KATHMANDU, Sept 28: A labor audit is a legal process to check whether an employer's employment-related policies and practices comply with the law. It is an important exercise to see how employers and workers are complying with the country's labor laws.

Financial audit like 'Labor Audit' is a mandatory legal system that must be followed under the Labor Act 2074.

Pursuant to the provisions of the Labor Act, the Labor Rules 2018 (“Labor Rules”) prescribe the procedure for labor audit. According to Rule 56 of the Labor Rules, enterprises are required to conduct a labor audit by the end of the Nepali Month of Poush (Mid-January) every year. The Labor Audit should be conducted as per the criteria defined by the Ministry of Labor.

All profit-making or non-profit local, national, domestic, foreign, multinational and international associations, organizations, companies, firms, bodies operating in Nepal that employ employees for their operations (under the definition of establishment according to the Labor Act) must conduct a labor audit.

The main objective of a labor audit is to help in the overall production and productivity increase by ensuring the right interest of the reserve labor through the effective implementation of the existing legal system in the workplace and maintaining good industrial relations.

The Labor Act is applicable on professional issues between the employer and the employee unless any other Nepali law is applicable. So, a labor audit becomes a mandatory provision.

 
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