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Contribution Based Social Security


Introduction

On 13thof August, 2017, Contribution based Social Security Act (Social Security Act) was accorded the assent by Rt. Hon. President of Nepal after being passed by the Parliament on 24thof July, 2017. Effectively implemented from 11th November,2017, the Social Security Act is a step towards ensuring the right to social security envisioned by the Constitution of Nepal, providing social security to the contributors to establish a welfare society.

The Social Security Act is the Act specifically formulated to deal with matters related to social security which have been enshrined in the Constitution and further prescribed under Labor Act, 2074 and Labor Regulations, 2075. The provisions under the Social Security Act further elaborates on the amount that were to be submitted to the Social Security Fund (SSF) as provident fund and gratuity under the Labor Act and Regulations.

Contribution and Contributors

According to Section 2(f) of the Act, Contribution is the amount which is deposited on a regular basis in the SSF by the employee and employers and even those people who are self-employed and workers from informal sectors to receive benefits under social security schemes.

On the other hand, Section 2(h) defines those labors, self-employed person, people employed in government services or those people who receive remuneration from the prescribed government fund published in the Nepal Gazette by the Nepal Government, who have obtained the social security number after being enlisted in the social security scheme as Contributors.

Enrollment with Social Security Fund

Employers

Under Section 19 of the Act and Rule 13 of Contribution based Social Security Regulations, 2018, Employers are required to enroll themselves in the SSF within the time limit published in the Nepal Gazette by submitting an application in the department, office or through online computer system by visiting https://sosys.ssf.gov.np/Modules/REGISTRATION/Submission.aspx  as prescribed by the Fund.

According to the notice published by the Ministry of Labor, Employment and Social Security in Nepal Gazette on November 12, 2018, the timeline for the employer in various regions to be enrolled with SSF is given below:

  • Employers and outsourcing companies within Kathmandu Valley – November 22, 2018
  • Employers of Province Number 3 except Kathmandu Valley – December 1, 2018
  • Employers of Province Number 1 – December 16, 2018
  • Employers of Gandaki Province and Province Number 5 – December 30, 2018
  • Employers of Karnali and Far Western Province – January 29, 2019

Note: The employer shall enlist themselves within 3 months from the date mentioned above in the SSF.

Employees

The Act, under Section 20, requires Employers to enroll the employees employed by them within 3 months from the date published in the Nepal Gazette. In this regard, as per the notice published by the Ministry of Labor, Employment and Social Security on November 12, 2018 the employers are required to enlist their employees with SSF within 3 months from the date of their enrollment.

Is it necessary to enroll yourself with the SSF?

The Social Security Schemes Operation Directives, 2018 provides four schemes viz.

  1. Medical Treatment, Health and Maternity Protection Scheme
  2. Accident and Disability Protection Scheme
  3. Dependent Family Protection Scheme
  4. Old Age Protection Scheme

However, in order to enjoy these schemes, it is compulsory that one enrolls himself/herself in the SSF and contributes to the fund.

What is the next step after enrollment?

The employers and employees, who have received the Social Security number, once enrolling themselves with the SSF become the contributors. The Act requires that the listed employers shall deposit contributions to the Fund on a monthly basis unless otherwise specified or where full month’s contribution is not required, beginning from the day of listing of employee, till the last day of employment. Such contributions are to be deposited to SSF within 15 days from the end of the month.

Section 25 of the Social Security Schemes Operation Directives, 2018 states that employer are to deposit a total of 31% amount in the SSF. 11% of the total amount is to be deducted from basic remuneration of employee and the additional 20% of the basic remuneration is the employer’s contribution.

By Shishir Amayta
Associate

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