Understanding Nepal's Bonus Act: How to Calculate Employee Bonuses

Author : Hajir hr | Published On : 13 Nov 2026

Nepal’s Bonus Act sets out how profit-making businesses must share their earnings with employees, yet many employers still struggle with the calculation every fiscal year. This guide explains the law in plain language so HR managers and business owners can get it right the first time.

You will learn that 10% of net profit, measured before bonus and income tax, forms the employee bonus pool, and that government-owned enterprises follow a different rule of 5% of net profit or three months’ salary, whichever is greater. The article covers who qualifies, including the requirement of at least half of the fiscal year worked, proportional bonuses for part-year staff, and the situations where an employee can be excluded.

A clear step-by-step method walks through the calculation, from taking net profit in the audited accounts to working out each employee’s share of eligible salaries. A worked example with a NPR 5 crore profit shows how an employee earning NPR 6 lakh receives NPR 3 lakh, so you can check your own payroll figures against it. The guide also explains how advance bonuses and final settlements work after the audit.

Common mistakes are highlighted, such as using profit after tax, overlooking joiners and leavers, and keeping poor records. Finally, the article shows how Hajir HRM brings attendance, salary and joining-date data into one system, helping HR teams prorate bonuses faster, reduce errors and stay audit-ready during bonus season. Book a demo to see how bonus calculation fits into your existing payroll workflow.