Bonus Act 2030 Nepal: Employee Bonus Eligibility & Calculation

The Bonus Act, 2030 (1974 AD) is the primary law governing profit-sharing bonuses for workers in Nepal. It was authenticated on 11 Chaitra 2030 BS, corresponding to 14 March 1974 AD, and has since been amended several times, most significantly by the Some Nepal Laws Amendment Act, 2075 (2019). The Act works alongside the Bonus Rules, 2039 and the Labour Act, 2074 (2017) to define how enterprises must share a portion of their yearly profit with the people who generated it.

The core idea is simple: when a business earns a profit in a fiscal year, its workers have a statutory claim to a share of that profit in the form of an annual bonus. This is different from the festival allowance (often called the 'Dashain bonus' or 'chad parva kharcha') that many employers pay around Dashain and Tihar. In popular usage the two are frequently blurred, but the profit bonus under this Act is a legal entitlement tied to profit, whereas a fixed festival allowance is a contractual or customary payment.

Because the profit bonus is usually distributed in the months leading up to Dashain, searches for 'dashain bonus rules nepal' and 'employee bonus calculation nepal' spike each autumn. This page explains the statutory framework so employees and employers can distinguish a lawful profit bonus from a discretionary festival gift, and calculate what is actually owed.

The foundation of the Act is the allocation requirement. Under Section 5, every enterprise that makes a profit in a fiscal year must set aside an amount equal to 10% of its net profit as a bonus fund for its employees. This is a floor, not a ceiling on generosity, but it is the amount the law compels a profitable enterprise to distribute.

'Net profit' here means profit computed after the deductions permitted under the Act and prevailing tax law, so the 10% is applied to the assessed net figure rather than gross revenue or operating income. Certain sectors have their own carve-outs: for example, special hydropower provisions have historically set a lower allocation (2%) for that industry, reflecting its capital structure and concession terms.

The 10% pool is then distributed among eligible employees in proportion to their salary or wages, subject to the per-employee caps described below. If the pool is not fully exhausted after every eligible worker has received their capped entitlement, the leftover does not simply revert to the company; it is channelled into welfare funds under Section 13.

Eligibility is governed mainly by Section 6. To qualify, an employee must have worked for at least half of the total period they were required to work in the fiscal year. In practice this means a worker who joined partway through the year, or who was on prolonged unauthorised absence, may fall below the threshold and lose entitlement for that year.

The Act excludes certain categories. Employees engaged on a purely casual basis, or on a shift/substitute basis without a continuing relationship, are generally not entitled to the profit bonus. Likewise, a worker who has been lawfully dismissed for serious misconduct — such as theft, causing damage to the employer's property, or participation in an illegal strike — can be disqualified from the bonus for the relevant period.

Importantly, eligibility does not depend on rank or seniority alone: managers, permanent staff, and long-term contract workers who cross the half-year working threshold are all covered. The distribution is calculated on the basis of each eligible employee's salary scale, so higher-paid staff draw a larger share of the pool, but every qualifying worker participates.

While the pool is 10% of net profit, no individual can receive an unlimited amount. Section 7(3), as amended in 2019, sets two entitlement tiers keyed to the government's minimum wage. An employee whose monthly salary or wage is up to twice the prescribed minimum wage may receive a bonus of up to eight months' salary or wage. An employee earning more than twice the minimum wage may receive a bonus of up to six months' salary or wage.

The Act also contains a fairness floor: the minimum bonus payable to a higher-tier (six-month) employee must not be less than the maximum bonus payable to a lower-tier (eight-month) employee. This prevents the odd result where a small salary increase that pushes someone into the higher tier could actually reduce the rupee value of their bonus.

These tiers were revised by the Some Nepal Laws Amendment Act, 2075, which was published in the Nepal Gazette on 3 March 2019 with immediate effect. The amendment replaced earlier, lower ceilings and expressly linked the tiers to 'twice the minimum wage', so the threshold now moves automatically whenever the government revises the minimum wage.

As of fiscal year 2082/83 BS (2025/26 AD), the national minimum monthly wage in Nepal is Rs 19,550 (Rs 12,170 basic wage plus Rs 7,380 dearness allowance), effective from 17 July 2025 for all workers except tea-estate labour. Twice the minimum wage is therefore Rs 39,100 per month, which is the dividing line between the eight-month and six-month bonus tiers.

Example 1 — a worker earning the minimum wage. Suppose an eligible employee earns Rs 19,550 per month, well within twice the minimum wage. Their bonus is capped at eight months' salary, i.e. up to Rs 19,550 x 8 = Rs 156,400. Whether they actually receive the full cap depends on how large the enterprise's 10% profit pool is relative to total eligible salaries; the cap is the ceiling, not a guarantee.

Example 2 — a mid-level employee earning Rs 35,000. This is below the Rs 39,100 threshold, so the eight-month cap applies: up to Rs 35,000 x 8 = Rs 280,000. Example 3 — a senior employee earning Rs 60,000, which exceeds twice the minimum wage. Their bonus is capped at six months' salary, i.e. up to Rs 60,000 x 6 = Rs 360,000, but never less than the maximum a lower-tier colleague could receive, thanks to the statutory floor.

These figures are ceilings. If a company's 10% net-profit pool is smaller than the sum of every eligible worker's capped entitlement, the pool is shared proportionally to salary and each person receives less than their cap. Conversely, when the pool exceeds total capped entitlements, the surplus flows to the welfare funds rather than boosting individual bonuses beyond the caps.

Section 9 requires that the bonus be paid in cash and distributed within eight months from the close of the fiscal year. Nepal's fiscal year ends on the last day of Ashar (mid-July), so the practical deadline for most enterprises falls in the following winter — which is one reason many companies release the profit bonus around Dashain. If an enterprise cannot pay on time, it must apply to the Labour Office with reasons; the Office may grant an extension of up to three months, or permit the enterprise to pay two years' bonuses together in the next fiscal year.

Section 13 governs what happens to any bonus left over after every eligible employee has received their capped share. Of that residual amount, 70% must be deposited in the welfare fund established at the enterprise level under prevailing law, and the remaining 30% must go to the national-level welfare fund maintained by the Government of Nepal for the benefit of workers generally.

A special rule applies to enterprises owned by the Government of Nepal: for them the split is reversed to 20% into the enterprise-level welfare fund and 80% into the national-level welfare fund. In all cases the operation of these welfare funds is required to involve employee participation, ensuring that money set aside 'for workers' is actually governed with worker input rather than sitting idle.

Employers must keep clear records of net profit, the list of eligible employees, the salary scale used for distribution, and the dates of payment. Because the bonus is a statutory entitlement, an employee who believes they were wrongly excluded or underpaid can raise the matter with the enterprise and, failing resolution, with the Labour Office, which supervises compliance and can direct payment.

Employees should verify three things when they receive a profit bonus: that they met the half-year working threshold, that the correct tier (eight or six months) was applied to their salary, and that the enterprise actually made a profit that year — no profit means no statutory bonus obligation, though a festival allowance may still be paid by custom or contract. Keeping payslips and the appointment letter helps establish the salary figure used in the calculation.

Finally, remember that the bonus caps are ceilings tied to a moving minimum wage. Because the government reviews the minimum wage roughly every two years under the Labour Act, the Rs 39,100 tier threshold used in the examples above will change at the next revision. Always check the minimum wage in force for the relevant fiscal year before computing the tier and the cap.