Chapter 5

Regulatory Environment
 The Engineering Council Act 2057
 Nepal Engineering Council Act 2057 came into
existence under the Nepal Engineering Council Ain
2055, Section 37.
 The Ain was initiated for making engineering
profession effective and impressive in Nepal.
 The Ain has the following main objectives:
 To make engineering profession more effective,
 To regulate systematically and scientifically the
engineering profession in Nepal, and
 To register engineers in the Engineering Council
according to their qualifications.
 NEC objectives
The objective of Nepal Engineering Council is to
make the engineering profession effective by
mobilizing it in a more systematic and scientific
and also to register the engineers as per their
qualifications.
According to section 2 of the NEC Act, it defines the
registration of engineers into three following
categories:
◦ General Registered Engineer
◦ Professional Engineer
◦ Non-Nepali Registered Engineer
 NEC
 According to Annex-1 of the Act, the minimum
academic qualification has been set bachelor
degree in any listed engineering fields.
Only bachelor degrees obtained from the
recognized academic institutions by the Council
in relation to Clause-4, Subclause- 1 of the Act
is eligible for applying for registration.
 NEC
The minimum qualification for professional
engineer registration is master degree in any
engineering field specified by the Council.
The Council shall provide a certificate to an
engineer for being registered in the council.
The registered engineers have to take ‘Oath’ in
a paper prescribed by the council while
providing a certificate of registration.
 NEC-duties and responsibilities
1. To prepare policies, plans and programs for the smooth
functioning of the engineering profession and to execute them
2. To set norms and standards for engineering education in Nepal
3. To grant permission and approval to carry out engineering
education to those engineering colleges and institutions that
meet the required norms and standards and to honor their
degrees and certificates
4. To monitor and inspect the quality of engineering education
provided by the engineering colleges and institutions
5. To fix the qualification necessary in order to practice engineering
profession and to register their name in the Council
6. To remove their name from the registration of the engineering
council if found to violate the code of ethics.
 NEC code of Ethics
 Discipline and honesty
 Politeness and secrecy
 Non-discrimination
 Limit service in concerned expertise
 Abstain from work which harm engineering
profession
 Professional responsibility
 State name, designation and registration number
 No publicity and advertisement of statements for
unnecessary influence
 NEC code of Ethics
 Section-5 of the Act states an examining
committee of three members formed under the
coordination of a council member shall examine
against any engineer in the council.
 The examining committee may suspend the
engineer under examination.
The engineer shall be given an opportunity to
clarify his/her doings.
 NEC code of Ethics
The examination committee will produce its
recommendation on the case to the executive
board of the council.
 In the study of the recommendation, if the
culprit is found guilty, he/she shall be
informed to the organization or client.
The council will seize registration membership
and ban for practicing engineering profession
 System of provision for private
practice and for employee engineers
The Nepal Engineering Council Ain
2055,Section-3 states that-
“No engineer should practice engineering
profession without being registered in the
Council even if graduated from the institute
recognized by the council. This will be effective
after a year from the implementation of the
Nepal Engineering Council Ain 2055 .”
 NEC registration process
 Apply for registration:
a. In the prescribed format of the council,
b. Those practicing engineering profession before coming
of NEC should apply in the prescribed format within six
month from the implementation of the NEC Act.
c. Those wishing to apply according to a and b above
need to submit certificates, awards and other papers
related to academic qualification along with the
specified registration fees.
 Checking of the application:
The Register of the Council will check all the papers
submitted along with the application and then submit
to the subject committee of the council.
 NEC registration process
 Checking on the application and recommendation:
a. The subject committee will make necessary checking
on the application submitted by the to the council
Register,
b. Anything unclear realized by the committee will be
made clear by asking to submit necessary papers and
certificates,
c. Any necessary paper demanded by the committee and
to submit the same by the applicant is applicant’s
responsibility,
d. If the committee finds qualified for registration
according to a, b and c above, the committee will
recommend the council for registration.
 NEC registration process
 Register the name:
The council shall decide to register the name of the
application in the format of Registration Book
prepared by the council, if the council finds the
recommended name right for registration in the
council.
 Certify the Registration of the name:
After the decision made for registration by the
council, the Register will register the name in the
Registration Book and provide a Certificate of
Registration of the Name in specified format.
 NEC registration process

 Inform if the decision is made not to register the

name:
The Register will inform the applicant in
writing.
 Removal of the name from the Register Book:
1. The name of the engineers from the Register
Book shall not be removed except in the
following cases
i. Mentally ill,
ii. Bankrupt in case being unable to pay loans back,
 NEC registration process
iii. Violated the specified professional conducts and
reported to the council to remove the name from the
Register Book and if decided by two third majority,
iv. If the court proved the engineer guilty in public case on
moral ground,
v. By mistake or mischief if anybody without basic
qualification has been registered.
2.The council shall form a committee to make
recommendation on the case by examining the
engineer that is reported blamed and
removal his name from the Register Book
3.The procedure that the examining committee has to
follow in checking the case will be as per specified.
 NEC registration process
Cancellation of the Certificate:
If the council decides to remove the name of the
registered engineer from the Register Book, the
Register will inform the engineer by removing
the name from the Register Book and canceling
the certificate of the engineer.
LABOR ACT ,2074
 Introduction
• The Labor Act, 2074 has received the assent of
president and become effective from the date Bhadra
19, 2074.
• The Labor Act,2074 has replaced the previous labor law
completely i.e. Labor Act, 2048 has ceased to be in
effect.
• The New Labor Act has been passed for provisions for
the rights, interest, facilities and safety of workers and
employees working in enterprises of various sectors.
• The New Labor Act has passed by the Parliament
according to sec 296(1) of the Constitution of Nepal.
 Labor Law
Objectives:
To provide the employees and workers with
job security
To regulate the working conditions
To ensure the certain other benefits available
to them under the labor laws
 Labor Law
Should be deployed at work for no more than
8 hours a day
Overtime should be paid for extra hours of
work
Employees cannot be fired once they have
been appointed unless the employee
voluntarily leaves
If retrenchment is required, the enterprise
should take approval from the labor
department.
 Labor Law
 Employees may be punished for offence with
prior notice and a chance to submit clarification
within seven days with following actions
 Other Benefits
– Settlement of Labor Dispute
– Collective Bargaining
– Retirement Benefits
– Health and Safety
– Welfare Provision
 Applicability of New Labor Act
 New Labor Act applies to company, private
firm, partnership firm, cooperatives,
association or other organization ("entity"):
- in operation, or established, incorporated,
registered or formed under prevailing laws
- regardless of its objective to earn profit or not.
Labor Act, 2074 is applicable to all entities
regardless of number of workers/employees.
 Non Applicability of New Labor
Act (Section 180)
Exempted Entity:
- Civil Service,
- Nepal Army, Nepal Police, Armed Police Force,
- Entities incorporated under other prevailing laws
or in situated in Special Economic Zones to the
extent separate provisions are provided.
- Working Journalists, unless specifically provided in
the Contract.
 Hiring
 Sect 10 of the New Labor act has provided the flexibility
in the modes of hiring as per the requirements of the
entity:
1. Regular Employment
2. Work Based Employment : for completion of certain
work or rendering certain service.
3. Time Bound Employment: employment for certain time
period determined.
4. Casual Employment: employment for seven or less days
in a month.
5. Part time Employment: employment for 35 or less hours
in a week.
 INTERN(Sec 16 & 17 )
• The new labor act has introduced the concept of
intern according to which any person may be
allowed to work as intern pursuant to the
approved syllabus of any educational institution.
• They shall be deemed regular employee if
engaged in works other than as per their syllabus.
There was no any provision in the previous act
related to intern and the modes of hiring.
Part Time Worker (Section 19-21):
a. Remuneration on the basis of hours worked, unless
otherwise provided in the employment agreement
b. No restriction to work in other places
c. Entitled to social security benefits

Probation period (section 13)

-Shortening of probation period – 6 months
 Working Hours
 Maximum Working Hours (Section 28): 8 hours a day
and 48 hours a week.
 Maximum Overtime (Section 30): 4 hours a day and 24
hours a week (Previously, 20 hours a week)
 Overtime Pay (Section 31): 1.5 times the basic
remuneration
 Break (Section 28):
- 30 minute break after working 5 hours where the
work can be interrupted,
- Where work cannot be interrupted, break is arranged
in shifts.
 Remuneration
 Minimum Remuneration (Section 34): As prescribed by
the Government of Nepal
 Increment (Section 36): once a year at the rate of ½ day
basic remuneration
 Payment of remuneration(Section 35):
- To workers engaged in work for less than a month: within 3
days from the date of completion of the work
- To workers in casual employment: upon the completion of
the work
-Other employee: the payment period should not exceed 1
month
 Festival Expenses (Section 37): Amount equivalent to one
month’s basic remuneration once a year
 LEAVE AND HOLIDAYS
NATURE OF LEAVE LABOR ACT, 2074
No. of days
Weekly Holiday 1 day every week
Public Holiday 13 days including May day. Additional 1 day to female
employees including Intl Women Labor Day.
Annual Leave 1 day for every 20 worked days( 18days).
Sick Leave Fully paid 12 days (previously half paid up to 15 days)
- For those who have not completed one year of service, sick
leave is provided on a proportional basis.
Mourning Leave 13 days
Maternity Leave 98 days. Fully paid up to 60 days.
Paternity Leave 15 days. Fully Paid
Leave in lieu For the laborers put in work on public holiday or weekly off.
Leave and Holidays-General Principles
(Section 51):
Leave is not regarded as matter of right but
privilege.
The approving authority may accept or decline
leave request or curtail approved leave.
Prior approval is required except in case of
urgency.
Going for leave without approval is
misconduct.
 Terminal Benefits:
1. Leave Encashment (Section 49):
 Accumulated annual leave up to 90 days and
sick leave up to 45 days can be encashed at
the time of discontinuation of service.
 Any unused annual or sick leave in excess of
the limit of accumulation shall be en-cashed at
the end of each year.
 En-cashment shall be done at the rate of basic
remuneration during such payment.
 Terminal Benefits:
2.Provident Fund(Section 52)
Eligibility: From the first day of appointment
Contribution of employee: 10% of basic
remuneration
Contribution of employer: 10% of basic
remuneration of worker
Deposit in: Social Security Fund.
 Terminal Benefits:
3.Gratuity (Section 53)
Eligibility: since the first day of employment
Rate of Gratuity: 8.33% of basic remuneration
every month
Deposit in: Social Security Fund
 Other Benefits
 Medical Insurance (Section 54):
- Coverage: at least one hundred thousand rupees
(Rs. 100,000) per year for every worker
- Premium: equally paid by the employer and worker
 Accident Insurance (Section 55):
- Coverage: at least seven hundred thousand rupees
(Rs. 700,000) for every worker
- Premium: fully paid by employer
 Death Compensation: the nearest successor is
entitled to the amount of accident insurance.
Disciplinary Action for Misconduct
 Reprimanded/Warning
Withholding Annual Grade of Remuneration
or Promotion
 Deduction of one day’s remuneration
Termination
Reprimand/Warning (Section 131(1))
absence from the work without obtaining
permission,
 leaving the workplace without obtaining the
permission, from the Managerial level,
 coming late frequently without obtaining
permission,
 not abiding the order of the senior or
employer with regard to work,
 other misconducts as prescribed in Bylaws.
 Deduction of one day’s remuneration
(Section 131(2))
 act of refusing to accept any letter or notice issued by
the employer or officer having the authority to punish;
 act of taking part in an illegal strike or forcing others to
do so or adopting go slow tactic collectively;
 act of causing loss to the enterprise by decreasing the
production or service negligently or carelessly;
 act of attempting to take benefits by submitting false
documents;
 act of not using safety equipments by the worker
responsible for using such equipments; or
 act of doing any other misconduct of similar nature
specified in the by-law.
 Withholding Annual Grade of Remuneration or
Promotion (Section 131(3))
 act of taking and using or causing to use any property
outside the enterprise without the permission of a person
entrusted with such authority;
 act of attempting to misappropriate the fund in the
business of the employer;
 act of damaging the property of the employer negligently
or carelessly;
 act of stopping the supply of food, water, telephone,
electricity or obstructing the movement in and out of the
workplace;
 intentional act of misusing or causing damage or loss to the
objects or provisions kept for the benefit or safety and
health of the workers:
 act of committing any other misconduct of similar nature
prescribed in the by-law.
Termination upon Misconduct (Section 131(4))
 act of assaulting or injuring an employer or any worker or
customer or any person concerned with the workplace or act of
keeping in captive or causing unrest or damage in the premise of
the enterprise with or without the use of any weapon;
 act of taking or giving bribe;
 act of stealing property of others in the workplace;
 act of financial misappropriation in the enterprise;
 intentional act of damaging the property of the employer under
his/her control or which is being used by the employer;
 act of being absent in the work continuously for more than 30
days without approving the leave;
 act of divulging production related formula or any confidential
information relating to special technology with an intention to
cause loss or damage to the enterprise where he/she is
employed;
 act of working in collaboration with a competitive
employer in the similar nature of business or carrying any
competitive business on his own or providing confidential
information about the enterprise where he is employed to
any other competitive employer;
 if convicted by the court for any immoral or criminal act
during the period of employment;
 act of submitting forged or false educational certificates
for the purpose of appointment;
 act of taking drugs or liquor during working hours or come
to the workplace in drunken state;
 act of being punished for more than two times for
misconducts pursuant to sub section (1), (2) and (3)
within a period of three years; or
 act of committing any misconduct for which any prevailing
law prescribes dismissal as punishment.
 Procedure for Disciplinary Action
 Seek an explanation from the employee:
- give a letter stating the misconduct and punishment
that is likely to be awarded,
- provide 7 days time to submit the explanation
 Time limitation for seeking explanation: within 2
months from the date of having obtained the
knowledge of occurrence of misconduct
 Time limitation for Punishment: within 3 months
from the date of requiring of explanation.
 Authority to issue Punishment: Chief Executive
Officer or the managerial level employee authorized
by the Employee Bylaws.
 Other Grounds of Termination
 Voluntary Resignation (Section 141): The employee can
terminate the employment voluntarily by providing
employer a resignation letter and a notice of days as
prescribed.
 Compulsory Retirement (Section 147): Applicable only for
regular employees: At 58 years of age
 Time Bound Employee (Section 140): After the expiry of
the time period provided in the employment agreement
 Work Based Employee (Section 140): After the completion
of the work specified in the employment agreement
However, the employment may be continued if the time
period for the project is extended.
 Casual Employee: At any time by the employer or the
employee voluntarily.
 Other Grounds of Termination
 Lack of Performance (Section 142):underperforming
in 3 or more consecutive performance appraisal
 On the ground of Bad Health(Section 143): The
employer may terminate the employment of an
employee upon the recommendation of a medical
practitioner if
- employee is physically or mentally disabled or injured
- rendering him/her unable to work or
- requiring a long period for medical treatment
effecting in the work of the entity.
 Notice Period (Section 144)
 Employer or employee is required to furnish
notice as provided below to each other before
terminating then service except in dismissal
upon misconduct:
Period of Service Notice Period
Up to 4 weeks 1 day prior
4 weeks- 1 year 7 days prior
Exceeding 1 year 30 days prior
 5.3 Intellectual property right
Intellectual property rights are the rights given
to persons over the creations of their minds.
They usually give the creator an
exclusive right over the use of his/her creation
for a certain period of time.
It covers patents, designs, trademarks and copy
right; the legal rights given to the creators of
such properties are called intellectual property
rights.
 Intellectual Property Right
copyright,
patent,
design and
trademark.
 Intellectual ..
The World Intellectual Property Organization has
listed the following as intellectual property.
 Literary, artistic and scientific works
 Performances of performing artists, phonograms,
and broadcasts
 Inventions in all fields of human endeavor
 Scientific discoveries
 Industrial designs
 Trademarks, service marks, and commercial
names and designations
 Intellectual …
Protection against unfair competition
 All other rights resulting from intellectual
activities in industrial, scientific, literary or
artistic fields
The laws related to intellectual property rights
in Nepal are: (a) Patent, Design and Trademark
Act 2022 (1965), amended in 1987 and (b)
Copyright Act 2059 (2002).
 Patent
As per the PDT Act 2022, the patent can be
issued to any useful invention based on new
principle or formula, or any new way or
method of construction, operation or
transmission related to substance or a body of
substance.
A patent should be duly registered, by
submitting all the required documents, to
have the patent right
 Design
The PDT Act 2022 has defined design as a
feature, pattern or shape of a substance made
by following any means.
The design should be registered to have
design right.
A registered design should be used by
someone else only with specific written
permission of the design right holder
 Trademark
The PDT Act 2022 has defined trademark as
the use of any word, sign or picture or a
combination of them by a firm, company or
person to distinguish the product or services
from those of others.
The trademark should be registered to have
trademark right.
A registered trademark, or its close imitation,
should not be used by someone else.
 Copyright
As per the Copy Right Act 2059, the copy right
can be provided to the author of the works
that are related to the following.
Book, pamphlet, article, and research paper
Drama, opera, dumb-show and similar works
prepared for show
Musical works with or without words
Audiovisual works
 Copyright
Architectural design
Painting, sculpture, wood carving, lithography
and architecture related other works
Photographic works
Works related to applied art
Excerpt, maps, plan, three dimensional works
related to geography, topography, and scientific
writing and articles
Computer program
 Copyright
 The description or the explanations of the ideas,
religion, news, concept, formula, law, court
decisions, administrative decisions, folk songs,
folk stories, proverbs & general statistics, even if
they are included in any works, cannot be copy
righted.
 Specific registration is not required to have copy
right.
 There are two types of rights granted under the
Copy Right Act:
Economic and
Moral.
 Copyright
The Act has granted rights to performers,
producers of phonograms and to broadcasting
institutions.

The copy right is effective up to 50 years after

the death of the author (or creator) of the
copy righted materials.
SN Particular Copy Right Patent Design Trademark

1 Subject Rights related to work Rights relates to Rights related to Rights related to
matter authorship/literary work ,artistic work, new shape, pattern, word, symbol,
music, book,movies,painting,photos inventions/theory color of picture, figure or
/principles, commodities, combination of all
process, formula product these to recognize
goods or products
2 Validity a) Life time+50 yrs 7 yrs & two times 5 yrs & two times 7 yrs & indefinite
b) For applied art & photograph:25 renewable renewable period as long as
timely renewed
3 Infringeme Person other than owner comes up Confers statutory Confers statutory Confers statutory
nt with same work, there is no monopoly that monopoly that monopoly that
infringement can be copied and used prevents anyone prevents anyone prevents anyone
without permission for academic, other than other than other than
public welfare purpose , with source patents holder patents holder patents holder
cited from making , from making , from making ,
using or selling using or selling using or selling

4 Punishment a)10,000 to 100000 or 6 months Rs. 250,000 to Upto rs. 50,000 Up to rs. 100,000
on imprisonment or both + confiscation 500,000 + +confiscation of + confiscation of
infringeme b)20000 to 200000 or one year confiscation of product product
nt imprisonment product
5 Start of As soon as work is created From patent From design From trademark
protection application date registration date application
registration date
6 Application, Rs. Rs. 100, 700, 200 Rs. 100,400,150
registration 100,1000,3,000
and renew
Company Registration Procedures
 Application with following documents:
– Filled application form, format as per Annex 1
– Two copies of Prabandha Patra (Article of Association),
and Niyamawali (Article of Memorandum)
– Citizenship certificates of all the founder shareholders
– In case of a public company, a copy of the agreement
made among the founder members before the
establishment of the company.
– In case of a private company, a copy of the mutual
agreement (if any).
(Additional documents needed for foreigner registering a
company.)
 Company Registration Procedures...
Other considerations:
– Max 101 founders in private company; minimum 7
founders in public company
– Prabandha Patra and Niyamawali to be in Nepali
– Each founder should sign on each page of Prabandha
Patra and Niyamawali
– Last page should have
• full name, full signature, address, number of share of each
founder,
• full name, full signature, address of witness (one witness per
founder)
• full name, full signature, registration number of legal-
professional or chartered accountant preparing the
document, and date of document preparation
Company Registration Procedures.....
 The OCR checks the documents and if found OK, notifies
the applicant(s) to pay registration fee and collect
certificate.
 If the Registered Capital is up to Rs. 5000, the charge can
be paid at the OCR; else required fee to be deposited in
NRB or other authorized banks in ‘RAJASWA’ account
number1-1-05-10.
 Two copies of the voucher to be submitted in the OCR’s
A/C section, and then presented in the registration section.
After this, the company registration certificate (according
to the index 5) and one copy of each (approved and signed
by CRO Officer) of the ‘PRABHANDA PATRA’ and the
‘NIYAMAWALI’ presented by the founders are provided to
the founders.
 Only electronic registration, from Baisakh 2074, as per first
amendment in 2074