As Nepal’s business ecosystem grows and integrates with global markets, many companies in Nepal are increasingly seeking international talent to meet evolving organizational needs. Whether it’s for specialized technical expertise, strategic advisory roles, or leadership positions, hiring foreign nationals has become a practical necessity for certain sectors.

While Nepal continues to invest in developing its human capital, there are scenarios where specific skills, certifications, or international experience may not be readily available in the local workforce. In such cases, companies, particularly in industries like infrastructure, IT, energy, education, research, development consulting, and foreign-aid-funded projects, may need to look beyond domestic talent pools.

Why Businesses Hire Foreign Nationals in Nepal:

1. Specialized Technical Skills: Certain roles, especially in fields like engineering, information technology, biomedical sciences, and renewable energy, may require technical competencies that are not widely available in the Nepali job market.
2. Project-Based International Expertise: Large-scale infrastructure or donor-funded development projects often bring in foreign technical advisors, project managers, or engineers with prior experience in similar global projects.
3. Knowledge Transfer & Capacity Building: Multinational companies and INGOs may employ foreign professionals to train and upskill local teams, ensuring sustainable knowledge transfer.
4. Regulatory or Compliance Requirements: Some international investors or foreign-invested companies may prefer to deploy their own compliance, legal, or finance experts to maintain global reporting standards.
5. Leadership and Strategic Roles: Senior management positions, especially in foreign joint ventures or startup ventures funded through international capital, may be filled by foreign nationals with global business exposure.
6. Language and Market Expansion Needs: Businesses looking to expand into international markets often require multilingual staff or professionals with regional business expertise.

However, hiring foreign nationals in Nepal is not a free-market decision alone. It is tightly regulated by Nepalese labor and immigration laws to protect the interests of the domestic workforce. Employers are required to demonstrate that the position could not be filled by a qualified Nepali citizen, followed by a structured application process for labor permits and work visas.

This guide provides a comprehensive overview of how to legally hire foreign nationals in Nepal, covering every step from justification to legal compliance. Whether you’re a company, HR professional, startup founder, or foreign investor, this article will help you navigate the process seamlessly.

Legal Framework for Employing Foreign Nationals in Nepal

Employing foreign professionals in Nepal is regulated by the Labor Act, 2017, Labor Rules, 2018, Immigration Act, 1992, and other sector-specific regulations. These legal instruments ensure that foreign employment is allowed only under specific circumstances and that Nepalese labor market interests are protected.

1. Labor Act, 2017 (Section 22: Employment of Foreign Nationals)

The Labor Act, 2074 (2017) through Section 22 explicitly prohibits employing a foreign national without prior approval and labor permit from the government. The employment of foreign nationals is permissible only under limited and justified circumstances, and employers must exhaust all efforts to hire local talent first.

Under Section 22 of the Labor Act, 2017:

• An employer may hire a foreign national only when a qualified Nepali citizen is not available for the position.
• The employer must prove the unavailability of suitable local talent before initiating the process to hire a foreign national.
• A work permit is mandatory and must be obtained from the Department of Labour and Occupational Safety (DoLOS) before the foreign national commences employment.

Key Prerequisites:

• Employers must publish vacancy advertisements in national newspapers to seek Nepali candidates.
• If no suitable application is received or selected, the employer may then apply for a work permit.
• However, exceptions exist for technicians and experts recruited under investment agreements approved by the Government of Nepal or related ministries. In such cases, the advertisement requirement may be waived.

2. Labor Rules, 2018: Work Permit Procedures

The Labor Rules provide detailed guidelines on the following:

• Application procedure for obtaining a work permit.
• Required documentation and eligibility criteria.
• Renewal process and duration of work permits.
• Grounds for cancellation of permits.

3.  Immigration Act, 1992 and Immigration Rules

Foreigners must also comply with immigration regulations. After obtaining a work permit from the DoLOS, the foreign employee must apply for a Non-Tourist Visa (Work Visa) from the Department of Immigration. A visa will be issued only after submission of the approved labor permit.

4. Foreign Citizen Labour Permission Directive, 2075

It sets out the framework for issuing work permits to foreign nationals in Nepal. Enforced by the Department of Labor, it defines the eligibility criteria, procedures, and conditions for hiring foreign employees in Nepal. The directive seeks to regulate foreign employment, details the application process, renewal requirements, associated fees, and limitations to ensure that foreign employment aligns with Nepal’s labor policies and economic interests.

6. Company Act and Sector-Specific Laws

Certain sectors such as banking, telecommunications, and insurance may have additional regulatory requirements before foreign employment is approved. In cases of foreign-invested companies, employment of expatriates is generally allowed under investment-related provisions. However, the labor permit requirement remains compulsory even in such cases.

Competent Authorities for Work Permit and Visa Issuance

It is mandatory to first obtain a work concurrence from the Department of Immigration, work permit from the DoLOS and recommendation for Non-Tourist working visa from Department of Industries (DoI) before applying for a work visa from the Department of Immigration.

Exceptions to Work Permit Requirement

As per Section 23(2) of the Labor Act, the following categories are exempt from labor permit requirements:

1. Foreign nationals who enjoy diplomatic immunity.
2. Foreign nationals exempted under bilateral or multilateral treaties or agreements signed with the Government of Nepal.
3. Short-term technicians hired for urgent tasks such as machinery repair or technology implementation, not exceeding a stay of three months.

Provisions Under Foreign Investment and Technology Transfer Act, 2075 (2019)

Section 27 of the Foreign Investment and Technology Transfer Act (FITTA), 2019 allows industries with foreign investment to employ foreign nationals if:

• No competent Nepali candidate is available.
• The hiring is necessary for knowledge transfer or technical skill development.

Such employment must be reported to the Department of Industry (DoI), which then communicates the details to the Ministry of Finance, Department of Immigration, and the Ministry of Labor, Employment, and Social Security.

Step-by-Step Procedure for Hiring Foreign Nationals in Nepal

Step 1: Vacancy Announcement and Justification

Employers must advertise the job vacancy in a national daily newspaper specifying:

• Position and number of vacancies
• Educational qualifications and experience required
• Selection procedure and application deadline
• Work description and responsibilities

In addition, the vacancy should be uploaded to the job portal of the DoLOS.

Step 2: Apply for Recommendation from Department of Industry (DoI)

Once it is evident that there are no sufficient applications from qualified Nepali nations to fill the job vacancy, the hiring company shall apply for recommendation of DoI for work permit as well as for work concurrence (from Department of Immigration) along with following documents:

• Application letter
• Original newspaper advertisement
• Bio-data and certificates of foreign employee
• Passport copy (valid for at least six months)
• Employment agreement
• Board resolution approving hiring
• Company registration documents (MOA, AOA, PAN, Industry registration)
• Tax clearance certificate
• Work plan for training Nepali staff to replace foreign employees over time
• Power of attorney
• Foreign investment approval documents (if applicable)

Step 3: Obtain Work Concurrence from Department of Immigration

Based on recommendation of the DoI, the hiring company shall submit an application along with the above mentioned documents to the Department of Immigration for the work concurrence. 

Step 4: Apply for Labor Work Permit at DoLOS

Submit an application as per Annex 1 of the Labor Rules, 2075, along with the following documents:

Prescribed Fees for Work Permit:

• NPR 15,000 per person (up to 6 months)
• NPR 20,000 per person (more than 6 months)
• Payment in convertible foreign currency if applying from abroad

Processing Time: Generally 7 days working days

Step 5: Apply for Work Visa Recommendation at DoI

Upon receiving the work permit, the foreign employee must apply for a recommendation for a Work Visa at the DoI.

Step 6: Apply for Work Visa at Department of Immigration

Finally, the foreign employee can apply for a Work Visa at the Department of Immigration.

Validity and Renewal of Work Permits

• Standard Validity: One year (renewable annually)
• Maximum Duration: Up to five years for skilled professionals; up to three years for others
• Work permit and visa must be renewed before expiry to avoid legal complications

Process Flow Summary

1. Identify staffing requirements.
2. Attempt to recruit Nepali candidates by publishing a job vacancy announcement
3. Document justification for hiring a foreigner.
4. Submit application to Department of Labor.
5. Receive work permit.
6. Apply for a work visa from the Department of Immigration.
7. Onboard employee and comply with tax and labor regulations.
8. Renew permits and visa annually.

Penalties for Non-Compliance

Employing a foreign national without proper authorization is a serious offense under Nepali law. Penalties may include:

• Fines imposed on the employer.
• Cancellation of foreign employee’s visa and deportation.
• Legal sanctions and possible blacklisting of the employer.
• Potential scrutiny from sector regulators (for regulated industries).

It is important to note that a visa alone is not sufficient, the labor permit is the primary legal requirement for foreign employment.

Special Considerations for INGOs and Foreign Investors

For INGOs, diplomatic missions, and donor-funded projects, the process may involve coordination with the Social Welfare Council (SWC) or other relevant authorities.

For foreign investors and startup founders, the route is different. They must apply for Business or Investor Visas through the Investment Board Nepal (IBN) or Department of Industry (DoI) based on the investment threshold. However, if they wish to hire foreign staff, labor permit requirements still apply for those employees.

Best Practices and Recommendations

• Always start the hiring process well in advance to account for delays in approvals.
• Maintain transparency and document each step thoroughly.
• Use a specialized legal or compliance consultancy if you are hiring multiple foreign professionals.
• Conduct periodic audits to ensure ongoing compliance with labor and immigration laws.

Frequently Asked Questions (FAQs)

1. Can foreigners work in Nepal legally?

Yes, foreigners can legally work in Nepal as employees or laborers, provided they obtain a Labor Work Permit from the DoLOS and a Work Visa from the DoI. Employment without these approvals is considered illegal under Nepalese law.

2. What is the legal process to hire a foreign employee in Nepal?

The process involves:

• Publishing a vacancy for Nepali candidates.
• Justifying the need for foreign employment.
• Applying for a work permit at the DoLOS.
• Obtaining a recommendation from the DoI (if applicable).
• Submitting documents and prescribed fees.
• Applying for a Work Visa at the Department of Immigration after receiving the work permit.

3. Are there any exceptions to the work permit requirement?

Yes. Foreign nationals are exempt from obtaining a work permit if they:

• Hold diplomatic immunity.
• Fall under treaty or agreement-based exemptions with the Government of Nepal.
• Are technicians hired for urgent, short-term assignments not exceeding 3 months.
• Are part of foreign investment-based projects, under approved agreements specifying exemptions.

4. What is the maximum number of foreign employees a company can hire?

In general, a company in Nepal can employ up to 5% of its total workforce as foreign nationals. For entities under foreign investment or aid, the limit is typically three foreign employees, unless otherwise specified in an agreement with the Government of Nepal.

5. What documents are required for a labor work permit application?

Employers need to submit:

• Newspaper advertisement and portal proof
• Justification letter
• Bio-data and passport copy of the foreign national
• Employment agreement
• Tax clearance, PAN certificate, labor audit
• Training plan to substitute with Nepali staff
• SSF registration and other regulatory approvals (if applicable)

6. How long does it take to get a work permit in Nepal?

It usually takes 30 to 45 working days from submission of a complete application and payment of the prescribed fee, subject to approval from the DoLOS

7. What is the validity period of a work permit?

A work permit is typically issued for one year and can be renewed annually. For highly skilled technical professionals, the permit can be extended up to five years, and for other workers, up to three years.

8. How much is the work permit fee in Nepal?

• Up to 6 months: NPR 15,000 per person
• More than 6 months: NPR 20,000 per person
  For overseas applications, the fee must be paid in convertible foreign currency

9. What kind of visa is issued to foreign workers?

Foreign employees must obtain a Work Visa, issued by the Department of Immigration upon recommendation from the relevant authority. The visa is valid for the same duration as the labor permit and renewable annually.

10. Can foreign employees repatriate their income from Nepal?

Yes, foreign workers can repatriate their net salary, bonus, provident fund, and other eligible benefits. As per Nepal Rastra Bank’s directives, they can repatriate up to:

• 75% of net income (after tax)
• 100% of retirement-related benefits
• Maximum of USD 3,000 per month or USD 36,000 per year

11. What are the penalties for non-compliance with foreign employment laws?

Employers hiring foreign workers without permits may face:

• Fines up to NPR 200,000
• Additional fines of NPR 5,000 per person per month if non-compliance continues
• Record-keeping penalties if the employer fails to record exempted workers with DoLOS
• Permit cancellation and legal sanctions if conditions are violated

12. What additional compliance is required before a foreign national starts working?

Besides securing a labor permit and work visa, employers and foreign workers must:

• Ensure tax registration and timely tax payment
• Submit to SSF and labor audits
• Comply with Nepalese laws, rules, and codes of conduct
• Provide employment terms in a language understood by the employee or in English

13. Can the labor permit be renewed?

Yes, employers can apply for permit renewal within the last 30 days of validity. Renewals are granted based on the foreign employee’s performance and contribution in strategic sectors like education, science, non-profits, etc.

14. Who supervises compliance with foreign employment regulations?

The DoLOS is responsible for:

• Reviewing applications
• Inspecting workplaces
• Enforcing penalties
• Cancelling permits in case of violations

15. What if a foreign national is already in Nepal on another visa?

Such individuals must convert their visa status to a Work Visa upon receiving the labor permit. Visa change is done through the Department of Immigration, along with submission of relevant documents and visa fees.

What Next?

Employing foreign nationals in Nepal can bring valuable skills and global perspectives to your organization. However, it is crucial to navigate the legal requirements diligently to avoid compliance risks and penalties. By following the outlined steps and adhering to the legal framework, employers can ensure a smooth and lawful hiring process.

Disclaimer

INFORMATION PROVIDED HERE IS ONLY FOR GENERAL UNDERSTANDING PURPOSE. IT SHOULD NOT BE CONSIDERED AS A LEGAL ADVICE OR OPINION.

For precise legal guidance, always consult a qualified legal or compliance expert.

Need Expert Help?

If you're planning to hire a foreign national in Nepal and want to ensure full legal compliance, get in touch with our professional experts at Khatapana. From documentation support to regulatory navigation, we offer end-to-end assistance tailored to your business needs.

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