An Hourly-Wage System will now be Implemented in Nepal; along with a Revised New Minimum Salary

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The minimum wage fixing committee is working on implementing an hourly-based wage system in Nepal. This comes as an obligation to address a requirement in the new labor law- of bringing part time workers (such as construction laborers, household workers etc), under the legal umbrella.

The minimum wages of company workers, tea-plantation workers, agriculture workers, and household workers will now be differentiated for the first time in Nepal. Negotiations are still underway between employers and trade unions, to arrive at a decision on exactly how much the new minimum salary should be; although the Labor ministry has notified that these negotiations are now at its final stages.  However, even after they have come to a decision, the proposed wage will still have to be approved by the Ministry of Social Security.

When the committee implements this hourly-based wage system, part-time workers will be entitled to compensation packages that are similar to full-time workers. According to Mr Ramesh Vadal,- the vice president of GEFONT, it will now be a requirement to differentiate basic wage and allowances for hourly based workers, and these wages might also be subject to provident fund (PF) and subsidies reductions.

Thus, Outsourcing companies will now have to pay daily wages, allowances, PF and subsidies as separate parts of the compensation package,- similar to full time workers. Additionally, all required facilities that concern the job, will also have to be provided or paid for by the company, for the specific number of days that the worker has been hired for.

These daily wages and hourly wages will be calculated on the basis of the new minimum salary; which as mentioned, has still not been finalized. The employers have put forward a statement that due to the financial burden of social security, they cannot agree on a minimum salary above Nrs 12,500. Trade unions, on the other hand, argue that social security of workers cannot be added to basic salary, and that they will not settle for anything less than Nrs 17000.  

According to the coordinator of the committee- Mr. Ram Prasad Ghimire, they are doing their best to decide on a wage rate that is agreeable to both parties. However, if they cannot come to an agreeable decision, the government will have to intervene and decide on a suitable minimum salary.

It has been further notified that this new revised minimum salary will be announced by the Govt. anytime this week to be effective from Shrawan.    

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