How to File a Labor Case in Nepal: Step-by-Step Process under the Labor Act, 2017
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.
Step 3: Negotiation Period
The dispute should be settled through negotiation within 21 days, unless extended by mutual consent.
Step 4: Application to Labour Office
If the dispute is not settled or the employer fails to issue a negotiation notice, the employee may file an application before the concerned Labour Office.
Step 5: Labour Office Proceedings
The Labour Office facilitates negotiation within 21 days.
If settlement fails, the Labour Office must issue a decision within 15 days.
Step 6: Appeal
An appeal against the Labour Office’s decision may be filed before the Labour Court within 35 days.
Settlement of Collective Labour Disputes
Step 1: Submission of Collective Claim
A collective claim must be submitted in writing to the employer through:
the Collective Bargaining Committee (where 10 or more employees exist), or
a committee supported by 60% or more employees by signature.
Step 2: Employer’s Discussion Notice
The employer must notify the date, time, and place of discussion within 7 days.
Step 3: Negotiation Period
Negotiation must conclude within 21 days, unless extended by agreement.
Step 4: Labour Office Intervention
If unresolved, the dispute may be submitted to the Labour Office, which must attempt settlement within 30 days.
Binding Effect
Any settlement reached constitutes a Collective Bargaining Agreement (CBA) binding on the employer and all employees.
Arbitration of Collective Disputes
1. When Arbitration is Mandatory or Permitted
Arbitration applies where:
Parties agree to arbitration in advance
The dispute arises in essential services
The enterprise operates in a Special Economic Zone
A constitutional emergency prohibits strikes
The Ministry determines arbitration is necessary to prevent economic disruption
2. Arbitration Procedure
Application submitted to the Ministry
Arbitration costs borne by the Government of Nepal
Tribunal issues an award within 30 days of hearing completion
3. Finality of Award
Awards are final
In Ministry-referred arbitration, objections must be filed within 5 working days, failing which the award becomes final
Right to Strike
Conditions for Strike
A lawful strike may be initiated if:
Arbitration is not mandatory
Arbitration fails or cannot be constituted
Award is not issued or implemented
Objection is filed against the award where permitted
Notice Requirement
30-day prior written notice to employer
Notification to Labour Office and local administration
Salary During Strike
Lawful strike: 50% salary payable
Unlawful strike: No salary payable
Lockout by Employer
Conditions for Lockout
Lockout may be initiated with approval of the Department of Labour where:
Strike is commenced without notice
Dispute resolution procedures fail
Emergency Lockout
In cases of violence or threat to enterprise security, lockout may be imposed without prior approval, subject to notification within 3 days.
Restrictions
Lockout is prohibited in essential services
Unlawful lockout entitles employees to full salary
Lawful lockout entitles employees to half salary
Filing a Case before the Labour Office
Jurisdiction
The Labour Office has authority over disputes relating to termination, wages, benefits, and labour standards.
Who May File
Employees
Employers (for compliance or statutory interpretation issues)
Required Contents
Details of parties
Facts and legal grounds
Relief sought
Supporting Documents
Employment contract
Termination or disciplinary notices
Payroll records
Correspondence
Filing a Case before the Labour Court
Jurisdiction
The Labour Court hears:
Appeals against Labour Office decisions
Unresolved disputes
Complex legal or evidentiary matters
Procedure
Filing of Statement of Claim
Submission of evidence
Written statements and rejoinders
Hearings, witness examination, and arguments
Representation
Parties may be represented by licensed legal practitioners at all stages.
Enforcement, Appeals, and Limitation
Labour Court decisions are enforceable through the Government of Nepal
Appeals must be filed within 35 days
Supreme Court review is available only in limited circumstances
Limitation periods apply; delayed claims may be dismissed
Compliance Considerations for Employers
Employers should:
Maintain written employment agreements
Follow due process in termination and discipline
Pay wages and benefits timely
Establish internal grievance mechanisms
Proactive compliance significantly reduces litigation and penalty exposure.
Note: For case-specific advice, dispute resolution, or representation before the Labour Office or Labour Court, Sherpa Law Associates provides specialized legal services to both employers and employees.