What is an Employer of Record (EOR) in Nepal?

An Employer of Record is a locally registered company that becomes the legal employer of your Nepal-based hire while you keep day-to-day direction of their work. The EOR issues the employment contract under the Labour Act 2074, registers the employee with the Social Security Fund, withholds income tax at source, files monthly returns, and pays net salary in NPR. You pay one invoice per month and never register a Nepali entity.

How much does an EOR cost in Nepal?

Budget in three layers. Layer one is gross salary in NPR. Layer two is statutory employer cost — the Social Security Fund employer contribution is 20% of basic salary, on top of the 11% withheld from the employee, so the combined SSF load is 31% of basic. Layer three is the EOR's own fee, typically USD 199–599 per employee per month or 8–15% of payroll depending on provider and headcount. A NPR 150,000/month engineer usually lands around NPR 185,000–200,000 all-in before the platform fee.

Is an EOR legal in Nepal?

Yes, when the EOR is a Nepal-registered company with a PAN, SSF registration, and a compliant employment contract. What is not safe is treating a full-time worker as an independent contractor for months on end: under the Labour Act 2074 the substance of the relationship governs, and a misclassified worker can claim employee status, gratuity, leave and notice retroactively. Confirm your specific structure with a Nepal-licensed lawyer or auditor.

EOR or my own Nepal entity — which should I choose?

Under about five full-time hires, an EOR is almost always cheaper and dramatically faster: days instead of the two to three months a Pvt. Ltd. registration, PAN/VAT, SSF enrolment and bank account realistically take. Past roughly ten to fifteen hires the per-head EOR fee usually exceeds the cost of running your own entity with a local accountant, and an entity gives you a Nepali brand for recruiting. Between five and ten, it comes down to whether Nepal is a two-year bet or a permanent site.

What statutory benefits must an EOR provide in Nepal?

Social Security Fund enrolment (covering gratuity at 8.33% of basic, provident fund, medical and accident insurance, and dependent benefits), 13 paid public holidays, 18 days of annual home leave, 12 days of sick leave at half pay, 98 days of paid maternity leave (60 fully paid by statute, the balance per SSF rules), 15 days of paternity leave, and monthly income tax withholding. Probation is capped at six months.

How fast can an EOR onboard someone in Nepal?

Three to ten working days once you have a signed offer. The gating items are the candidate's citizenship certificate and PAN, an SSF number (issued quickly if they've been employed before), and a Nepali bank account. Payroll cut-off matters: most providers need onboarding closed by the 20th of the month to pay in that cycle.

Can an EOR handle equity for Nepali employees?

Almost never directly. Stock options for Nepal-resident employees sit outside the EOR relationship and run into Nepal Rastra Bank rules on outbound investment by residents. In practice founders use phantom equity or a cash-settled appreciation right paid through payroll, which is taxable as employment income. Get Nepal-specific tax advice before you promise anyone shares.

Which EOR providers actually cover Nepal?

Coverage changes constantly, so verify at contract stage. Deel, Remote, Oyster, Papaya Global and Multiplier all list Nepal, but several serve it through a local partner rather than an owned entity — which matters when something goes wrong. Ask three questions: do you own the Nepal entity, who signs the employment contract, and who is liable if SSF filings are late?

Written from Kathmandu

Employer of Record in Nepal — what it actually costs and when to skip it.

I've hired, paid and offboarded people in Nepal both ways — through an EOR and through a registered Pvt. Ltd. This page is the version I wish someone had sent me: the real all-in monthly number, the statutory floor you cannot negotiate away, the misclassification trap, and the headcount where an EOR stops making sense.

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The short version

An EOR buys you speed, not savings.

An Employer of Record is a Nepal-registered company that legally employs your hire on your behalf. It signs the contract under the Labour Act 2074 (2017), enrols the person in the Social Security Fund, withholds monthly income tax, files returns, and pays net salary into a Nepali bank account. You keep the work; they keep the paperwork and the liability.

The trade is simple. You avoid two to three months of entity registration and a permanent compliance function. You pay a per-head fee forever and you lose some control over contract terms, notice periods and benefit design. Under five hires that trade is obviously worth it. Past ten it usually isn't.

Cost model

What one NPR 150,000/month hire really costs.

Illustrative, for a mid-senior Kathmandu engineer in 2026. Your numbers move with how basic salary is split from allowance, because SSF is calculated on basic.

Line item	Monthly	Note
Gross salary (basic + allowance)	NPR 150,000	What you agree with the candidate
SSF — employer share (20% of basic)	≈ NPR 21,600	Assumes basic set at 72% of gross
SSF — employee share (11% of basic)	≈ NPR 11,880	Withheld from salary, not extra cost
Insurance / festival & leave provisions	NPR 12,000–14,000	Dashain bonus is one month, accrued monthly
EOR platform fee	USD 199–599	Or 8–15% of payroll
Realistic employer cost	≈ NPR 185,000–200,000 + fee	Before FX spread on the invoice

Two things founders forget: the Dashain festival bonus (one month's salary, so accrue 8.33% every month) and the FX spread your provider takes when it converts your USD invoice into NPR payroll. Together they're 10% of the annual number.

Decision table

EOR, entity, or contractor.

1–4 hires: EOR; Entity setup cost and compliance overhead dwarf the platform fee. You can also exit in 30 days.
5–10 hires: It depends; Model both. If Nepal is a permanent engineering site, start the entity now — registration takes months.
10+ hires: Own entity; Per-head fees exceed a local accountant plus an HR generalist, and a Nepali employer brand wins better candidates.
Any headcount, <6 months: EOR or contractor; Genuinely short project work can sit on a contractor agreement. Beyond three months of full-time hours, move to employment.

Risk

The contractor shortcut is where people get hurt.

The most common Nepal mistake isn't choosing the wrong EOR — it's paying a full-time employee as a freelancer for two years to avoid both. Nepal looks at the substance of the relationship: fixed hours, your tools, your direction, no other clients. When that unwinds, the worker can claim employee status and with it gratuity, accrued leave, notice pay and SSF arrears, and the tax authority can come for unremitted withholding.

A workable line: genuine project work with a deliverable and an end date can be a contract. Anything that looks like a role on your org chart should be employment — through an EOR if you have no entity. This page is operating guidance, not legal advice; confirm your structure with a Nepal-licensed lawyer or auditor.

Frequently asked

EOR Nepal — straight answers.

What is an Employer of Record (EOR) in Nepal?: An Employer of Record is a locally registered company that becomes the legal employer of your Nepal-based hire while you keep day-to-day direction of their work. The EOR issues the employment contract under the Labour Act 2074, registers the employee with the Social Security Fund, withholds income tax at source, files monthly returns, and pays net salary in NPR. You pay one invoice per month and never register a Nepali entity.
How much does an EOR cost in Nepal?: Budget in three layers. Layer one is gross salary in NPR. Layer two is statutory employer cost — the Social Security Fund employer contribution is 20% of basic salary, on top of the 11% withheld from the employee, so the combined SSF load is 31% of basic. Layer three is the EOR's own fee, typically USD 199–599 per employee per month or 8–15% of payroll depending on provider and headcount. A NPR 150,000/month engineer usually lands around NPR 185,000–200,000 all-in before the platform fee.
Is an EOR legal in Nepal?: Yes, when the EOR is a Nepal-registered company with a PAN, SSF registration, and a compliant employment contract. What is not safe is treating a full-time worker as an independent contractor for months on end: under the Labour Act 2074 the substance of the relationship governs, and a misclassified worker can claim employee status, gratuity, leave and notice retroactively. Confirm your specific structure with a Nepal-licensed lawyer or auditor.
EOR or my own Nepal entity — which should I choose?: Under about five full-time hires, an EOR is almost always cheaper and dramatically faster: days instead of the two to three months a Pvt. Ltd. registration, PAN/VAT, SSF enrolment and bank account realistically take. Past roughly ten to fifteen hires the per-head EOR fee usually exceeds the cost of running your own entity with a local accountant, and an entity gives you a Nepali brand for recruiting. Between five and ten, it comes down to whether Nepal is a two-year bet or a permanent site.
What statutory benefits must an EOR provide in Nepal?: Social Security Fund enrolment (covering gratuity at 8.33% of basic, provident fund, medical and accident insurance, and dependent benefits), 13 paid public holidays, 18 days of annual home leave, 12 days of sick leave at half pay, 98 days of paid maternity leave (60 fully paid by statute, the balance per SSF rules), 15 days of paternity leave, and monthly income tax withholding. Probation is capped at six months.
How fast can an EOR onboard someone in Nepal?: Three to ten working days once you have a signed offer. The gating items are the candidate's citizenship certificate and PAN, an SSF number (issued quickly if they've been employed before), and a Nepali bank account. Payroll cut-off matters: most providers need onboarding closed by the 20th of the month to pay in that cycle.
Can an EOR handle equity for Nepali employees?: Almost never directly. Stock options for Nepal-resident employees sit outside the EOR relationship and run into Nepal Rastra Bank rules on outbound investment by residents. In practice founders use phantom equity or a cash-settled appreciation right paid through payroll, which is taxable as employment income. Get Nepal-specific tax advice before you promise anyone shares.
Which EOR providers actually cover Nepal?: Coverage changes constantly, so verify at contract stage. Deel, Remote, Oyster, Papaya Global and Multiplier all list Nepal, but several serve it through a local partner rather than an owned entity — which matters when something goes wrong. Ask three questions: do you own the Nepal entity, who signs the employment contract, and who is liable if SSF filings are late?

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