The Labour Act, 2074 (2017) establishes a structured, rights-based, and tiered mechanism for resolving labour disputes in Nepal. The statutory framework prioritizes amicable settlement, negotiation, and administrative resolution before judicial intervention, ensuring dispute resolution is accessible, time-bound, and cost-effective for both employers and employees.
Labour disputes are initially addressed before the Labour Office and may escalate, where necessary, to adjudication by the Labour Court, with limited further recourse to the Supreme Court of Nepal. A proper understanding of this statutory process is essential to safeguard legal rights and ensure compliance with labour law obligations.
Nature of Labour Disputes in Nepal
Labour disputes under Nepali law broadly fall into two categories:
Individual Labour Disputes
These arise between an individual employee and an employer and commonly include disputes relating to:
Termination or dismissal of employment
Non-payment or underpayment of wages, overtime, or benefits
Denial of statutory leave or facilities
Disciplinary action, suspension, or demotion
Breach of employment contracts or service conditions
Collective Labour Disputes
These affect a group of employees and typically involve:
Trade union rights and registration
Collective bargaining agreements
Strikes, lockouts, and industrial action
Workplace representation and negotiation issues
Statutory Dispute Resolution Framework
The Labour Act, 2017 provides a three-tier dispute resolution structure:
Section 116 – Mandatory attempt at settlement through dialogue and mediation
Section 117 – Jurisdiction and authority of the Labour Office
Section 120 – Establishment and jurisdiction of the Labour Court
Administrative resolution is generally mandatory before judicial proceedings may be initiated.
Settlement of Individual Labour Disputes
Step 1: Submission of Claim to Employer
An aggrieved employee must submit a written application to the employer clearly stating the grievance.
Step 2: Employer’s Notice for Negotiation
The employer must issue a notice for negotiation within 7 days of receiving the application.
