Labour Audit in Nepal (श्रम अडिट): Who Must Do It, the Poush Deadline and the Schedule 10 Format

What the Labour Audit Is

A labour audit is a yearly self-check. Section 100(1) of the Labour Act 2074 says each enterprise shall make a labour audit, as prescribed, of whether its acts are being performed in accordance with the Act, the Rules and other prevailing law, and prepare a report. Section 100(2) requires that report to be handed to the Labour Office or a labour inspector during an inspection, or whenever they ask for it.

“As prescribed” points to Rule 56 of the Labour Rules 2075, which sets the timing, who may conduct the audit, the report format and who receives a copy. The Ministry of Labour, Employment and Social Security has also issued a Labour Audit Standard (श्रम अडिट मापदण्ड, 2075) that Rule 56 refers to.

It belongs with the yearly filings in our annual compliance guide, but it is about your workers, not your accounts.

Who Must Do It: Is There a Headcount Threshold?

The obligation falls on every enterprise. Section 2(j) of the Act defines that as any company, private firm, Partnership Firm, cooperative, association or other organisation established or operated under law to carry on any industry, business or service, with or without profit motive. So it reaches a sole proprietorship as much as a Pvt. Ltd. — if it employs workers.

Some published guides say the audit is mandatory only for enterprises with ten or more employees. We could not find that threshold in either Section 100 or Rule 56. Ten is the trigger for other duties — most visibly the Labour Relation Committee under Section 111 — and the Schedule 10 form asks about that committee, which may be where the figure comes from. On the text, a five-person firm or company is covered too.

The Deadline: Poush End, Every Year

Rule 56(1) says the labour audit is to be done within Poush end of each year (प्रत्येक वर्षको पौष मसान्तभित्र). Nepal’s fiscal year runs Shrawan to Ashad, so Poush end falls roughly six months after the year closes — the same day the company’s OCR annual filing is due, as our CAMIS annual return guide explains.

The Rule does not say in terms which period is audited. Practitioners treat it as the fiscal year just ended, and the Schedule 10 form asks about matters “in this fiscal year”, so a report signed by Poush end 2083 normally covers FY 2082/83.

Who Can Conduct the Audit

Rule 56(1) allows the enterprise to have the audit done by its own managerial-level employee, or by another person or organisation connected with the labour sector, following the standard set by the Ministry. Law-firm summaries of the Labour Audit Standard describe the qualifications for an outside individual as Nepali citizenship, at least a bachelor’s degree and two years’ managerial experience in an enterprise, and for an outside organisation, registration under law with labour matters among its objectives.

That means the labour auditor does not have to be a chartered accountant, and we found no government licence for labour auditors in the Act or the Rules. Some sources refer to a list of approved labour auditors; we could not locate one published by the Department, so ask any outside auditor what standing they claim and check it with your Labour and Employment Office.

The Report Format: What Schedule 10 Asks

The report goes on the form in Schedule 10 (अनुसूची-१०) of the Labour Rules. It opens with the enterprise’s details and a headcount by employment type, gender, and foreign, managerial, trainee and supplied workers. Then come yes/no questions with a remarks column, grouped like this:

The form ends with suggested improvements and two signatures: the person who prepared it and the person who approved it, each with name, designation and date.

Where the Report Goes

Rule 56(2) requires the enterprise to keep the report in the Schedule 10 format and hand it to the inspector who inspects the enterprise. Rule 56(4) then requires a copy to go to the enterprise’s Labour Relation Committee and to its regulator:

In practice the report also goes to the area’s Labour and Employment Office; the Department counts the reports it receives. Practitioner guides say it accepts uploads through its online Integrated Labour Management Information System (ILMIS), email or hard copy. We could not confirm the upload steps from an official page, so check with your Labour and Employment Office.

The Penalty: What the NPR 20,000 Figure Covers

The figure guides quote is correct but narrow. Rule 56(3) says that if the report contains false details, the Labour Office may fine the person who gave them and the manager of the enterprise, for each instance, under Section 163(2)(b) of the Act — which caps the fine at NPR 20,000. Neither the Act nor the Rules sets a separate fine simply for missing the Poush deadline.

The real cost of skipping the audit is that an inspector finds the underlying problems instead, and the Act’s fines for those are much larger:

Labour Audit vs Financial Audit

Both are called “audit” and both land around Poush, but they are separate exercises under separate laws:

For the financial side, see company audit and nil audit and the company tax return deadlines.

What Trips Employers Up

These are the problems commonly reported by labour-law practitioners and in the Department’s own monitoring statements:

• Assuming small means exempt. The ten-employee figure circulates widely, but it is not in Section 100 or Rule 56.
• Treating it as a form to sign. If the answers are not backed by contracts, attendance records and payslips, the report itself becomes the false-details problem under Rule 56(3).
• No written contracts. Long-serving staff without an appointment letter are a frequent gap, and the s.163(1)(d) fine is counted per worker.
• SSF enrolment and contributions. Schedule 10 asks directly whether the enterprise is registered with the Social Security Fund and depositing contributions, and the Department and the Fund now share data to cross-check it.
• Supplied and outsourced workers. Security guards and cleaners supplied by a contractor count. The Department’s 2026 statement reported supplied security staff at banks and financial institutions not receiving minimum wages or festival allowance, and overtime not paid at private hospitals.
• Bye-laws never registered. The form asks for the registration number and date of the bye-law at the Labour Office.
• Confusing it with the financial audit. “Our auditor has done the audit” usually means the accounts — not the labour audit.

A Practical Timeline

Frequently Asked Questions

Is the labour audit mandatory for every employer in Nepal?

Section 100 of the Labour Act 2074 applies to every enterprise, and the Act defines enterprise to include any company, private firm, Partnership Firm or cooperative, profit-making or not. Neither the Act nor Rule 56 sets a minimum number of employees, though some guides cite ten.

What is the labour audit deadline?

Poush end every year, under Rule 56(1) of the Labour Rules 2075 — for 2083, that is 14 January 2027. The audit normally covers the fiscal year that ended in Ashad.

What is the labour audit format in Nepal?

The report form is Schedule 10 of the Labour Rules 2075. It records the enterprise’s details and headcount, then asks yes/no questions on contracts, hours, wages, leave, provident fund, gratuity, SSF, insurance, safety, bye-laws, committees, bonus and trade unions, and ends with suggested improvements and two signatures.

Who can conduct a labour audit?

The enterprise’s own managerial-level employee, or an outside person or organisation connected with the labour sector, following the Ministry’s Labour Audit Standard. It does not need to be a chartered accountant.

What is the penalty for a labour audit?

Rule 56(3) lets the Labour Office fine the person who gave false details in the report, and the enterprise’s manager, up to NPR 20,000 for each instance under Section 163(2)(b). Violations the audit should have caught carry their own, larger fines.