configurable weekly caps and 1.5x rate multipliers
- Leave management for annual, sick, maternity, paternity, and other leave types
- Audit trail for every record change
- CSV export for payroll integration and inspector requests
- Multi-currency support including NPR for Nepal-based teams
For Nepal payroll integration, Leave Balance works alongside payroll providers that handle tax and SSF calculations, while providing the attendance data that feeds into accurate payroll processing.
leave emails? Track your employee's leave with Leave Balance
Frequently Asked Questions
Can I use a digital attendance system instead of a paper register?
Yes. The Labour Act requires an attendance register but does not prescribe a specific format. A digital system that captures all required fields (name, date, arrival time, departure time, overtime, leave) and is available for inspection satisfies the requirement. Digital systems are generally more reliable and easier to search during inspections.
What is the overtime rate in Nepal?
Overtime is paid at 1.5 times the normal hourly rate. This applies to all hours worked beyond 8 hours in a day or 48 hours in a week, whichever comes first. Night work between 10 PM and 4 AM also attracts the overtime rate.
How many leave days are employees entitled to?
Under the Labour Act 2074, employees with at least one year of continuous service are entitled to 24 days of annual leave. Sick leave is 12 days per year. Maternity leave is 14 weeks (98 days), and paternity leave is 15 days.
Do foreign employees have different working time rules?
Foreign employees working in Nepal are subject to the same Labour Act provisions as Nepali employees. Additional requirements may apply under the Foreign Employment Act for Nepali workers going abroad, but for workers within Nepal, the rules are uniform.
What records must I show during a labour inspection?
A labour inspector may request: the attendance register, employment contracts, payroll records (including overtime payments), leave records, and any relevant government permits. Records for the previous 2 years should be readily accessible.
This article is general information, not legal advice. Consult a Nepali labour law specialist for advice specific to your situation.