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The Ministry of Labour, Employment and Social Security in Nepal has stepped up the enforcement of statutory minimum wage and Social Security Fund (SSF) norms in a number of industries. The order specifically is directed at employers who hire full-time employees as interns or trainees so they don’t have to pay the minimum wage or Social Security.
Now it falls to private hospitals, schools, colleges and businesses to make sure that employees who are eligible get legally required remuneration and benefits. This is because some institutions have taken advantage of unpaid or underpaid staff to fill the gaps that have been exploited in the law.
Labour Act Protects Trainees and Interns
Within the scope of the Labour Act 2074 it is mentioned that, for the Workers who are performing their tasks as trainee/intern, they are entitled to statutory benefits and facilities if it applies in the Law. It’s not just a matter of employers throwing the term ‘internship’ about to obviate basic labour protections.
These covers include the minimum wage, leave, provident fund (PF) and insurance benefits related to leave. Statutory rights to benefits cannot legally be lessened due to private arrangement or to institutional policy.
Private Hospitals Face Greater Scrutiny
The enforcement drive has hit one of the hardest hit areas in particular, which is private hospitals and health care institutions. However, simply calling someone such as a nursing staff member or trainee medic an ‘unpaid intern’ does not automatically make this safe, as they may have regular duties to perform.
Employers must abide by the minimum wage law and ensure that workers who are entitled receive at least the minimum wage and that workers who should be screened for the SSF are indeed screened. Existing internships and trainee contracts should also be checked to ensure there are compliance issues.
Private Schools and Colleges Must Comply
Schools are also coming under increasing pressure. Private schools and colleges need to make sure that the wages paid to the teachers and administrative staff who have the qualification to teach are the national standards.
The institutions have to also consider that they are obligated to pay a certain percentage to the Social Security Fund as an employer. Management committees should use payroll records and employment agreements to ensure that their employment status is clearly documented, especially checking their SSF appointment, as this will avoid future disagreements and penalties.
What Is Nepal’s Current Minimum Wage?
The minimum monthly wage mentioned in the directive is NPR 17,300 which includes a basic wage of NPR 10,820 and dearness allowance of NPR 6,480.
Employers should make sure that those workers who are subject to the applicable rules are not paid below the sector minimum wage. It is also important to note that businesses should verify if there has been any further notification by the government which alters the rates before paying employees.
How SSF Contributions Work
Under the stipulations of the directive, the Social Security Fund contribution is at the 31% level of basic salary. 20% is paid by the employer and 11% is deducted from the base salary by the employee.
The employer-sponsored aspect covers such aspects as provident fund, gratuity, accident insurance and medical insurance. Good registration and payroll deductions are thus necessary to ensure proper employment arrangements.
Penalties for Non-Compliance
Fines for employer failure to observe the minimum wage or the SSF can be anywhere from NPR 10,000 to NPR 100,000 per violation. Also, the authorities may ask for the payment of wage debts and interest to the workers affected.
On reoccurring or serious breaches there could be further regulatory implications, such as the risk of withdrawal of the institution’s operating licences. Employers should thus consider compliance reviews as an imperative item in the payroll agenda as a whole.
FAQs
Can the minimum wage be applied to interns in Nepal?
If an intern or trainee is covered by protection of the Labour Act, the employer cannot rely on the intern or trainee’s title to weak arguments that they are not a soldier or don’t apply social security.
How much is the minimum wage that Nepal’s 1992 law mandates?
As per the direction the wage mentioned is NPR 17,300/- per month which includes dearness allowance NPR 6,480/- per month and basic salary NPR 10,820/- per month.
How much is the SSF contribution?
One’s basic salary is split into 50% employer and 50% employee and 31% voted as the SSF contribution.
