Why Has the Government Decided to Implement Bi-Monthly Salary Payments? How Is the Practice Abroad?

April 20, Kathmandu – The Ministry of Finance has made a formal decision to transform the salary payment system for government employees from a monthly to a bi-monthly schedule.

Following this change, all civil servants will receive their salary and allowances twice a month, once every 15 days.

Currently, in Nepal, salaries and allowances are distributed on a monthly basis, typically credited to employees’ bank accounts in the last week of each month.

Replacing this traditional payment system, employees will now receive 50 percent of their total income every 15 days, an official from the Ministry of Finance revealed.

The Finance Ministry has already informed the Office of the Auditor General on April 17 to begin the necessary technical preparations for implementing this change.

According to a letter signed by Dr. Suman Dahal, Under Secretary of the Budget and Program Division of the Ministry of Finance, “Previously, salary disbursement for civil servants was done monthly after the payment month; however, per the Ministry of Finance’s directive dated 2083/01/04 (Nepali calendar), this will now shift to a bi-monthly schedule.”

How Is This Practice Abroad?

Such a payment system is common in Western countries. However, in Nepal and neighboring countries, as well as key foreign employment destinations, this is a new approach.

India

In India, most government employees, including senior IAS officers, receive salaries monthly. State and central government staff are paid either at the end of the month or within the first week of the following month.

China

In China, public sector employees predominantly follow a monthly payment system. While efforts are underway to increase the base pay to boost internal consumption, the frequency of payments has not been altered.

Gulf Countries

In major destination countries for Nepali workers such as the UAE, Qatar, and Saudi Arabia, labor laws mandate monthly salary payments. Despite improvements in minimum wages and workers’ rights, payment frequency generally remains monthly.

Western Countries

Nepal’s new system aligns closely with practices in countries like the United States and Australia.

In the U.S., both the private and public sectors typically pay salaries every two weeks or every 15 days. Wage-based jobs often receive weekly payments.

Australia follows a similar model: full-time employees are paid bi-weekly, some industries operate on weekly payments, while senior and professional staff might still receive monthly salaries.

This approach aims to reduce financial stress and decrease reliance on short-term, high-interest loans.

To implement bi-monthly salary payments, Nepal will need to amend the Federal Civil Service Act. The current act, sections 28 and 31 of the 2049 Act, stipulates monthly salary payments.

Efforts Toward Administrative Reform

The government’s decision is intended to increase liquidity in the market. Officials believe this will improve cash flow for employees and ease daily expense management.

Increased and regular cash circulation in the market is also expected to positively impact overall economic activity.

Alongside this change, the government has already set official working hours from 9 a.m. to 5 p.m. and reinstated weekly two-day weekends, Saturday and Sunday. High-level officials have extended Friday’s half-day office hours to a full day from 9 a.m. to 5 p.m.

The bi-monthly salary decision is viewed as a continuation of these administrative reforms.

Legislative Amendments Required for Implementation

To implement bi-monthly salary payments, changes to the Federal Civil Service Act are essential. A Ministry of Finance official stated, “The existing act provides for salary and allowance payments after each month, so amendments are necessary to allow payments every 15 days.”

Section 28 of the Civil Service Act 2049 specifies monthly salary payments, stating, “Civil servants shall receive salary and allowances after the completion of each month.”

Section 31 mandates a 10% salary deduction for the Employees Provident Fund, which the government matches with a 100% contribution.

The government is currently preparing a new federal-level Civil Service Act that will incorporate provisions for bi-monthly salary payments.

“Once the federal Civil Service Act is passed, the decision can be implemented at any time. We are making the necessary preparations,” a Finance Ministry source said.