Introduction

The Contribution Based Social Security Act, 2017 (2074) was enacted by the Government of Nepal to uphold workers’ rights to social security and create a structured mechanism for delivering benefits. Passed on July 24, 2017, and effective after its publication in the Government Gazette, the Act represents a significant step toward securing the social welfare of Nepalese citizens, particularly the working class. This landmark legislation is designed to protect workers and ensure comprehensive social security coverage.

Who is Covered Under the Social Security Act in Nepal?

The Act encompasses the following categories:

• Employees: All employees in the formal sector (public and private), including full-time, part-time, and contractual workers.
• Employers: Responsible for making contributions on behalf of employees.
• Dependent Family Members: Eligible for benefits in certain cases, such as death or disability of a contributor.
• Foreign Workers: May be covered depending on agreements or policies.

Social Security Fund (SSF): Key Components

The Social Security Fund (SSF) was established to manage social security benefits using contributions collected from:

• Employee and employer contributions.
• Provident Fund amounts from employees and employers.
• Gratuity, severance pay, and other benefits under the Labor Act.
• Social Security Tax.
• Government donations, loans, and foreign assistance (with approval).
• National-level “Kalyankari” Fund bonuses.
• Returns on investments of the Fund’s assets.

Enrollment with the Social Security Fund (SSF)

The Gazette dated 2075/07/26 mandates all employers to register with the SSF within six months and comply with its guidelines.

Required Documents for Registration:

• Employer’s Registration Certificate.
• PAN or VAT Certificate.
• Employee details.
• Registration decision regarding the SSF.

Note: Documents must be translated and notarized if they are in a language other than Nepali.

Social Security Number Assignment

Each contributor receives a unique Social Security Number (SSN), recorded on their identity card, which is required to access benefits under the Act.

Contribution Mechanism

Employers and employees contribute to the SSF monthly as follows:

• Employer Contribution: 20% of the employee’s basic salary.
• Employee Contribution: 11% of their basic salary.

Contributions must be deposited within 15 days after the end of the month.

Eligibility for Social Security Benefits

Only contributors to the SSF are eligible for benefits, which are determined based on contribution amounts and durations.

Entitlements Include:

• Sick leave: Up to 13 weeks per year (60% of basic salary).
• Maternity leave: 98 days of paid leave (60% of basic salary).
• Compensation in cases of unpaid leave due to employer closure or employment termination.

Offenses and Penalties Under the Social Security Act

Offenses Include:

• Non-deposit of contributions by the employer.
• Providing false information to claim benefits.
• Misuse or irregularities in Fund operations.

Penalties:

• Fine of NPR 100,000, imprisonment up to 1 year, or both (if the amount is unquantifiable).
• If the offense involves a quantifiable amount, the penalty equals the amount involved.
• For aiding an offense: 50% of the principal offender’s penalty.

Disclaimer

S & S Jurists, a leading Nepalese law firm specializing in corporate law, publishes this article for informational purposes only. This content is not legal advice or solicitation. The firm and its team are not liable for consequences arising from the information provided here.

For tailored legal advice regarding the Social Security Act in Nepal, contact us. information provided here. for consequences arising from the information provided here.

For tailored legal advice regarding the Social Security Act in Nepal, contact us. information provided here.