Federation of Nepalese Chambers of Commerce and Industry (FNCCI)

The debate on the need of reforming the existing Labour Act of Nepal has been going on for a couple of years. The need for the reformation of the existing law was felt by both the trade unions and employers. Ineffective implementation, delay in the court decisions and the rigid provisions on termination of employment were some of the reasons for the demand of reformation of the law. In December 2002, the employers and trade unions mutually agreed to work on seven point agenda as a way forward to labour law reform in Nepal. In January 2005, the employers and the trade unions, after a series of discussions mutually agreed on 19-point policy guideline for the labour law reform process. ILO played a very important role in making the parties come to this stage. In January 2005, the Second National Labour Conference held by the Ministry of Labour and Transport Management (MoLTM), HMG/Nepal expressed its commitment in its Declaration to uphold the 19-point bipartite agreement on policy guidelines for labour law reform. Unfortunately, the change in the political situation disturbed this process and the agendum of labour law reformation was pushed back.

However, having attained some stability in the political situation, the MoLTM initiated the social dialogue process on the reformation of Labour Law with the technical input from ILO in 2007. Accordingly, MoLTM formed a National Task Force with the representation from the government, trade unions and employers for the reformation of the existing Labour Law. The questions of forming a labour commission and reforming the existing Labour Law were taken up by the sub-committees formed by the Task Force.

The ILO Consultant, Mr. Mordy Bromberg worked on preparing a Draft Labour Act and Draft Labour Commission Act. The MoLTM in collaboration with ILO held a first workshop on the proposed Commission and the issues related to the labour law reformation. Mr. Bromberg presented his recommendations on the labour law reformation issues. Minimization of labour disputes and balancing the issues of labour flexibility and social security were the guiding factors behind the drafting of these Acts.After a series of workshops held subsequently on the drafts prepared by ILO and Mr. Bromberg many differences between the trade unions and the employers were narrowed down.

After the submission of final draft Labour Act consisting of 10 chapters and draft National Labour Commission Act to the ILO, a national consultant, Mr. Binaya Regmi was hired by ILO to complete the process of drafting in context of Nepal. Accordingly, the national consultant prepared the draft of the Labour Act, National Labour Commission Act, Social Security Organization Act and Unemployment Insurance Benefit Act and submitted them to the ILO.

The MoLTM and ILO Office Kathmandu jointly organized a tripartite workshop at Nagarkot in December 2009 to discuss the drafts prepared by the national consultant. The workshop identified a list of differences between the trade unions and the employers on the draft provisions. Then after, the ILO organized two separate meetings between the national consultant and the trade unions and employers respectively in presence of government representatives. The final comments were given by both the parties in these meetings to the national consultant. Both the trade unions and employers have stated what they agree on and what they do not agree on.

Labour Law Reformation Process - A Summary