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Background
The Ministry of Labour, Employment and Social Security (the “Ministry”) has made enlistment in the Social Security Fund (“SSF”) mandatory for employers in Nepal. Initially, a notice dated 2075/07/26 directed all employers to register with the SSF. Subsequently, on 2082/01/01, the Ministry extended this requirement to employees receiving remuneration from government funds, including those from provincial and local-level bodies, as well as government-owned or partially owned institutions. Despite these directives, compliance remained low. Therefore, a follow-up notice dated 2082/12/19 was issued, reinforcing the mandatory SSF registration requirement for all employers in Nepal. This article provides a comprehensive overview of SSF enlistment, compliance obligations, and contribution requirements.
Governing Authority
The Social Security Fund (SSF Nepal), operating under the Ministry of Labour, Employment and Social Security, is the primary regulatory authority responsible for the administration, regulation, and enforcement of social security schemes in Nepal.
Governing Laws
Main laws governing the enlistment with the SSF are as follows:
- Labour Act, 2017 (the “Labour Act”);
- Contribution based Social Security Act, 2017 (the “Contribution Based Social Security Act”);
- Social Security Schemes Operating Procedures, 2018 (the “Social Security Procedures”).
These laws collectively establish the legal framework for employer obligations, employee benefits, and contribution mechanisms under the SSF system in Nepal.
Process of Enlistment with SSF
The SSF registration process in Nepal is conducted through an online system and involves the following steps:
Step 1: Registration of the employer in the SSF portal
Step 2: Issuance of the SSF enlistment certificate
Step 3: Enlistment of employees within three (3) months from the date of appointment or commencement of the employment relationship
Required documents:
a. Required documents for the employer are:
- Registration certificate of the organization;
- PAN/VAT registration certificate;
- Resolution regarding enlistment;
- Details of the employees
- Online Application
b. Required documents for the employee are:
- Detail of the Employee
- Employee Citizenship/ National ID Card
- PAN Certificate
- PP Size Photo;
Consequences of non-enlistment with SSF
The responsibility to enlist both the employer and its employees with the SSF lies solely with the employer. Failure to comply with SSF requirements may result in significant legal and financial consequences. The SSF may require the employer to:
- Immediately register with the SSF along with all employees
- Deposit all outstanding contributions from the date of employment, along with 10% interest
- Compensate employees by paying benefits equivalent to those they would have received under the SSF
These measures highlight the importance of SSF compliance for employers in Nepal.
Contribution to SSF
The SSF contribution rate in Nepal is based on the employee’s basic salary and is jointly contributed by both employer and employee. The employer deducts the employee’s portion at source during salary disbursement.
Contributor Type | Contribution Heading | Rate (of basic Salary) |
Employee | Provident Fund | 10% |
Social Security Tax | 1% | |
Total | 11% | |
Employer | Provident Fund | 10% |
Gratuity | 8.33% | |
Additional Contribution | 1.67% | |
Total | 20% |
Percentage-wise division of the SSF:
The total 31% SSF contribution is allocated across different social security schemes as follows:
Social Security Scheme | Rate (of basic Salary) |
Medical Treatment, Health and Maternity Protection Scheme | 1% |
Accident and Disability Protection Scheme | 1.4%
|
Dependent Family Protection Scheme | 0.27%
|
Old Age Protection Scheme | 28.33%
|
Total | 31% |
Benefits Schemes
Employees enrolled in the SSF are entitled to a wide range of social security benefits in Nepal, including:
- Medical treatment, health, and maternity benefits
- Accident and disability coverage
- Dependent family protection
- Old age security (pension and retirement benefits)
- Access to loan facilities
- Applicable tax exemptions
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