The Labour Act 2074 of Nepal is the primary legislation that governs labour relations, employment conditions, workers’ rights, and employer responsibilities in Nepal.
This Act was passed by the parliament on 27 Shrawan 2074, designed to protect the rights and interests of workers while clearly outlining the responsibilities of the employers.
The main objective of this Act is to promote fair and productive industrial relations, prevent labour exploitation, and contribute to economic growth by supporting improved workplace practice.
In addition, this Act provides a modern legal framework aimed at balancing the rights of workers with the obligations of employers to ensure fair and equitable labour practices across Nepal.
What Are the Types of Employment?
According to Labour Act 2074, there are several types of employment in accordance with Section 10 of the Labour Act 2074.
This provision covers almost five types of employment practised in Nepal. They are:
- Regular Employment
- Work-Based Employment
- Time-Based Employment
- Casual Employment
- Part-Time Employment
Now, a brief description of each of the types of employment:
Regular Employment
Regular employment under the Labour Act, 2074, is defined as providing stability, legal protections, and long-term benefits to workers while ensuring that employers have a resolute and responsible workforce.
Regular employees are entitled to a range of legal benefits and protections, such as:
- Paid Leave (annual, sick, maternity/paternity, etc.)
- Provident fund and gratuity
- Insurance (as applicable)
- Severance pay if terminated legally
- Participation in trade unions and collective bargaining
The termination of regular employment can only be made in accordance with the Labour Act, such as due to misconduct, deficient performance, organisational downsizing, or mutual agreement.
Regular employees are beneficial when there is a penalty for work, as their long-term commitment and added benefits often lead to greater dedication and initiative.
However, a key drawback is that employers must continue paying salaries even during slow business periods.

Work-Based Employment
According to the Labour Act 2074, work-based employment means employment that the employer provides or has provided, specifying any particular work and services for performance.
It offers flexibility to employers but does not provide long-term security or regular employment for workers.
Work-based employees may not receive the same benefits as regular employees, such as paid leave or provident fund, and may have fewer facilities.
Work-based employment allows companies to hire individuals with specific skills for short-term projects, avoiding the need to train existing staff and offering a chance to evaluate new talent before hiring permanently.
However, it can be challenging as skilled workers may be unavailable due to other commitments, and finding the right person might delay project timelines.
Time-Base Employment
As mentioned in the Labour Act 2074, time-based employment is defined as the employer provides to the labour, specifying a certain period on the condition that the labour has to provide any service or perform any work within that period.
While it offers flexibility for employers, it also ensures that employees receive fair compensation and legal protection during their period of engagement.
The workers are entitled to benefits like leave or bonus, proportionate to their service, and suitable for seasonal or short-term work, providing flexibility to both employers and workers.
Time-based employment is easy for employers to manage, especially in roles like administration and maintenance, where consistent effort matters more than output.
However, it can be time-consuming to calculate individual payments and challenging to supervise workers due to irregular hours.
Casual Employment
Under the Labour Act 2074 of Nepal, casual employment refers to a type of employment where a worker is hired to perform a specific task or service for seven days or less within a period of one month.
It is a temporary and short-term duration, typically used to meet immediate or occasional labour needs. Casual workers are not part of the regular workforce and are generally not entitled to long-term employment benefits, though they must still receive minimum wage and basic labour protections as per the law.
Casual employment offers flexibility for employers to fill temporary labour gaps without the obligation to provide leave benefits like annual or casual leave.
However, it can be more expensive due to the requirement to pay casual loading (extra pay in place of benefits), and casual workers may cancel shifts at short notice, causing disruptions to operations.
Part-Time Employment
Part-time employment, according to the Labour Act 2074 of Nepal, refers to a type of employment where a worker is hired to perform duties for thirty-five hours or less per week. This is suitable for individuals who cannot commit to full-time work, such as students, semi-retired persons, or those seeking flexible schedules.
Chapter 5 of the Labour Act 2074 outlines the provisions related to part-time labourers. Employers must provide part-time labourers with a written agreement specifying the terms of employment, including working hours, wages, and other relevant conditions.
While part-time workers may not receive all the benefits of full-time employees, they are still protected under the Act against unfair dismissal and are entitled to safe working conditions.
Part-time employment allows companies to hire skilled workers without bearing the full cost of a full-time salary. It offers flexibility, which can boost employee productivity and morale.
However, part-time employees may have limited time to understand the company’s operations, potentially lacking institutional knowledge. Additionally, balancing a heavy workload within fewer hours may affect the overall quality of work.
Conclusion
The Labour Act 2074 of Nepal provides a structured and inclusive framework for diverse types of employment, balancing workers’ rights with employers’ needs. By clearly defining regular, work-based, time-based, casual, and part-time employment, the Act promotes fair labour practices, flexibility, and productivity across sectors.
It ensures basic protections for all workers while supporting business needs through varied employment models, contributing to a more just and efficient labour market.
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Babita Pariyar
Babita is a law student with a keen interest in property accountancy and legal compliance. She contributes insightful, well-researched articles that reflect a fresh and analytical perspective on evolving legal matters.