HR cannot be manually managed by growing businesses in Nepal. Local payroll Management, attendance tracking and compliance with Labor Act 2017 and Social Security Act 2017 are complex processes that require sophisticated tools to make them simpler and more automated.
Why Nepalese Business Owners Need Specialized HR Software
The HR management needs of Nepal present unique challenges that are not addressed by generic international software. Payroll management also requires special calculations for Social Security Fund (SSF) at 31% of the basic salary (20% by the employer and 11% by the employee) and income tax deductions under the PAYEE system.
HR software for Nepal should have specialized date fields that understand the local Bikram Sambat system and automate calculations like sick leaves, home leaves, holiday leaves as appropriate. It should also have tax calculation formulas that can automatically categorize employees' tax.
There are mandatory contributions to the Social Security Fund (SSF) by both employees and employers in Nepal. Employers must contribute 20% of their basic salary to the SSF while gratuity accrual is at 8.33% of the basic salary. Overall, statutory employer contributions in Nepal are between 28-33% higher than the basic salary depending on the grade of the employee. Such calculations are best automated through localized HR software
HR Software for Nepal Should Automate These Tasks
Payroll Automation
Automated payroll calculation systems eliminate the manual work of calculating salaries and ensure compliance with the Labor Act 2074 BS. The system should be able to handle minimum basic wage calculations based on grades, gratuity, provident fund calculations, statutory deductions such as SSF contributions and income tax calculations.
Income tax calculations in Nepal operate on a slab system that is the same for married and unmarried taxpayers. The first NPR 1,000,000 is taxed at 1% (which is reduced by 100% for those contributing to the SSF). Higher slabs kick in at NPR 1,500,000 (10%), NPR 2,000,000 (20%), NPR 3,000,000 (27%) and NPR 4,000,000 (29%).
Attendance Automation
Attendance tracking and recording should be automated using biometric machines or geofencing to avoid time-wasting manual processes and minimize time theft. Modern systems allow manual entries to be made and approved by authorized company representatives. Attendance tracking software for Nepal should be able to handle multiple attendance recording methods including biometric machines, mobile geo-fencing and manual entries with approvals.
The Labor Act Nepal stipulates that working hours should not exceed 8 hours a day and 48 hours a week with a mandatory 30-minute break after every 5 hours of work. The Act also limits overtime to 4 hours a day and 24 hours a week with overtime payments at 1.5x the overtime rate.
Leave Management Automation
The leave management system should allow employees to apply for leaves which are then approved by the appropriate company personnel while automatically adjusting the payroll. Nepal labor laws stipulate that employees are entitled to 1 day of annual leave for every 20 days worked with a maximum of 90 days of accumulation. They are also entitled to 12 days of sick leaves per year with a cap of 45 days of accumulation. Maternity leaves in Nepal last 14 weeks with 60 days paid while paternity leaves are 15 days with full payment. Employees are also entitled to 13 days of mourning leaves.
Essential Features in HR Software for Nepal Businesses
Statutory Compliance
The best HR software for businesses in Nepal should be able to handle the Bikram Sambat system which determines the fiscal year in Nepal. This includes calculating leave as well as processing statutory deductions like SSF, EPF and CIT. It should also handle statutory leave calculations in accordance with the labor laws. The software should be able to generate all reports required by the government for audit purposes including income tax computations.
Monthly income tax and SSF deductions need to be deposited by the 25th of every month. The best payroll software should be able to calculate these automatically and generate the required reports.
Employee Self-Service Portals
Self-service portals reduce the workload of HR officers while at the same time empowering employees. The portals should be accessible through employee email addresses and allow employees to view payslips, apply for leaves, update personal information and access tax-related information.
Connected HR, Payroll, and Business Operations
When the HR data is linked with the rest of your business, things operate more smoothly. AlineBMS brings HR, payroll, CRM, project management and support tools on one platform. This makes it easier for you to manage the information more efficiently and can focus on the work that really matters.
Scalability and Support
The software should be scalable to accommodate the growth of the company in terms of employees, locations and payroll needs. The vendor should also offer excellent onboarding, training and support services in case of any challenges.
Things to Consider When Searching for the Best Payroll Software in Nepal
When looking for the best payroll software in Nepal, always go for systems that offer Bikram Sambat, SSF, EPF and CIT compliance. The best options also include biometric attendance recording and self-service portals where employees can check their payslips and apply for leaves without the need to involve HR.
When considering security, ensure that the payroll software offers role management, access restrictions to sensitive data, secure logins and regular data backups. After all, the system will host sensitive employee information including salary details.
