Kathmandu, 20 April: The Ministry of Finance has made a formal decision to transform the salary payment system for government employees from a monthly basis to a semi-monthly basis.
Once implemented, all civil servants will receive their salaries and allowances in two installments per month, with payments made once every 15 days. Until now, Nepal has followed a monthly salary distribution system, where salaries and allowances are deposited into employees’ bank accounts in the final week of each month.
Replacing this traditional system, employees will now receive 50 percent of their total income every 15 days, according to a Ministry of Finance official. The ministry has already instructed the Office of the Financial Comptroller General, through a letter dated Baisakh 4, to begin the necessary technical preparations for implementation.
A letter signed by Dr. Suman Dahal, Joint Secretary at the Budget and Program Division of the Ministry of Finance, states:
“While the distribution of salary and allowance facilities to civil servants has been carried out on a monthly basis after payment, in the context of initiating a semi-monthly payment system, you are requested to make the necessary arrangements for distribution on a semi-monthly basis, as per the decision dated 2083/01/04 (at the level of the Honorable Finance Minister).”
How is it practiced abroad?
Such payment systems are common in Western countries, but this is new in the context of Nepal, as well as its neighboring countries and major labor destination countries.
India
In India, most government employees, including high-ranking IAS officers, still receive salaries on a monthly basis. Salaries are generally distributed at the end of the month or within the first week of the following month.
China
In China as well, public sector employees are generally paid monthly. While there has been a focus on increasing base pay to boost domestic consumption, the frequency of payment remains unchanged.
Gulf Countries
In countries such as the UAE, Qatar, and Saudi Arabia—major destinations for Nepali workers—labor laws require monthly salary payments. Although there have been improvements in minimum wages and workers’ rights, the payment frequency remains largely monthly.
Western Countries
Nepal’s new system is similar to practices in countries like the United States and Australia.
In the United States, both private and public sectors commonly pay salaries every two weeks or semi-monthly. For labor-based jobs, weekly payments are also common.
Australia follows a similar system, where full-time employees are typically paid every two weeks, with some industries offering weekly payments and higher-level or professional sectors using monthly payments.
Objectives of the reform
The decision by the Government of Nepal aims to increase market liquidity. According to officials, this move is expected to improve employees’ personal cash flow, making it easier to manage daily expenses.
Regular cash flow into the market is also expected to have a positive impact on overall economic activity.
Administrative reform efforts
The current government has already implemented administrative reforms, including office hours from 9:00 AM to 5:00 PM. It has also reintroduced a two-day weekend (Saturday and Sunday) for government offices. The previous half-day work schedule on Fridays has now been replaced with a full 9–5 working day.
The semi-monthly salary payment system is also being viewed as a continuation of these administrative reform efforts.
Legal amendments required
To implement the semi-monthly salary system, the Government of Nepal will need to amend the Federal Civil Service Act.
“Under the existing law, civil servants are entitled to receive their salary and allowances after each month’s payment,” a Ministry of Finance official said. “To implement the 15-day payment system, this provision must be amended.”
Sections 28 and 31 of the current Civil Service Act, 2049, contain provisions related to monthly salary payments.
Section 28 states that civil servants are entitled to receive their salary and allowances after each month’s payment. Section 31 provides that 10 percent of the monthly salary is deducted and, with an additional 100 percent contribution from the government, deposited into the Employees Provident Fund.
The government is currently preparing to introduce the Federal Civil Service Act, which is expected to include provisions for semi-monthly salary payments.
“Once the Federal Civil Service Act is passed, the decision may need to be implemented at any time. Therefore, the Office of the Financial Comptroller General has been instructed to make the necessary preparations,” a Ministry of Finance source told Onlinekhabar.
