(1) If financial problems arise in the operation of the establishment, or if the number of workers increases due to the merger of more than one establishment, or if the establishment has to be partially or completely closed for any other reason, the employer may reduce the number of workers.
(2) When reducing the number of workers in accordance with sub-section (1), the reason for the reduction, the probable date of reduction and the number of workers likely to be reduced shall be disclosed at least thirty days before the date of such reduction. Notice must be given to the active trade union or labor relations committee.
(3) After giving the notice in accordance with sub-section (2), the employer shall discuss with the relevant union or labor relations committee about the options of labor reduction and the basis and conditions for choosing the workers to be reduced and the labor can be reduced as agreed in the discussion.
(4) If the trade union or the labor relations committee does not want to discuss in accordance with sub-section (3) or if there is no agreement during the discussion, the employer can reduce the number of workers by informing the office about the same. 5) According to this section, if the number of workers is to be reduced, it should be done in the following order: (a) foreign workers, (b) workers who have been punished for bad behavior, (c) workers whose work performance is poor, (d) in the same type of work. Among the employed workers, the worker who was appointed last in such a job. However, the one who was appointed last has to be cut, so that if the one who was appointed before has to be cut without cutting according to the order, it can be cut for reasons.
(6) Notwithstanding anything written in subsection (5), unless otherwise agreed with the trade union, the official of the collective bargaining committee or the official trade union shall be cut last in the order of cut-off priority.
(7) When reducing the number of workers, the employer shall pay a worker who completes at least one year of service one month for each year of service.A lump sum amount calculated at the rate of the basic salary of the employee will have to be given to the worker as compensation. (8) Notwithstanding anything written in sub-section (7), workers who receive unemployment benefits according to the law related to social security shall not be entitled to compensation as per sub-section (7).
(9) In case any establishment has to close the whole or part of the establishment in accordance with the order of the Government of Nepal or the Labor Court in accordance with the law, or if the establishment in the special economic sector reduces the number of workers, the provisions of subsection (1), (2), (3) and (4) shall apply. No. (10) Notwithstanding anything else written in this section, the provision mentioned in this section shall not apply when the employer employing ten or less workers reduces the number of workers.