An employment contract in Nepal can be terminated at the end of the contract period (if for a fixed term), upon completion of the work (if work-based), by the employee, or by the employer. Employers must have a valid reason for dismissing an employee. An employer may terminate an employee based on poor performance, however, the employee should be provided at least seven days to submit an explanation to the employer.
If an employee in Nepal has been declared disabled by a medical practitioner, then the employer may terminate the employment based on ill health after six months. However, if the worker suffered injury in a workplace accident and is undergoing treatment, the employment cannot be terminated for one year.
An employee can terminate their employment voluntarily by submitting a written resignation letter. The employer must approve the resignation within 15 days. If the employer fails to accept the resignation within the 15 days, it will be deemed accepted. The resignation can be canceled by mutual consent or if the employee continues working after the last day. Both employers and employees are required to provide notice of termination or resignation, except for dismissals for misconduct. The notice requirement is linked to the length of service.