Nepal’s New Federal Civil Service Bill

Published on April 24, 2024

Bishnu Adhikari and Parshuram Upadhyay

Since the adoption of Nepal’s landmark federal constitution in 2015, a new federal civil service law has been among the most-anticipated legislative actions. Without it, civil servants across Nepal’s three tiers of government have been in limbo, uncertain of their professional careers, powers, and jurisdictions. This has damaged public services and deadlocked much of the new federal governance system. Disagreements among political factions and civil servants and their trade unions scuttled a previous bill in 2022. But in early March, the coalition government of Prime Minister Pushpa Kamal Dahal registered a new civil service bill in parliament.

Why is this law so significant?

The 2015 constitution adds a mandate that provincial and local governments arrange and manage their own civil services, but in conformity with a requisite federal framework law that was expected to be enacted soon after the 2017 elections. Instead of waiting indefinitely for the federal framework legislation, seven provincial and a few local governments have adopted their own civil service laws and begun hiring civil servants, with each civil service differing in service terms and conditions. This has created a situation where provincial and local governments must rely on up to five different categories of civil servants to conduct their business, each with different lines of accountability, terms of service, career paths, and benefits.

In the first category are those on deputation from the federal government, who head the administrative wings of provincial ministries and local governments but are beyond the control of those elected officials in terms of their performance, promotion, and transfer. For the last seven years, an average of one-third of chief administrative officer (CAO) positions in local governments have remained vacant, mainly due to frequent transfers by the federal government.

Second are those who transferred to the provincial or local level after 2019 under a federal administrative restructuring. Under this scheme, some 97,000 civil servants, most of them reportedly nearing retirement, moved permanently to work within the provincial or local civil services. They are now stuck where they chose to work, as there is no clarity about career progression, intergovernmental transfers, benefits, or other conditions.

Third are those hired on temporary service contracts by the provinces and local governments after 2017, often following weak or noncompetitive hiring processes. Employees in this category are fully dependent on the provincial and local governments for the terms, conditions, and benefits of their service. Lacking explicit legal standing, they have no substantial authority or signatory power and are considered “second class” staff.

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Fourth are those who were hired for permanent local positions before the 2015 constitutional change. Their status is the same as those in the previous category.

Fifth, in a few provinces, are those recruited under the new provincial civil service laws adopted mostly after 2020. The terms and conditions of their employment differ from province to province.

These anomalies could have been avoided if the federal civil service law had been adopted on time, establishing a uniform code for all levels of the civil service. While the new bill under consideration may bring some clarity to the current confusion, it is uncertain whether it will pave the way for a truly federal administrative state. Two factors give rise to this uncertainty.

First, the bill makes the provincial principal secretary a federal civil servant—albeit one who is accountable to the provincial government and who cannot be transferred without provincial consent for at least a year after taking office. Other provincial secretaries will be provincial civil servants, but only after 10 years. Until then, federal civil servants will fill these positions as well. Until they complete one year of service, these provincial secretaries cannot be transferred to any other ministry or assigned any function without the federal government’s consent. In addition, they will report to the provincial principal secretary—again, a federal civil servant. Under these provisions, it is hard to imagine any administrative autonomy for the provincial governments for at least a decade.

Second, the bill provides for local CAOs to eventually be chosen from the local civil service, but for the next 10 years, it requires the federal government to appoint them from the federal civil service. If the federal government fails to do so, the provincial government can appoint the local CAO from the provincial civil service. In either case, the CAO’s performance will be overseen by the provincial secretaries and principal secretaries, not by the municipal mayor. This means that the elected officials of local governments will wait another decade to have CAOs accountable solely to them. The proposed bill could instead have allowed the provinces to keep federal civil servants only as long as they need them, since few of the provinces will initially have a trained corps of civil servants ready to assume the new CAO positions.

There are some provisions in the new bill that could be considered favorable to provincial and local civil servants. These include an option for local civil servants to transfer to other local governments within the province; an option for provincial and local civil servants to move to the federal civil service; and a provision to count the length of provincial or local service toward the seniority of staff who transfer to the federal civil service.

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Under the proposed bill, civil servants reassigned from federal to local positions by the 2019 adjustment scheme can be transferred after two years to another local government in the same province. The bill does not go on to clarify whether the two-year tenure would be counted from the day those reassigned moved to local government, or from the day the new federal civil service law takes effect. If the former, then all of those 90,000-plus civil servants are now qualified for transfer. As most of them are nearing retirement, it is uncertain that they would wish to do so; but what if the local governments decide to transfer them en masse, since elected officials often complain that their civil servants lack local government skills?

In addition, the draft bill raises the civil service retirement age from 58 to 60 years. It also requires provincial and local governments to align their civil service laws within six months of the bill’s enactment. While the bill goes on to require the federal civil service to make “necessary arrangements” to reduce its bloated workforce by 10 percent, it does not say what these arrangements should be or when they should be made, leaving the federal civil service free to maintain its current state of redundancy. Instead, the bill should have called for scrapping all redundant positions immediately.

The bill calls for an entity to maintain personnel records for all three tiers of government. Currently, no such body exists, and there is no accurate record of the provincial and local civil service workforce. It also requires provincial and local employees to contribute to their own pension plans, whereas no such requirement applies to federal civil servants.

In conclusion, this long-awaited bill lacks many provisions that would clear the way for provincial and local civil services to operate smoothly and efficiently. But these challenges aside, it may be prudent to get the bill passed, ideally with a few of these suggested revisions, and start testing it in implementation rather than waiting indefinitely for perfection.

Previously published on
Bishnu Adhikari is the Governance Director, and Parshuram Upadhyay is the Senior Policy and Governance Advisor for The Asia Foundation in Nepal. The views and opinions expressed here are those of the authors, not those of The Asia Foundation.