Workplace Cooperation Booklet (English Version)

Workplace Cooperation

This booklet has been developed to explain the most important rights and responsibilities of workers, employees and employers under the Nepalese Labour Act and the Rules to prevent labour disputes and increase productivity. {1}

Contents Application of the Labour Act | 04 Employment Contract | 05 Probationary Period and Permanent Worker | 06 Wage/Salary | 07 Minimum Wage | 08 Payment of Minimum Wage/Salary | 09 Deduction of Wage/Salary | 09 Working Hours | 10 Overtime | 11 Sick Leave | 12 Home Leave | 13 Public Holidays | 13 Mourning Leave | 14 Maternity Leave | 14 Special Leave | 15 Misconduct / Disciplinary Action | 16-20 Procedure of Disciplinary Action | 21 Compulsory Retirement | 22 Retrenchment | 23 Compensation | 23 Occupational Health and Safety | 24-25 Grievance Procedure | 26 Labour Dispute Resolution Mechanism | 27

Application of Labour Act The Nepalese Labour Act is only applicable for enterprises which employs 10 or more workers/ employees.

Exception: Enterprises employing less than ten workers/ employees, operating within the industrial estates established by the Government of Nepal, are also covered.

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Employment Contract An employment contract establishes the employment relationship between employer and worker/employee and determines their rights and responsibilities. The rights and responsibilities in accordance with such contract should be followed by the employer and worker/employee.

Workers/employees must respect the employment contract and by-law/ internal workplace rules set by the enterprise.

By-law/internal workplace rules and the employment contract should be according to the existing Labour Act and Rules. {5}

Probationary Period and Permanent Worker Newly appointed workers/employees shall remain on probation period until one year of continuous service (240 days including weekly days off and public holidays) is completed. Other leave days are not counted.

A worker/employee may be made permanent on the basis of the performance evaluation done during the probationary period.

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Wage/Salary Wage/salary refers to the money or benefit in kind a worker/an employee receives for his/her work under the employment contract.

Male or female worker/employee are entitled to equal pay for equal work.

The employer must explain to workers/ employees clearly about how their wages/salaries are calculated.

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Minimum Wage Payment below the Minimum Wage is prohibited.

The minimum wage set by the Government of Nepal is the lowest wage an employer is required to pay and this wage must be paid by the employers.

The Minimum Wage includes basic salary and dearness allowance and it is set as follows: Basic Salary Dearness Allowance Total

Highly skilled worker Rs 3,400 Skilled worker Rs 3,210 Semi skilled worker Rs 3,100 Unskilled worker Rs 3,050

1,550 1,550 1,550 1,550

The daily wage is fixed at 190 Rs. Apart from the minimum wage, other allowances and benefits can be paid on voluntary, contractual or collective bargaining agreement basis between employer and worker/employee.

Some of the common allowances and benefits are as follows:  Annual increment called grade  Transport allowance  Tiffin allowance  House rent allowance  Overtime payment  Benefit in kind  Bonus as per Bonus Act

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4,950 4,760 4,650 4,600

Payment of Wage/Salary The employer must pay the wage/salary directly to the worker/employee.

Deduction of Wage/Salary The wage/salary should not be deducted except • to realize a fine, • against absence, • against loss or damage caused intentionally or negligently to the property of enterprise in cash or kind, • in respect of advance or over payment, • in respect of period of suspension,

• amount required to be deducted under the order of government office or court decision, • in respect of income tax or any other tax under the existing law.

The total amount of the deduction cannot be more than 33% of the salary (basic salary + grade) per month. {9}

Working Hours The normal working hours are Daily 8 hours Weekly 48 hours After continuous work for every 5 hours, ½ an hour break must be given for taking refreshment or tiffin. This interval is included within the 8 working hours.

Workers/employees are entitled to at least one day (24 hours) off per week. Normally, it is Saturday, but the employer can fix any other day than Saturday as weekly holiday.

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Overtime Overtime is voluntary.

Overtime should not exceed 4 hours per day or 20 hours per week.

Overtime work must be paid at the rate of one and half times more than the ordinary rate of wage.

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Sick Leave Workers/employees are entitled to 15 days sick leave with half pay.

A worker or an employee is required to submit a medical certificate issued by a doctor recognized by the government to his/her employer if s/he needs to take leave for more than three days because of illness.

If any worker/employee has to take leave because of illness, s/he has to inform the employer immediately.

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Home Leave All workers/employees are entitled to 18 days full pay home leave in a year at the rate of 1 day for 20 days of the working period.

The home leave may be cumulated up to a maximum of 60 days.

Public Holidays All workers/ employees are entitled to 13 full paid public holidays.

The public holidays may be fixed by the employer in consultation with the workers’ representatives.

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Mourning Leave Every worker/employee, who has completed one year of continuous service is entitled to a maximum of 13 days of mourning leave with full pay in case s/he is required to observe mourning as per his/her religion.

Maternity Leave Female workers /employees are entitled to 52 calendar days maternity leave with full pay before or after the maternity.

Such maternity leave shall be provided only two times during the entire service period.

Provided that the children of the female worker / employee, who has already used the maternity leave for two times do not survive, such worker / employee may be granted maternity leave for the birth of another two children. {14}

Special Leave If any permanent worker/employee who has no home leave in reserve, by taking prior approval, can take special leave in special circumstances up to 30 unpaid calendar days within a year. Special leave may be granted up to 6 months in the entire period of service.

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Misconduct / Disciplinary Action Workers/employees can be punished for their misconduct.

There are four kinds of punishment on the basis of the gravity of their misconduct: n Warning n Withholding of annual salary increment (grade) n Suspension – up to 90 calendar days n Dismissal

Punishment/Misconduct

Warning

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If the worker/employee is frequently violating the orders or directives issued under the Labour Act /Rules or By-laws or Internal Workplace Rules made by the enterprise or misbehaves with the customers of the enterprise, If the worker/employee is absent from work frequently with out taking permission or frequently comes late to work,

the worker/ employee intentionally misappropriates or damages any object or article kept for the benefit or protection of health or safety of the worker.

Withholding of annual grade increment

In case the business transaction of the enterprise is misappropriated,

If the worker/employee participates in any unlawful or illegal strike or compels other workers to take part in such illegal strike,

If a strike is organized without following the procedure prescribed by the law or deliberately resorts to go slow adversely affecting the interest of the enterprise,

If the worker/employee deliberately destroys or damages any property of the enterprise or makes use of the property by taking it outside the enterprise without a permission of the authorized person or allows it to be used by any unauthorized person. {17}

Misconduct / Disciplinary Action Suspension up to 3 month

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If the worker/employee creates or causes to create any disturbance within the enterprise with an intention to adversely affect the production process or service of the enterprise or stops the supply of food, water, telephone service and electricity or obstructs the movement in or out of the enterprise,

If the worker/employee offers or accepts bribes,

If any worker/employee is found intoxicated during regular working hours or the intoxication is certified by a registered doctor.

Dismissal

If any person causes any bodily harm by using or without using any weapon or keeps in fetters or confines or creates disturbances within the enterprise or physically assaults any manager or worker/ employee in relation to any labour dispute or any other issue,

If the worker/employee steals any property of the enterprise,

If the worker/employee is absent for more than 30 consecutive days without approval,

If the worker/employee is convicted in a criminal offence involving moral turpitude and imprisoned for such offence,

If the worker/employee does any act of breaking a secret related to special technology or production formula of the enterprise with an intention of causing damage to such enterprise where s/he is working, {19}

Misconduct / Disciplinary Action Any worker/employee who has been punished twice for any misconduct punishable with warning or withholding of annual salary increment or suspension may be dismissed if the same misconduct is repeated again. The punishment so given shall not be effective after the expiry of 3 years from the date of such punishment.

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Procedure of Disciplinary Action awarding any punishment including dismissal to any worker/employee for any misconduct must be given a notice clearly mentioning the facts of such misconduct and the type of punishment in case it is proved, along with an opportunity to submit an explanation for the same at least within 7 days.

n Before

However the decision regarding such punishment must be made within 2 months from the date such explanation is asked for.

In case the worker/employee does not submit his explanation within the specified time or if the explanation submitted is not found satisfactory, s/he may be punished accordingly.

Any worker/employee who is dismissed is not entitled to claim gratuity as provided in the law. {21}

Compulsory Retirement who have completed the age of 55 may be compulsorily retired.

n Workers/employees

service of the worker/employee who has completed the age of 55 may be extended for another 5 years, if the worker/ employee is indispensable for the operation of the enterprise.

n The

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Retrenchment

In case the production or service of the enterprise needs to be curtailed or if the enterprise is to be closed partly or wholly for more than three months due to any special circumstances, the management may, after obtaining approval of the Government of Nepal through the Department of Labour, retrench all or some of the workers/employees of the enterprise.

While retrenching, the workers /employees who are hired last among those permanent workers/employees who are engaged in same kind of work, shall be retrenched first.

The workers/employees may be retrenched by giving 1 month prior notice or 1 month salary in lieu of notice.

Compensation case of retrenchment each worker/employee will receive the amount of remuneration calculated by multiplying the number of each year of service performed by the figure of the present remuneration for 30 days.

n In

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Occupational Health and Safety and workers/employees have the right that the workplace is safe, healthy and hygienic. n Employers must provide enough drinking water for all workers/employees working in the enterprise. n Employers must provide adequate supply of fresh air and light as well maintain appropriate temperature in the working rooms. n Employers

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Workers/ Employees have to clean their work place at the end of a working day.

Occupational Health and Safety

Workers/employees have to switch off all machines and lights at their work place at the end of a working day.

The area around and under fire hoses, fire extinguishers, fire alarm, exits, first aid kits and electric panels should be free.

Workers/employees have to keep the toilets clean.

Workers/employees have to close water taps after use.

If there is a Fire Alarm, stay calm and proceed to the nearest EXIT.

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Grievance Procedure

A dispute may occur in any workplace no matter how well it is managed. For this reason, employers and workers/employees should anticipate disputes and set up ways of resolving them.

The procedure can be divided in four steps – like the following example:

First step: If there is a problem in your workplace, first talk to your supervisor.

Second step: If this problem cannot be resolved by the employee and the supervisor within 1 working day, talk to the supervisor‘s superior.

Third step: If the parties cannot resolve the problem within 1 working day, then, submit the complaint to the Human Resources Manager.

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Fourth step: If the parties are still not able to solve the problem within 2 working days, but believe the problem can be solved, the parties may agree to approach the chief of the enterprise to assist them in their negotiation.

Labour Dispute Resolution Mechanism Negotiation Taking together to resolve a dispute.

Mediation/Conciliation Assisting the disputing parties to solve the dispute.

Arbitration Making a decision by an arbitrator or a tripartite committee. lawful Strike If negotiation, conciliation or arbitration fail, then the workers may go on strike by following the procedure prescribed by the Labour Act. {27}

This booklet was developed and produced by FNCCI Employers’ Council

Illustration & Layout by Print Communication Pvt. Ltd ww.printcommunication.com.np for Further information please contact:

Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Employers’ Council Pachali Shahid Shukra FNCCI Milan Marg Teku Kathmandu, Nepal, Tel.: 4262061 Email: employers@fncci.org Web: http://www.fncci.org

Publication Funded by ILO

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