Every year during the major festive season—most notably Dashain and Tihar—the topic of annual festival allowances (चाडबाड खर्च) takes center stage across Nepal’s employment sector. For hundreds of thousands of formal and informal workers, this single payment is essential for meeting annual travel expenses, ceremonial requirements, and rising household inflation.

Legally, the framework is explicit: The Labour Act 2074 (2017) leaves zero ambiguity regarding employer obligations. Yet, in practice, a gaping chasm divides statutory guarantees from ground reality. When the issue is raised in public forums, the reaction from Nepali employees is not celebration—it is frustration and skepticism.

1. What Does Section 37 of Nepal’s Labour Act 2074 Mandate?

The legal entitlement is defined under Chapter 6, Section 37 of the Labour Act, 2074:

• Full Entitlement: Every permanent, fixed-term, or regular employee who has completed one full year of continuous service is entitled to an amount equal to one month's basic remuneration as a festival allowance each fiscal year.
• Prorated Calculation for Partial Year: If an employee has worked for less than one complete year before the festival disbursement date, they are entitled to allowance calculated proportionally based on their service length:
  Prorated Allowance = (Basic Salary / 12) × Number of Months Served
• Designation of Festival: While commonly disbursed ahead of Dashain (the largest national festival), employees have the legal liberty to select an alternative primary religious/cultural festival (such as Eid, Lhosar, Chhath, or Christmas) based on their personal religious practice.
• Basic Salary vs Gross Salary Distinction: The law specifically calculates the allowance on Basic Remuneration, not gross total compensation (excluding allowances such as dear allowance, transport, or house rent).

2. The Voice of the Workforce: "Rules Exist Only on Paper"

A recent cross-section of employee feedback across professional and social networks highlights a shared sentiment: the law is progressive, but compliance is severely broken. Real worker reactions reveal the practical bottlenecks they experience daily:

3. The Legal Blindspot: Why Interns Are Left Out

A major criticism of the current statutory framework is the treatment of interns (प्रशिक्षार्थी). Under Section 16 of the Labour Act, interns who join an entity strictly for educational curricula or vocational training are not classified as standard employees.

• No Mandatory Festival Allowance: Because internships are treated as learning arrangements rather than contractual employment, entities have zero legal obligation to grant Section 37 allowances to interns.
• Exploitation of Trainees: Many private institutions operate regular daily workflows using continuous cycles of unpaid or low-stipend interns, denying them both standard wages and festival benefits.
• Trainees vs Interns: Unlike educational interns, individuals registered under formal Traineeship (दफा १७) are entitled to minimum wage and statutory benefits once taken on for regular institutional output.

4. What Recourse Do Deprived Employees Have?

If your employer has withheld your festival allowance without reasonable or legal grounds, the Labour Act offers clear dispute resolution pathways:

1. Internal Labour Relations Committee: Raise the collective or individual grievance before the workplace's internal committee mandated under Section 111.
2. Filing with the Labour Office (श्रम तथा व्यवसायजन्य सुरक्षा विभाग): If the establishment does not resolve the issue within 15 days, employees can file a formal complaint before their provincial or local Labour and Occupational Safety Office under Section 113.
3. Demanding Banking Evidence: The law mandates payments be disbursed via formal banking channels. Inquiries into corporate banking transaction logs provide transparent proof of payment or evasion.