5 Payroll Mistakes SMEs in Nepal Commonly Make

Many businesses in Nepal stumble over avoidable payroll errors.

Our new guide breaks down the 𝟓 𝐦𝐨𝐬𝐭 𝐜𝐨𝐦𝐦𝐨𝐧 𝐩𝐚𝐲𝐫𝐨𝐥𝐥 𝐦𝐢𝐬𝐭𝐚𝐤𝐞𝐬 𝐨𝐫𝐠𝐚𝐧𝐢𝐳𝐚𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐍𝐞𝐩𝐚𝐥 make and—most importantly—provides the simple solutions , like implementing automated, compliant payroll systems and ensuring on-time salary disbursements to avoid violating Section 81 of the Labor Act.

1. 5 PAYROLL
MISTAKES SMES
IN NEPAL
COMMONLY
MAKE
And how to fix them—before
they cost you time, money, or
compliance.

2. Fines, legal disputes, employee
dissatisfaction.
❌ Not aligning payroll with
statutory requirements(e.g., gratuity, PF, leave accruals)
✅ Always base payroll on the latest
Labor Act provisions.
Solution:
Risk:IGNORING THE NEPAL LABOR
ACT 2074

3. Errors in overtime, tax deductions, or
PF—leading to under/overpayments.
❌ Using Excel sheets or handwritten
records.
✅ Use automated, compliant payroll
systems.
Solution:
Risk:USING EXCEL SHEETS OR
HANDWRITTEN RECORDS

4. Violates Section 81 of Nepal Labor Act
→ penalties + loss of trust.
❌ Paying salaries late due to
disorganization or cash flow issues.
✅ Set fixed payroll cycles & use
outsourcing to ensure on-time
payments—every time.
Solution:
Risk:DELAYED SALARY
DISBURSEMENTS

5. Failed labor inspections, inability to
resolve disputes.
❌ Failing to maintain payslips,
attendance, or tax records.
✅ Keep digital, organized records
for 5+ years.
Solution:
Risk: NO PAYROLL DOCUMENTATION
OR AUDIT TRAIL

6. Non-compliance penalties,
incorrect employee deductions,
and reputational damage.
❌ Continuing old payroll practices even
after amendments to the Nepal Labor Act,
tax rates, or social security rules.
Stay updated with legal changes—
or partner with experts who do it for
you.
Solution:
Risk:NOT UPDATING PAYROLL FOR
POLICY OR LAW CHANGES

7. Outsource Your
Payroll to Nepal’s
Trusted HR Partner

8. ?????? Contact us today →
[email protected]
www.frontline.com.np
9801898004
ISO 9001:2015 Certified | Licensed by
Ministry of Labor, Nepal