Employment of Non-Nepalese citizen in Nepal (Part 1)

Although the exact data of foreigners working in Nepal is not available, the Department of Labour has estimated that there are around 550,000 non-Nepalese citizens working in Nepal, of which 500,000 are from India. Work in Nepal is subject to obtaining work permits from the Department of Labour. However, as per the record maintained by the Department of Labour, it is seen that for the fiscal year 2013-14, only 869 foreigners obtained work permits and 876 renewed their work permits which is in total 1,745. Likewise, in the year 2015-15, only 2,709 foreigners obtained new work permits while 1,618 work permits were renewed. As the Department of Labour has been granting work permit for one year at atime in most of the cases, the latest data of the Department of Labour could be considered as the number of work permits and renewals until March 2016.

Analyzing the data available from the Department of Labour in relation to work permits and their renewals, the number of foreigners obtaining work permits is very less compared to the estimated number of foreigners working in Nepal. As Nepal has several avenues of work opportunity, it has been evidenced that foreigners are working in various sectors including NGOs, INGOs, multinationals companies, joint-venture entities, local companies, tourism industry, such as, hotels, trekking, rafting, paragliding, etc., export and import businesses and in the volunteer organizations either on payroll or on voluntary basis.

Mandatory for foreigners to obtain work permit

Working in Nepal by foreigners is not a general rule rather it is an exceptional case subject to of the compliance of labor law, rules and directives. Except for other categories of visa, foreigners desiring to work in Nepal enter into the territory of Nepal on tourist visa as the Immigration Department has not yet started the practice of granting non-tourist visa with work permit at the time of their entry into Nepal. Immigration law and labour law requires foreigners not to involve in other works other than the purpose for which visa is granted. It means a foreigner on a tourist visa cannot work without obtaining work permit and non-tourist visa. It is therefore that the Immigration Department has adopted a practice of stamping the statement in the visa "Works are prohibited." Doing so shall be considered to be the violation of immigration law.

In addition, the Government of Nepal, Ministry of Labour has framed a Guideline, "Guideline for Work Permit Management of Non-Nepali Employees 2014" ("Work Permit Guidelines 2014") as afresh attempt to regulate the hiring of foreign workers in Nepal. The Work Permit Guidelines 2014 provides 90 days transitional period for the foreigners working in Nepal to convert their visas status by obtaining work permit. Though, the Labour Department is still of the opinion that many foreigners have not applied for work permits and still working on  tourist visas until for the tourist visa period remains, however the data demonstrates that there has been arising in the number of foreigners applying for work permits. The rise in number of expats obtaining work permits could be attributed to the Work Permit Guidelines 2014 that was introduced to encourage foreign workers to obtain work permits.

Necessity of work permit in Nepal for foreigners

Nepalese labour law does not allow foreigners to work without work permits. The Immigration law prohibits foreigners to use visa for purposes other than those for which the visa has been granted. The above mentioned Guidelines also attempts to regulate foreigners for their work in Nepal. The Guidelines 2014 is the first such initiative to regulate the increasing trend of hiring foreign nationals in formal and informal sectors.

With the Work Permit Guidelines 2014 in place, foreign workers have to mandatorily obtain work permits from the Labour Department no matter which sector they work in, be it formal, informal or self-employment, paid or volunteer. The Work Permit Guidelines 2014states that it is mandatory for foreigners visiting Nepal for paid or unpaid jobs to apply for work permits within one month of their arrival. In addition, the Government of Nepal has stated that work permits will be made mandatory for non-Nepalese to be employed in Nepal and updated records thereof will be maintained. the Immigration Department also published its notice to the employer and foreigners prohibiting to employ or be employed without work permits.

Why recent strict regulation?

Despite of Government of Nepal's repeated attempts to prohibit foreigners to engage in work other than the purpose for which visa is granted or engage them without having work permits, the Government of Nepal has not been able to achieve desired results by bringing foreign nationals within the scope of work permit requirement. Though the Government of Nepal has made it mandatory for foreigners working in Nepal to acquire work permits amid rising trend of foreigners visiting Nepal on tourist visa and staying back to work, the data recorded at the Department of Labour is not as desired. The notice published by the Immigration Department is discouraging and threatening in nature and has the potentiality of hitting to the foreign investment. As such, it has now become necessary to examine the possibility of hiring foreign nationals and the procedures including other legal and procedural formalities within the existing laws, rules and regulations.

Modalities of employing foreigner in various organizations

Appointment of non-Nepalese citizen could be under various categories and visas. Foreigners are seen to be employed in the UN Missions and International Organizations under bilateral treaties, Diplomatic Missions under Vienna Convention, foreign investment companies and INGOs under General Agreement and Project Agreement with the Government of Nepal. Under the accession to the Agreement for Establishing the World Trade Organization ("WTO"), Nepal has made a commitment to allow 15% of technical and managerial posts to be filled by expatriate staff from entities having foreign investment. Unless any special privileges are granted under bilateral treaties, diplomatic immunities and waiver of work permits, non-Nepalese citizens who are desirous to work in Nepal are mandatorily required to obtain work permit in compliance with labour laws and immigration laws of Nepal. Hence, in general an employer may hire skilled technical non-Nepalese citizens as country representative as per the General Agreement with Social Welfare Council, or as expatriates pursuant to Project Agreement entered into with Social Welfare Council, or appointment as expatriate employees under bilateral or multilateral treaties with the Government of Nepal or with various other Ministries including the Ministry of Health and Population, as per general rule of hiring in the skilled technical positions as envisaged by the labour laws; and pursuant to technology transfer agreement entered into between a foreign party and a Nepal-based organization.

Can foreigners work on their choice by simply travelling to Nepal?

No, foreigners cannot work simply on their choice by just travelling to Nepal. Working in Nepal is not that much simple and easier. Employment of foreigners in Nepal is limited to the nature and exigency of skilled technical positions where local employees are not available even after going through multiple advertisements for fulfilling the same from amongst the locally available human resources. As such, foreigners desiring to work in Nepal must demonstrate competency and need to go through certain tests, such as, being the last resort for employers based in Nepal. Non-Nepalese citizens must pass certain tests for being recruited as employees in Nepal where he/she requires demonstrating specialized and higher degree of skills in technical positions. Nepalese labour laws have thus emphasized on the appointment of skilled technical staffs with an intention of controlling the high inflow of foreign employees and developing the skill and capacity of local staff through training by the expatriate staffs, so that the expatriate staffs can gradually be replaced by local staffs upon expiry of service term of expatriate staffs.

In this regard, Labor Act 1992 states that, non-Nepalese citizens could be employed by an organization only in case Nepalese citizens could not be available for any 'skilled technical post'. The term "skilled technical post" hasnot been defined by the Nepalese labour laws, however, it proposes for the post of skilled technical employees on the basis of academic excellence, experience, skills, training and knowledge, etc. Hence, non-Nepalese citizen interested to work in Nepal most demonstrate his/her application and appointment by submission of academic documents or documents relating to training and skill, profession and experience, etc. related to the responsibility to be undertaken. Hence, except in case of unavailability of skilled human resources for skilled technical posts,, foreign expats cannot be employed for general nature of work which could be undertaken by locally available human resources.

Apart from this, to confirm that an expat has met the condition of his/her skill and technical knowledge to take the assignment in an organization based in Nepal and that he/she is sound and adaptive to local environment, the Department of Labour during the process of granting a work permit conducts an interview (discussion) on the physical presence of such expat to evaluate whether or not he/she is qualified for undertaking an employment in Nepal. In course of such process, the expat is required to justify how he/she considers himself/herself to be a better candidate for being employed in comparison to Nepali citizens, the relevance of his/her academic qualifications and skills to the proposed job and the strategy to be adopted by the employing organization to train Nepalese staffs so that they can replace the expat in future.

Categories of person who do not require work permit

There are persons of different categories/capacity who are exempted from the requirement of work permit, such as,
  • foreigners entitled to diplomatic immunities and privileges under Vienna Convention 1961;
  • foreigners explicitly exempted by laws of Nepal or international law from such requirement;
  • foreigners explicitly exempted from having to obtain work permit under bilateral agreement or treaty pursuant to the Nepal Treaty Act 1990;
  • foreigners explicitly granted exemption from obtaining work permits by an authorized agency under the principle of reciprocity;
  • foreigners granted exemption from obtaining work permitson the basis of special decision of Government of Nepal; and
  • foreigners granted exemption from time to time by the Government of Nepal.
Other requirement that the employer and the foreign national must take into consideration

Before employing foreign nationals, an employing organization is required to ensure that the foreign nationsare exceptional with knowledge and superior managerial skills; justification of skill, knowledge and experience and academic and their relevancy with the job assignment, knowledge and understanding of local practices, cultural values and tradition, acquaintance with local laws and work procedures, commitment of training local staffs to develop their competency and capacity. Thus, upon demonstration of competency, skills and technical knowledge, the Department of Labor grants work permits and provides recommendations for non-tourist visas.

Workpermit processing

The Government of Nepal and its agencies have been practicing a complex system of processing work permit applications. The work permit process gets initiated from the relevant Department and/or line Ministry regulating  the employer. For example, if a foreigner desires to work in an educational institution, then the Ministry of Education is the concerned line Ministry for initiating work permit processing, for getting employed in an entity having/related to foreign investment the concerned governmental agency for initiating work permit processing is the Department of Industry or Investment Board and in case of INGOs, the Social Welfare Council and the Ministry of Women Children and Social Welfare are the relevant governmental agencies for initiating work permit processing.

If foreigners are to be hired, it is to be ensured that such foreigners are selected upon non-availability of local skilled personnel even after publishing vacancy twice in a national level newspaper. The advertisement must contain detailed information regarding post, salary, job responsibility. If an applicant satisfies the conditions set out in the advertisement, the internal process of appointment/recruitment must be carried out before requesting for concerned governmental authority for recommendation of work permit. The concerned governmental authority, after examining all necessary documentations, may recommend the Ministry of Home Affairs for work consent in principle. Upon satisfaction on account of security reasons, the Ministry of Home Affairs may recommend to the Labour Department for granting a work permit. The Department of Labour shall then instruct the concerned Labour Office to carry out necessary site inspection of the employer and furnish a report thereof. Upon receipt of a satisfactory report from the concerned Labour Office regarding compliances with labour laws, the Labour Department may grant work permit after consultation or interview in physical presence of the proposed foreign employee. The Labour Department issues workpermit with Green Card based on which non-tourist visas are granted to the foreigners. This process normally takes 2 months.

(This is extract of an interview published in Nepalipatra on 31 August, 2016. The remaining part of the post will be published in Part 2. Nepal Tax Online has a special package covering immigration and expatriate tax issues for subscription. Details are available in our pricing page under INGO-Premium.)

Saroj Krishna Ghimire

Saroj Krishna Saroj Krishna

About me

Saroj is an Attorney at Law and an Assistant Professor of Law at Tribhuvan University, Nepal. Saroj has advised high profile clients on investment and corporate matters and appears in all level of courts in large scales commercial litigation. He is one of the dynamic young lawyers of Nepal and have worked as local counsel for largest law firms worldwide. He advises international clients and immigration issues in Nepal Tax Online.

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