Probation Period in Nepal: Rules, Duration, Rights & Termination

What Is a Probation Period in Nepal?

A probation period is the initial stage of employment during which an employer evaluates whether a newly hired employee is suitable for the position. It also gives the employee time to understand the role, workplace, and company expectations.

During probation, employers may assess:

• Job performance and work quality
• Attendance and punctuality
• Ability to complete assigned responsibilities
• Communication and teamwork
• Workplace conduct
• Ability to follow company policies
• Adaptability to the role

For employees, probation is also an opportunity to understand the organization and determine whether the job is suitable for them. Being on probation does not automatically mean that an employee loses applicable employment rights, such as eligibility for a festival allowance in Nepal or other statutory protections.

Probation Period Under Nepal's Labour Act 2074

Section 13 of the Labour Act, 2074 allows an employer to keep a worker on probation for up to six months. If the worker's work is not found satisfactory during probation, the employer may terminate the employment contract, while an employment relationship that is not terminated during the probation period is deemed valid after the probation ends.

The important point is that six months is a maximum period, not a requirement that every employee must complete six months of probation. The probation arrangement should also be clearly documented as part of the employment relationship.

1. Probation Terms in the Employment Contract

The probation period should be clearly stated in the employment agreement along with other important employment conditions. HR teams should record the probation duration, employment start date, job responsibilities, remuneration, benefits, and other applicable terms.

2. Probation Is Not Mandatory for Every Employee

The Labour Act allows employers to use a probation period, but it does not require every employee to remain on probation for six months. Where an organization uses probation, its terms should be communicated clearly to the employee.

How Long Is the Probation Period in Nepal?

The Labour Act 2074 allows a probation period of up to six months. An employer may use a shorter period depending on the employment arrangement, so six months should not automatically be treated as the standard duration for every employee.

1. Starting Date of the Probation Period

HR should calculate probation from the actual commencement of the employment relationship and maintain the relevant joining date in its records. Accurate start and expiry dates help employers complete performance reviews and make employment decisions before the probation period ends. Keeping this date visible on an HR system, rather than in a spreadsheet that has to be checked manually, reduces the risk of a deadline being missed.

2. Probation Period Extension

The Labour Act does not provide a general mechanism for extending probation beyond the six-month period. Employers should therefore review performance before the probation period expires rather than treating probation as an indefinite evaluation period.

What Happens If Probation Ends Without a Decision?

If the probation period ends without the employment contract being terminated, the employment relationship is deemed valid under Section 13. This legal effect does not depend solely on whether HR has issued a separate confirmation letter.

HR teams should therefore track probation expiry dates and complete their internal review process before the deadline. A confirmation letter may still be useful for internal communication and recordkeeping, but it should not be confused with the legal effect of probation ending without termination.

Employee Rights During the Probation Period

Probation does not automatically remove an employee's applicable employment rights. Employers should continue to handle remuneration, working conditions, leave, and working hours, which can be managed using time and attendance software, along with applicable statutory obligations according to the Labour Act.

Employers should apply these entitlements consistently rather than assuming probationary status removes them by default, and payroll teams should confirm the current minimum wage rate before processing salaries in their HR payroll software, since it is revised roughly every two years.

Can an Employer Terminate an Employee During Probation?

Yes. Section 13 allows an employer to terminate the employment contract during probation when the worker's work is not found satisfactory, but probation does not give an employer unlimited freedom to ignore other applicable legal requirements.

Employers should review the employment agreement, applicable notice requirements, and relevant labor provisions before ending employment. Performance expectations and relevant records should also be maintained to support the decision.

1. Ending Employment During Probation

An employer may end the employment relationship when the employee's work is found to be unsatisfactory during probation. HR teams should maintain relevant records of expectations, feedback, attendance, performance reviews, and discussions before making the decision. Centralizing these records in one system, rather than scattered across emails and paper files, makes it easier to produce a clear record if a decision is ever questioned.

2. Notice Requirements During Probation

Probation does not automatically remove applicable notice requirements. Under Section 144, the minimum notice period depends on the employee's length of service.

Because probation can last up to six months, an employee who has been working for more than four weeks will generally fall within the seven-day notice category, subject to applicable circumstances and statutory exceptions.

3. Salary and Final Dues After Termination

When employment ends, HR and payroll should calculate outstanding salary and other applicable amounts due to the employee. Accurate attendance, leave, payroll, and employment records make the final settlement process easier and can help reduce disputes.

How Is Probation Termination Different From Regular Termination?

Probation does not automatically remove an employee's applicable employment rights. Employers should continue to handle remuneration, working conditions, leave, and working hours, which can be managed using time and attendance software, along with applicable statutory obligations according to the Labour Act.

Employers should not assume that probation removes every requirement associated with ending employment. The appropriate process depends on the reason for termination and the applicable provisions of the Labour Act.

Can an Employee Resign During the Probation Period?

Yes. An employee can resign during probation, subject to applicable notice requirements and employment terms. Probation is not a one-sided arrangement, so both the employer and employee should understand what happens when either party decides to end the employment relationship.

1. Notice Period for Resignation During Probation

Section 144 establishes minimum notice periods based on length of employment. Employees should check their employment agreement and applicable labour requirements before submitting a resignation.

2. Leaving Without Completing the Required Notice

Where applicable, an employee who does not provide the required notice may face consequences under the applicable law and employment terms. Employees should therefore understand the applicable notice requirements before leaving employment.

What Should Employers Do Before Probation Ends?

Employers should review probationary employees before the expiry date rather than waiting until the final day. A structured review process helps HR make timely decisions and maintain appropriate employment records.

• Review performance: Compare the employee's work against the expectations communicated at the beginning of employment.
• Check attendance and conduct: Review attendance, punctuality, workplace conduct, and compliance with company policies.
• Document feedback: Maintain relevant performance discussions, feedback, reviews, and improvement areas.
• Check the probation expiry date: Make sure HR knows exactly when the probation period ends.
• Make the employment decision on time: If employment is to continue or end, complete the appropriate process before the probation period expires.

An automated expiry reminder removes most of the risk in this step, since HR no longer has to rely on manually checking dates across every employee file.

Common Probation Management Mistakes Employers Should Avoid

Employers can avoid common probation problems by tracking important dates, documenting performance, and making employment decisions on time. Clear processes help ensure probationary employees are managed consistently and according to applicable requirements.

• Not Tracking Probation End Dates: HR teams should record probation end dates and review employees before the deadline.
• Treating Six Months as Mandatory: Employers should remember that six months is the maximum period, not a requirement for every employee.
• Assuming Probation Can Be Extended Indefinitely: HR should not treat probation as an open-ended evaluation period after the statutory period has expired.
• Treating Probation Employees as Having No Rights: Probation does not automatically remove applicable employment protections and statutory obligations.
• Failing to Document Performance: Employers should maintain records of expectations, feedback, reviews, attendance, and relevant discussions.
• Delaying Employment Decisions: HR teams should begin the review process before the probation expiry date rather than waiting until the last day.

How Can HR Teams Manage Probation More Efficiently?

HR teams can manage probation more efficiently by tracking key dates, setting reminders, and keeping employee information organized. An HRMS can bring these processes together in one system.

• Track Probation Start and End Dates: An HRMS can record an employee's joining date and probation period, making it easier for HR teams to track when probation starts and ends.
• Set Probation Expiry Reminders: HRMS reminders can alert HR when a probation period is approaching its end, giving them time to review performance and make an employment decision.
• Maintain Employee Records in One Place: An HRMS can keep employment details, attendance, leave, salary, performance information, and documents in one place for easier access during probation.
• Connect Probation With Attendance and Payroll: An HRMS can connect probation records with attendance, leave, and payroll information, helping HR teams review relevant employee data without managing separate records.

How Pace HRMS Helps Manage Probation Periods

Pace HR Software can help Nepali businesses manage probation by keeping employee information, joining dates, attendance, leave, payroll, and HR records in one system. HR teams can use centralized employee information and automated reminders to track probation periods and prepare for reviews before important dates, avoiding the missed-deadline risk described earlier in this guide.

Pace HRMS supports the administrative side of probation management, but employment decisions still require HR judgment and appropriate review. The software helps organize the process, surface the right records at the right time, and reduce manual tracking, rather than replacing the employer's responsibility to manage employees according to applicable requirements.

Conclusion

The probation period in Nepal is an important stage of employment that allows employers to evaluate new employees while giving employees time to understand their roles and workplace. Under Section 13 of the Labour Act 2074, probation can last up to six months, and if the employment contract is not terminated during that period, the employment relationship is deemed valid.

As businesses grow, managing these tasks manually becomes harder to sustain. Pace HRMS centralizes employee information, tracks probation and expiry dates automatically, organizes attendance and leave records, and supports HR teams throughout the employee lifecycle. Contact The Pace Infosys today to book a Pace HRMS demo and see how your team can manage probation, attendance, and payroll from a single system.