Employee Cost in Nepal 2026: SSF, Bonus, Payroll

Short answer

How much does it cost to employ someone in Nepal?

Budget roughly 1.2x gross salary. The employer contributes 20% of basic remuneration to the Social Security Fund (the employee adds 11%), and a customary one-month festival bonus adds about 8.33% of basic. Profit-making enterprises separately allocate 10% of net income to a staff bonus pool under Bonus Act 2030 s.5.

60-Second Summary

Budget roughly 1.2× gross salary. The largest single item is the employer's Social Security Fund contribution of 20% of basic remuneration, on top of the employee's own 11% deduction (31% total to SSF).
Provident fund (10% employer-matched, Labour Act s.52) and gratuity (8.33% of basic monthly, s.53) are not extra line items on top of SSF for enrolled employers — they are deposited into the SSF in the employee's name. Double-counting them is the most common budgeting error foreigners make.
Statutory minimum remuneration since 17 July 2025 is NPR 19,550/month (basic NPR 12,170 + dearness allowance NPR 7,380), or NPR 754/day.
Profit-making enterprises must set aside 10% of net income as a staff bonus pool under Bonus Act 2030 s.5 — a real, often forgotten cost line, separate from the customary one-month Dashain payment.
Overtime is paid at 1.5× basic remuneration (s.31). Standard hours are 8/day and 48/week (s.28).

The two errors that wreck almost every Nepal cost model are counting provident fund and gratuity on top of SSF when the statute puts them inside it, and forgetting the Bonus Act pool entirely. One inflates your cost by a fifth; the other shows up as a surprise at year end. Below is the cost stack line by line with the section of law each figure comes from, the monthly compliance calendar in order, and a worked example on a real Kathmandu salary.

Not legal or tax advice

Rates change with each Finance Act, and SSF, IRD and the Labour Office interpret edge cases differently. Every figure below is cited to its primary source so your counsel or chartered accountant can check it against the current gazette before you rely on it.

The employer cost stack

Employer-side statutory cost in Nepal, 2026. Percentages are of basic remuneration, not gross — how you split basic vs allowance materially changes the bill.

Cost line	Rate	Source
Gross salary (basic + allowances)	Market rate	Negotiated
Employer SSF contribution	20% of basic remuneration	Contribution Based Social Security Act 2075
Employee SSF deduction	11% of basic (withheld, not extra cost)	Same Act
Provident fund	10% employer match — deposited into SSF	Labour Act 2074, s.52
Gratuity	8.33% of basic monthly — deposited into SSF	Labour Act 2074, s.53
Statutory bonus pool	10% of enterprise net income	Bonus Act 2030, s.5
Overtime	1.5× basic hourly	Labour Act 2074, s.31
Paid leave	Home leave 1 day per 20 worked; sick 12 days/yr; public 13 days (14 for female employees)	Labour Act 2074, ss.40–48

SSF: what the 31% buys

The Contribution Based Social Security Act 2075 (2018) made SSF enlistment mandatory for registered business enterprises. The contribution is a combined 31% of basic remuneration — 11% withheld from the employee and 20% paid by the employer — deposited monthly in the employee's name.

The four SSF schemes

1
Medical treatment, health and maternity
Outpatient and inpatient cover plus maternity benefit for enlisted contributors.
2
Accident and disability
Work and non-work accident cover, with disability pensions on qualifying assessment.
3
Dependent family
Survivor benefits to the dependants of a contributor who dies.
4
Old age protection
Pension or lump sum on retirement — the scheme that absorbs the old employer-run provident fund and gratuity.

Independent consultants are outside the net

SSF enlistment attaches to employees of registered enterprises. A genuine independent consultant is not required to enlist — which is exactly why the contractor classification line matters so much, and why the Labour Office looks at substance rather than the title on the agreement.

The double-counting trap

Read Labour Act sections 52 and 53 carefully. Section 52 requires the employer to deduct 10% of basic remuneration, add an equal employer amount, and deposit the total as provident fund. Section 53 requires a further 8.33% of basic monthly for gratuity. Both sections then say the same thing: that money is deposited into the Social Security Fund in the employee's name.

So for an SSF-enrolled employer, provident fund and gratuity are the substance of the SSF contribution — not extra percentages stacked on top of it. If your model shows 20% SSF plus 10% PF plus 8.33% gratuity as three separate employer costs, you have inflated the cost of your Nepal team by roughly a fifth and will lose bids you should have won.

Where it does become extra

Sections 52(3) and 53(3) contemplate the situation where the SSF cannot receive the deposit — in which case the employer deposits provident fund and gratuity as otherwise prescribed. Legacy employers who ran their own PF and gratuity schemes before enlisting also have transition questions. Confirm your enterprise's specific position with your accountant rather than assuming.

Bonus Act vs Dashain bonus

Two different obligations people conflate

Statutory bonus (Bonus Act 2030)

Section 5: a profit-making enterprise must allocate 10% of the fiscal year's net income, after prescribed deductions, as a bonus pool.
Section 7: each employee's share is computed proportionally out of that allocated pool.
Driven by profit, so a loss-making year changes the position — check the Act and current amendments for caps and exclusions before promising a figure.
Real cash. Provision for it monthly instead of discovering it at year end.

Dashain / festival payment

Customary, and in most Nepali workplaces effectively expected: one month's basic before the festival.
Often written into the employment contract or collective agreement — at which point it is contractually binding regardless of the Bonus Act.
Foreign employers who skip it lose people, whatever the statute says.
Accrue about 8.33% of basic monthly so the Ashwin payroll does not blow a hole in your quarter.

Minimum remuneration

NPR 19,550

Monthly minimum remuneration

Basic 12,170 + dearness allowance 7,380

NPR 754

Daily minimum

Basic 470 + allowance 284

17 July 2025

In force since

Minimum Remuneration Notice 2082, under Labour Act s.106

The minimum is a floor, not a benchmark. For the roles foreign companies typically hire in Kathmandu — software engineers, analysts, finance and ops staff — the market clears far above it, and anchoring on the statutory minimum is how employers acquire a reputation that follows them through a small talent market.

The monthly compliance calendar

What has to happen, in order, every month

1
Run payroll on the Nepali month
Nepal's fiscal year runs Shrawan to Ashad (mid-July to mid-July) and payroll cycles follow the Bikram Sambat calendar, not the Gregorian month. Foreign parent companies that insist on a 1st-to-31st cycle create permanent reconciliation pain.
2
Withhold income tax on salary
Section 87 of the Income Tax Act 2058 requires the employer to withhold tax on employment income, at the rates in the IRD's annual TDS notice for the fiscal year. Take the rate table from the current IRD circular rather than from last year's spreadsheet.
3
Deposit TDS with IRD
Monthly deposit against your PAN, followed by the annual e-TDS reconciliation after fiscal year end. Confirm the exact day-count deadline for the current year on ird.gov.np — practitioners commonly work to 25 days after month end, but treat the circular as authoritative.
4
Deposit SSF contributions
31% of basic remuneration per employee, deposited monthly in each employee's name. Employers generally work to a deadline within 15 days of month end; confirm the current requirement on ssf.gov.np, since arrears attract back-contributions and penal interest.
5
Withhold on vendor and contractor payments
Section 88 covers service charges, commission, royalty and rent — 15% is the commonly applied rate for service fees. Section 89 applies 1.5% to contract or construction payments above NPR 50,000. The correct rate depends on the payee's registration status, so ask for the PAN before you pay.
6
Track leave and overtime balances
Home leave accrues at one day per twenty days worked and can accumulate to 90 days; sick leave is 12 days a year and accumulates to 45 (ss.43, 44, 49). On separation the balance is cashed out at last basic remuneration — an unbudgeted liability if nobody is tracking it.
7
Provision, don't discover
Every month, move the festival bonus accrual and an estimate of the Bonus Act pool out of your operating number. Both are cash you have already committed.

Worked example

Take a mid-level Kathmandu engineer on NPR 150,000 gross a month, structured as NPR 100,000 basic plus NPR 50,000 allowances.

Illustrative only. Your basic-versus-allowance split, insurance, equipment and any Bonus Act allocation will move the total.

Line	Monthly (NPR)	Note
Gross salary	150,000	Basic 100,000 + allowances 50,000
Employer SSF (20% of basic)	20,000	Includes the PF and gratuity substance
Festival bonus accrual	8,333	≈ one month basic spread across the year
Employer cost before Bonus Act	178,333	≈ 1.19× gross
Employee SSF deduction (11% of basic)	(11,000)	Withheld from the employee, not employer cost
Statutory bonus pool	Profit-dependent	10% of enterprise net income, allocated across staff

The planning number

For a Nepal hire, budget about 1.2× gross salary for statutory employer cost, then add insurance, equipment and workspace separately. If a vendor quotes you materially more than that before their own markup, ask them which statute each line comes from.

Frequently asked questions

What is the total employer cost of hiring in Nepal?

Roughly 1.2× gross salary. The employer's Social Security Fund contribution is 20% of basic remuneration, and a customary one-month festival bonus adds about 8.33% of basic. Profit-making enterprises additionally allocate 10% of net income to a staff bonus pool under Bonus Act 2030 s.5.

Do I pay provident fund and gratuity on top of SSF?

For an SSF-enrolled employer, no. Labour Act ss.52 and 53 require the 10% matched provident fund and 8.33% gratuity to be deposited into the Social Security Fund in the employee's name, so they are the substance of the SSF contribution rather than three separate costs.

What is the minimum wage in Nepal in 2026?

NPR 19,550 a month — NPR 12,170 basic plus NPR 7,380 dearness allowance — or NPR 754 a day, in force since 17 July 2025 under the Minimum Remuneration Notice 2082.

How is overtime paid in Nepal?

At 1.5× the basic remuneration receivable during regular hours, under Labour Act s.31. Standard hours are eight a day and forty-eight a week under s.28, with half an hour of rest after five continuous hours.

When are SSF and TDS due each month?

Both are monthly. Employers generally deposit SSF within 15 days of month end and salary TDS within the IRD's monthly window, followed by an annual e-TDS reconciliation. Confirm the current day-counts on ssf.gov.np and ird.gov.np, because late deposits attract interest and penalties.

References

Labour Act 2074 (2017) — full text — FAO/ILO NATLEX
Labour Act 2074 — Section 144, notice to be given — Nepal Laws
Contribution Based Social Security Act 2075 (2018) — P4H / Government of Nepal
Social Security Fund — schemes and enlistment — SSF Nepal
Bonus Act 2030 — Section 5 (10% of net income) — Nepal Laws
Income Tax Act 2058 — Section 89, contract payments — Nepal Laws
Income Tax Act 2058 — Section 88, service payments — Nepal Laws
Minimum Remuneration Notice 2082 (effective 17 July 2025) — Pradhan Law / Nepal Gazette
Inland Revenue Department — Nepal — IRD Nepal

What an Employee in Nepal Actually Costs (2026)