Cost of Firing in Nepal

cost of firing in nepal

Employment Protection Legislations (EPL) such as the Labor Act 1992 and the Trade Union Act 1993 (among others) were enacted to protect the employees and strengthen workers collective bargaining rights and improve employment conditions. As these policies still continue to do so, by and large, many questions have been raised as to their efficiency in improving industrial relations.
In particular, the provisions for firing in Nepal are tedious to say the least, with at least a dozen sub-clauses dictating actions for dismissal and/or retrenchment with associated calculations for severance packages under numerous headings. Direct dismissal, as stated in the law, is only possible when the worker in question is found to have engaged in theft or violence against the enterprise. Remaining absent from work for more than 30 consecutive days without notice also calls for dismissal, but apart from this, getting to dismissal takes at least three successive counts of repetition of the offense within 3 years. To put dismissal into effect requires evidence of the said crime and recorded evidence is almost impossible to come by. Popular argument suggests that dismissal incurs zero costs to the employer because the worker in question has no rights to claim severance pay thereafter. But considering that workers usually take the case to court to challenge the ruling, lengthy litigation costs ensue. This paper thus effectively examines how labor regulations have curbed both the entrepreneurial and workers’ spirit and furthers policy recommendations for deregulation that could prove fruitful for all parties involved.

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