Nepal: Social security scheme ready for private sector workers

By Mahandra Pd. Yadrav, Senior Vice-President, Nepal Trade Union Congress

Nepal has introduced a social security scheme to protect and secure employees working in the formal private sector. This is a historic step for the country’s workers. Trade Unions, including the Nepal Trade Union Congress (NTUC), were pivotal to produce this legislation. The scheme is a central tool to address structural inequalities and contributes to Nepal’s efforts to realise the Sustainable Development Goals (SDGs SDGs The Sustainable Development Goals were one of the outcomes of the Rio+20 Conference. The members States launched a new set of future international development goals, which will build upon the Millennium Development Goals and converge with the post-2015 development agenda. ), notably SDG 1 (no poverty), 8 (decent work and sustainable growth) and 10 (reduced inequalities).


Under the recently implemented Contribution-based Social Security scheme, the government will provide health, accident and maternity coverage to workers employed in the private sector.


In the first phase of the scheme, employees from the private sector will be provided with financial security in terms of medical treatment, health protection and maternity scheme; accidents and disability plan; dependent family plan; and old-age security programmes.

How does it work?

In order to avail of the scheme, 31 per cent of the workers’ monthly salary needs to be deposited to the Social Security Fund, with 11 per cent waived from the worker’s monthly salary and 20 per cent contributed by the employer.

Once the worker is listed, she/he will get a unique social security number and an identity card. The same number and identity card will work even if the employee switches job and her/his contribution will be recorded with the same social security number. According to the scheme, workers will also get a lifetime pension after retirement.

For accessing the scheme’s medical treatment services and medicine plan—which covers doctor’s fees, hospital charges, various test fees, medicine cost, and travel expenses, among others—the worker must have contributed to the fund for a minimum of six months.


To receive maternity coverage, workers should deposit money for at least 12 months (in the last 18 months) at the Social Security Fund (Tripartite body of Government, Workers and Employers).


However, there are no time limits set for accessing the accident and disability security plan, and workers are entitled to accessing the compensation from the first day of contribution.

In case of workplace accidents and disabilities, financial support will be immediately provided. Also, if the worker dies or is injured en route to the workplace from home, or vice versa, financial support will be provided.

The fund will also bear all the expenses of occupational diseases on behalf of the worker, but only if they have contributed to the fund for two continuous years. In case of other accidents other than at the workplace, workers will receive a maximum aid of Rs700,000.

The scheme also ensures similar coverage for family members of the worker, as long as they live, in case of the worker’s death. As per the plan, the worker’s spouse will receive a monthly pension equivalent to 60 percent of their basic salary of the last job for lifetime. Likewise, deceased worker’s children will receive educational support equivalent to 40 percent of their parent’s monthly salary till the age of 18. If the deceased worker does not have any spouse or children, parents of the worker will get 60 percent of their monthly salary as pension.

The scheme was formally launched on 27 November. It will expand in different phases until it will cover all workers of the private sector on 29 January 2019.