# Payroll in Nepal: employer costs, taxes and compliance

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> Canonical page: https://payrolloverview.com/countries/nepal/
> Methodology: every figure carries a source and a date in our database; ratings are averages of third-party platforms (https://payrolloverview.com/methodology/).
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> Data updated: September 2026
> Every figure below carries its statutory source and year.

Running payroll in Nepal means handling a few moving parts every cycle. You deduct income tax and a social security contribution from each employee's gross pay, add your own employer contribution on top, and file everything with the relevant authorities. The calendar, the currency, and the contribution rates are all specific to Nepal, so getting familiar with each piece before you hire matters.
This guide walks through what an employee actually costs, how the pay cycle works in practice, what leave and termination rules mean for your payroll runs, and when it might make sense to hand the whole thing to a specialist provider.

## Employer costs & taxes

| Item | Value | Source |
|---|---|---|
| Employer social security (on top of gross salary) | 30% | ISSA Country Profiles (2024) |
| Employee social security (withheld from pay) | 21% | ISSA Country Profiles (2024) |

## Pay & payroll operations

| Item | Value | Source |
|---|---|---|
| 13th-month salary | none | National government (2026) |
| Minimum wage (per month) | NPR 19,550 | WageIndicator Foundation (2025) |
| Statutory work week | 48 hours/week | National government (2026) |

## Leave & time off

| Item | Value | Source |
|---|---|---|
| Maternity leave | 14 weeks | World Bank Women, Business and the Law (2026) |
| Paternity leave | 2.1 weeks | World Bank Women, Business and the Law (2026) |

## Termination

| Item | Value | Source |
|---|---|---|
| Notice period | 4.3 weeks | World Bank Employing Workers / B-READY (2019) |
| Severance pay (at 1 year tenure) | 22.9 weeks | World Bank Employing Workers / B-READY (2019) |

## Labor market context

| Item | Value | Source |
|---|---|---|
| Retirement age | 60 | SSA Social Security Programs Throughout the World (2026) |
| Unemployment rate | 10.5% | World Bank Open Data (2025) |
| GDP per capita | $1,536 | World Bank Open Data (2025) |
| Union density | 30.2% | ILOSTAT (2018) |

The gap between what an employee earns and what you actually pay as an employer is meaningful in Nepal. On top of gross salary, employers contribute to social security at a rate that adds roughly a third again to your base wage bill. That is not unusual for the region, but it is worth building into your budget from day one. See the table below for the exact employer and employee rates side by side.
The combined employee-side deduction is also sizeable, which means the tax wedge, the difference between what you spend and what lands in an employee's pocket, is fairly wide. In plain terms, a worker earning a given gross salary takes home noticeably less than that figure suggests. Both sides of that equation matter when you are setting compensation and making sure offers are competitive in practice, not just on paper.

Nepal does not require a thirteenth-month or annual bonus payment by law, so your regular payroll cycle is your main obligation. The minimum wage floor is set nationally, and every employee must clear it before any deductions. Check that your pay runs reflect current minimum wage levels, since these can be updated and the table below shows the most recent figure. Payroll is typically run monthly, which keeps the admin manageable, but the withholding calculations still need to be right every time before anything goes out.

From a payroll operator's perspective, the two termination items that hit your final pay run are notice and severance. Notice sits at just over four weeks, and severance at close to six months of pay, so a termination payout can be significant. Budget for both when offboarding. On the leave side, maternity leave runs fourteen weeks and paternity leave just over two weeks. Whether those weeks are paid and who funds them affects how you account for the cost, so confirm the current rules apply correctly in your payroll setup before someone actually goes on leave.

If you do not have a local entity in Nepal, you generally cannot run payroll there directly, and setting one up takes time and local expertise. Even with an entity in place, filings happen in Nepali and rates do change. A global payroll provider or employer of record takes the entity question off the table entirely and keeps your contributions and withholdings current without you having to monitor every regulatory update yourself. For a small headcount especially, the overhead of doing it in-house rarely makes sense.