Festival Allowance in Nepal – Dashain Bonus Explained

What is Festival Allowance (Dashain Bonus) in Nepal?

The Festival Allowance, also called Dashain Bonus, is an extra one-month basic salary that employees in Nepal receive once a year during Dashain. Festival Allowance means the amount of money that an employer must give to an employee during the Dashain festival. The amount is usually equal to one month’s basic salary. This is provided once a year and is meant to help employees manage festival expenses.

In simple words: your Dashain Bonus = one month’s basic pay.

Legal Basis under Nepali Labor Law

The Labor Act, 2074 (2017) of Nepal clearly mentions that every employer must provide festival allowance to their staff. This means:

• Every employee who has worked for at least one year is entitled to the bonus.
• The bonus must be paid before Dashain starts.
• Even if the employee has left the job but worked for 1 year, they can still claim it.

So, it is not optional. It is a mandatory provision under the law.

Difference Between Salary and Festival Bonus.

It’s easy to get confused between regular salary and festival allowance. Here’s how they are different:

• Salary: The fixed amount you receive every month for your work.
• Festival Allowance (Dashain Bonus): An extra one-month basic salary given once a year, only during Dashain.

For example:

• If your basic monthly salary is Rs. 20,000, then your Dashain Bonus will also be Rs. 20,000.
• This is in addition to your regular Bhadra or Ashoj salary.

Dashain Bonus Rules and Legal Provisions in Nepal

Nepal’s Labor Act of 2074 (2017) includes rules about the Dashain bonus, often called the festival bonus. In simple terms, the law says that workers get a Dashain bonus if they meet certain conditions. The law makes sure employees get at least one month’s basic salary as a bonus during Dashain (the big autumn festival). The rule is part of Nepal’s official labor law from 2017.

According to Section 37:

“Each labor shall be entitled to an amount equal to the basic remuneration of one month as the festival expense each year for the festival to be celebrated according to his or her religion, culture, and tradition.” 

This provision ensures that all workers receive a festival allowance annually, promoting cultural inclusivity and financial support during major festivals.

Eligibility Criteria: Who Is Entitled?

Under the Labor Act, all workers are entitled to the festival allowance, provided they meet certain conditions:

• Employment Status: Applies to all forms of employment, including regular, contract, part-time, and temporary workers.
   

• Service Duration: A laborer who has not completed one year of service period on or before the day of payment of the festival expense shall be entitled to such expense in proportion to the period of service he or she has completed.

  

Employers are prohibited from denying the festival allowance to eligible workers, regardless of their employment status.

Payment Deadlines and Employer Obligations

Employers are legally obligated to disburse the festival allowance within a specified timeframe:

• Payment Timing: The festival allowance should be paid before or at the start of the major festival celebrated by the worker, as per their religion, culture, or tradition.
   
• Written Request: A labor may make a written request to the employer for the payment of the festival expense referred to in sub-section (1) at one time in one fiscal year on the occasion of the main festival to be celebrated according to his or her religion, culture, and tradition. In the case of such a request, the festival expense shall be provided at the time of the Dashain festival every year. 
   

• Employer's Responsibility: Employers must ensure timely payment and cannot delay the disbursement without valid reasons.

Failure to comply with these provisions can result in legal consequences for the employer.

Additional Considerations

• Proportional Entitlement: Workers who have not completed a full year of service are entitled to a proportional festival allowance based on the months worked.
   
• Payment to Deceased Workers: If a worker passes away before receiving the festival allowance, the amount should be paid to their nominee or legal heir.
   
• Non-Discrimination: Employers cannot discriminate against workers based on their employment status or duration of service when disbursing the festival allowance.
   
• Legal Recourse: Workers who do not receive the festival allowance can file a complaint with the District Labor Office for redress.

How is Festival Allowance (Dashain Bonus) Calculated?

The Festival Allowance (Dashain Bonus) is calculated based on your basic salary and the number of months you have worked in the year. You get a full month’s basic salary if you worked the entire year, or a proportional amount if you worked partially.

Dashain Bonus is not random. It’s a legal right under the Labor Act, 2074 (2017). The law ensures that every employee, whether full-time, part-time, contract, or probationary, receives a fair share based on how long they have worked. This calculation is straightforward: it considers your basic monthly salary and the months you were employed during the year. Even if you resigned before Dashain, you are entitled to the bonus for the months you actually worked.

The basic formula is:

Festival Allowance = (Basic Salary × Months Worked) ÷ 12

Real World Calculation Examples

1. Full Year of Employment:

• Basic Salary: NPR 15,000
• Months Worked: 12
• Festival Allowance: (15,000 × 12) ÷ 12 = NPR 15,000

Explanation: The employee worked the full 12 months, so they receive a full month’s basic salary as a bonus.

2. Partial Year of Employment:

• Basic Salary: NPR 15,000
• Months Worked: 6
• Festival Allowance: (15,000 × 6) ÷ 12 = NPR 7,500

Explanation: The employee worked for only 6 months. The bonus is proportional to the months worked.

3. Short-term Employment:

• Basic Salary: NPR 15,000
• Months Worked: 3
• Festival Allowance: (15,000 × 3) ÷ 12 = NPR 3,750

Explanation: Even short-term employees get a fair share based on their service.

Special Considerations:

• Contract Workers: Bonus is calculated the same way, based on months worked.
• Probation Employees: If employed during the year, they are eligible proportionally.
• Resigned Employees: Eligible for the months they worked before leaving, paid pro-rata.

This system ensures fairness for all employees, regardless of employment type, and guarantees that every worker gets a Dashain Bonus aligned with their actual service period.

Why is the Dashain Bonus Important for Employees?

The Dashain Bonus is important because it gives employees extra money during the festival, which helps them manage expenses and feel valued at work. Dashain is the biggest festival in Nepal. Families celebrate together, buy new clothes, travel home, and offer tika. The festival bonus, or Dashain Bonus, makes this easier for employees. It is not just money; it also improves happiness and motivation. Employees feel appreciated when employers give a bonus on time. It strengthens trust between workers and management. 

1. Financial Relief During Festival Expenses

The Dashain Bonus helps employees cover festival costs. Families spend on food, clothes, gifts, and travel. Without this bonus, many might struggle to celebrate properly. It acts as extra support for their monthly income. Even those with regular salaries feel a difference. People can plan better for the festival. They do not have to borrow money or skip celebrations. This makes Dashain more joyful for everyone.

2. Boosts Employee Morale and Motivation

Receiving the Dashain Bonus makes employees feel recognized. It shows that the employer values their work. Happy employees are more motivated to work harder. It can improve focus and productivity at the workplace. They feel more loyal to the company. Morale rises not just for one person, but for the whole team. A motivated employee also shares positivity with colleagues. This creates a friendly and productive work environment.

3. Promotes Fairness and Workplace Satisfaction

The bonus ensures fairness because it is legally guaranteed. Everyone who works, even part-time or on contract, gets their share based on months worked. This prevents unfair treatment or favoritism. Employees feel satisfied when rules are followed properly. Fair treatment reduces complaints and tension at work. People trust the employer more when payments are timely. Overall, it improves workplace harmony and long-term loyalty.

Employer’s Perspective on Dashain Bonus

For employers, the Dashain Bonus is more than just a payment. It is a way to follow the law and keep employees happy. Giving the bonus on time shows that the company cares about its staff. It also affects how employees feel about their workplace. Employers think carefully about the bonus because it has financial and organizational impacts.

1. Legal Compliance Benefits

Following the Dashain Bonus rules keeps employers safe from legal trouble. The Labor Act, 2074, clearly requires paying the festival allowance. Companies that pay on time avoid fines and complaints. It shows that the business respects Nepalese labor laws. Legal compliance also creates trust with employees. Workers feel secure knowing the company follows the law. This builds a positive reputation in the market. Employers who ignore the law may face penalties.

2. Employee Retention and Goodwill

Paying the Dashain Bonus helps keep employees loyal. Workers are more likely to stay in a company that values them. It builds goodwill between staff and management. Happy employees work harder and feel motivated. They also encourage others to join the company. A timely bonus creates a positive work environment. It makes employees feel respected and appreciated. Over time, this reduces turnover and recruitment costs.

3. Budgeting Challenges for Companies

Even though the bonus is important, it can be a challenge for some businesses. Companies need to plan their finances carefully to pay everyone. Small or new companies may feel the pressure more. They must set aside money in advance. Unexpected expenses can make it harder to manage. Yet, failing to pay the bonus can hurt morale and reputation. Proper planning solves these challenges. Companies that budget well can give a bonus without stress.