Labour audit in Nepal: Labour Lawyer in Nepal

9 January 2020

This questionnaire provides basic procedure relating to labour audit to be conducted by an enterprise in Nepal.  

1. What are the relevant laws governing labour audit in Nepal?

Labour audit in Nepal is governed by the Labour Act 2017 (“Labour Act”), Labour Regulations 2017 (“Labour Regulations”) and Labour Audit Standards 2018 (“Labour Audit Standards”).

Section 100 of Labour Act makes it compulsory for every enterprise to conduct labour audit whereas Rule 56 of the Labour Rules provides the procedure of conducting labour audit.

2. What are the objectives of labour audit?

Labour audit requirement was introduced to implement the existing labour laws with the aim of (a) ensuing rights of employees and increase productivity, (b) making enterprises liable and accountable towards labour laws and (c) ensuring better relations between enterprise and employees.

3. Who is responsible to conduct labour audit?

Bank and financial institutions, insurance companies, non-governmental organizations, companies, firm, cooperatives and all other forms of enterprises are responsible for conducting labour audit.

4. When should labour audit be submitted?

Enterprises are required to submit labor audit to the relevant authorities by the end of Poush (Mid-January) of every year.

5. Who are eligible people /entity to conduct labour audit?

Enterprises can conduct labor audit through a management level employee working in such enterprise. If enterprises are willing to hire auditor externally, the Labour Audit Standards sets out the following qualification of the auditor:

  1. S/he must be a Nepali citizen;
  2. must have completed at least bachelor’s degree; and
  3. two years of experience working in management level of any enterprise or industry.

For any entity to provide services as an auditor, such entity must be validly registered having the objectives relating to labour. The individuals deployed by the entity to conduct the labour audit must meet the qualification of individuals as mentioned above.

6. Where should enterprises submit the labour audit ?

Enterprises must submit one copy of labour audit to the Labour and Employment Office, Labour Relation Committee, Labour Inspector and the concerned regulatory authority of the enterprise as set out below:


Regulatory authority 

Bank and financial institutionsNepal Rastra Bank
Insurance companiesInsurance Board of Nepal
Non-governmental OrganizationsRelevant District Administration Office
CompaniesAuthority providing approval to establish/operate
Other enterprisesAuthorities providing approval to establish/operate

7. Are government fees applicable during submission?

There are no government fees or costs involved.

8. What are the procedures to be followed by the auditor?

Pursuant to the Labour Standards, the labour auditor is required to follow the procedures as follows:

(a)     Collect and analyze details of the concerned enterprise;

(b)     Spot visit and investigation;

(c)     Interviews;

(d)     Deploying audit team at the enterprise; and

(e)     Follow any other appropriate procedure as required.

9. What are the responsibilities of the enterprises and labour auditor?

Enterprises are required to fulfill the following responsibilities:

  • Provide true information and details of enterprises;
  • Provide remuneration and other benefits to labour auditor;
  • Provide any other assistance if required; and
  • Submit labour audit to the concerned authority.

Labour auditor is responsible for the following:

  • Preparing of the report based on true facts;
  • Completion of the audit within the stated time; and
  • Not disclosing confidential information known during audit to any other parties.

10. Are there any penal liabilities regarding labour audit?

If false particulars are provided in the labour audit report, the Department of Labour can impose a fine of up to NPR 20,000 on the auditor.

Disclaimer: This article is for informational purposes only and shall not be construed as legal advice, advertisement, personal communication, solicitation or inducement of any sort from the firm or any of its members. The firm shall not be liable for consequences arising out of any action undertaken by any person relying on the information provided herein.

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