Labour Act, 2074: History, Objectives and Evolution of Labour Law in Nepal

By Rohti Paudel

Introduction

The labour law of Nepal has evolved through two primary legislative frameworks: the Labour Act, 2048 (1992) and the Labour Act, 2074 (2017). The Labour Act, 2074 replaced the earlier framework and introduced a broader and more comprehensive approach to labour relations and employee rights.

1. History of the Labour Act in Nepal

Labour Act, 2048 (1992)

The Labour Act, 2048 provided an initial framework for labour rights and regulations following the re-establishment of democracy.

Labour Rules, 2050 (1993)

The Labour Rules, 2050 provided supplementary guidance and detailed provisions for implementing the Labour Act, 2048.

Labour Act, 2074 (2017)

The Labour Act, 2074 became effective on 4 September 2017, replacing the previous Act and introducing significant changes, including a broader scope of application and updated provisions concerning labour relations.

Labour Rules, 2075 (2018)

The Labour Rules, 2075 further elaborated the provisions of the Labour Act, 2074 and replaced the earlier Labour Rules, 2050.

2. Limitations of the Labour Act, 2048 and Rules, 2050

The older framework faced several limitations that created the need for a more comprehensive labour law.

Limited Applicability

The earlier Act primarily applied to entities employing 10 or more workers, leaving many workers in smaller businesses and the informal sector outside its protection.

Perceived Rigidity and Lack of Flexibility

Employers criticised the 1992 framework as being relatively rigid, particularly in relation to hiring, termination and workforce management.

Inadequate Social Security Coverage

From the perspective of workers and trade unions, the earlier social-security provisions were considered insufficient to provide comprehensive protection against risks such as health issues, unemployment and old age.

Outdated Provisions

After more than two decades of implementation, certain provisions had become outdated and no longer fully reflected modern labour practices or Nepal's changing economic environment.

3. Preamble and Objectives of the Labour Act, 2074

The Labour Act, 2074 is described in the uploaded material as an Act made for the amendment and consolidation of laws relating to labour.

Its objectives include protecting the rights, interests and benefits of workers, clarifying the rights and duties of employers and workers, improving industrial relations, increasing productivity and eliminating forms of labour exploitation.

4. Repeal of Earlier Legislation

Following the implementation of the Labour Act, 2074, the uploaded material identifies the following legislation as having been repealed:

• Labour Act, 2048 (1992)

• Industrial Apprenticeship and Training Act, 2039 (1982)

• Pension Act (Retirement Fund Act), 2042 (1985)

5. Main Objectives of the Labour Act, 2074

The objectives identified in the source include:

• Making provisions for the rights, interests and benefits of workers.

• Clarifying the rights and duties of employees.

• Promoting good industrial relations.

• Ending forms of labour exploitation.

• Supporting increased productivity.

• Amending and consolidating laws relating to labour.

Conclusion

The Labour Act, 2074 represents an important stage in the development of Nepal's labour-law framework. It replaced the earlier Labour Act, 2048 and sought to establish a broader and more updated framework for labour relations and employee rights.

The evolution from the Labour Act, 2048 and Labour Rules, 2050 to the Labour Act, 2074 and Labour Rules, 2075 reflects the need to respond to changing labour practices, improve protection for workers, clarify the responsibilities of employers and employees, and promote productive industrial relations.