New guidelines clear up ambiguities in labor permit rules

IMPACT – MEDIUM

What are the changes? The Ministry of Labour and Employment has issued new guidelines that impose stricter rules and enforcement of labor permits for foreign workers.

What do the changes mean? Foreigners are now explicitly prohibited from working without a labor permit and must apply in-person or through the employer for a labor permit, generally within 30 days of entering Nepal. In addition, the new guidelines define validity periods of the permits and procedures for appealing labor permit denials.

• Implementation timeframe: Jan. 10, 2014.
• Visas/permits affected: Labor permits.
• Who is affected: All foreign nationals working in Nepal.
• Impact on processing times: None.
• Business impact: Businesses now have clearer guidance and predictability on labor permits.
• Next steps: Employers should plan for stricter controls and stronger enforcement than in the past.

Background: The Ministry of Labour and Employment published the guidelines to make the labor permit process “simple, easy, regular, transparent, accountable and effective.”

The Nepal Labor Act passed in 1992, but did not clearly address work permits for foreign workers until recently. Although foreign workers are required to obtain a labor permit, the law does not make it an offense to work without a permit. The law imposes only nominal penalties for work permit violations and even that provision was not effectively enforced. As a result, an estimated 20,000 foreign workers – including those employed by NGOs, schools, development firms and private industry – are working in Nepal without permits.

The guidelines now explicitly prohibit working without a labor permit, generally in for-profit industry; exempt categories are enumerated. The guidelines also standardize the issuance of permits. Generally, labor permits for workers in private industry will be valid for a maximum of five years, while foreign workers holding special-skills jobs can get permits for a maximum of seven years. There is also a provision that gives the Department of Labour discretion to grant extensions beyond the maximum duration in special circumstances. An appellate procedure is spelled out in the guidelines, which allows an applicant who is denied a labor permit to appeal within 35 days and obtain a decision by the Director General of the Department of Labour within 15 days.

BAL Analysis: The guidelines should provide clarity and uniformity to employers and foreign workers on how Nepal will adjudicate and enforce labor permits going forward.

This alert has been provided by the BAL Global Practice group and our network provider located in Nepal. For additional information, please contact GlobalVisaGroup@bal.com.

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