The Foreign Employment Welfare Fund and worker insurance, explained

Two small line items clear before any Nepali worker is granted a labour permit, and most destination employers never see them on a budget. The first is a contribution to the Foreign Employment Welfare Fund, the state pool run by the Foreign Employment Board. The second is the premium on a mandatory term-life insurance policy bought from a DOFE-enlisted insurer. Neither is large against a corridor cost, the welfare-fund levy is Rs 1,500 to Rs 2,500 and the insurance premium runs roughly USD 90 for a two-year cover, but both are conditions of the labour approval itself, which means a file that skips either does not move. An operator who treats them as optional discovers that at the worst possible moment, when the Department of Foreign Employment (DOFE) bounces the labour permit and the fly date slips.

These are not the same instrument, and the most common error in an employer file is to merge them. The welfare fund is a state benefit financed by a per-worker levy and governed by the Foreign Employment Act 2007 (2064 BS). The insurance is a commercial policy regulated separately by the Nepal Insurance Authority. They pay out for different events, through different bodies, on different timelines. This guide walks both, names the amounts, and places them where they actually sit in the cost stack, the small protective layer underneath the visible recruitment and permit fees.

The Foreign Employment Welfare Fund, what the levy buys

The Foreign Employment Welfare Fund (FEWF), in Nepali वैदेशिक रोजगार कल्याणकारी कोष, was established in 2008 under the Foreign Employment Act 2007 and the Foreign Employment Rules 2008. It is governed by the Foreign Employment Board (FEB), whose secretariat sits at Babarmahal in Kathmandu and which is chaired by the Labour Minister. The fund is financed by a contribution that every departing worker pays before the labour approval is granted, deposited under Rule 24 of the Foreign Employment Regulations.

The contribution was a flat Rs 1,000 for years. A regulation revised on 31 July 2024 split it into two tiers by contract length:

• Rs 1,500 for contracts up to three years.
• Rs 2,500 for contracts over three years.

This matters for EU corridors specifically. A typical Croatian or Romanian work-and-residence permit runs beyond three years across renewal, so the EU-bound file usually falls in the higher Rs 2,500 tier rather than the Gulf-standard Rs 1,500. It is a small sum, but it is the kind of detail that, if mis-stated on the deposit slip, sends the file back for correction.

The fund held over Rs 6 billion, roughly USD 50 million, as of November 2020, built from contributions by around 4 million workers over its life. Historically about 90 percent of its payouts have gone to the families of workers who died abroad, which tells you what the pool is really for.

What the welfare fund pays out

The headline benefit is the death payment. A 2024 amendment to the Foreign Employment Rules 2008 raised the survivors' benefit from Rs 700,000 to Rs 1,000,000, about USD 7,300, paid to the family of a worker who dies during foreign employment. The old Rs 700,000 figure still circulates in stale guidance, so confirm the current number before quoting it to a worker's family. A reduced fallback of Rs 25,000 applies where the eligibility window for the full claim was missed, which is itself an argument for filing the welfare-fund contribution cleanly at the start rather than reconstructing it later.

The fund covers more than death. The schedule, as administered by the FEB expert committee, runs roughly as follows:

The legal-defence figure sits under a separate instrument, the Guideline for the Legal Defence of the Workers in Foreign Employment 2018, but it draws on the same welfare apparatus and is worth knowing when a worker faces a contract dispute or a criminal charge in the destination country.

The scale of disbursement is not theoretical. In FY 2023/24 the fund paid Rs 699.91 million to the families of 1,346 deceased workers, Rs 194.39 million to 653 injured workers, Rs 37 million to repatriate bodies, and Rs 28.2 million in scholarships to 2,956 children of dead or injured migrants. The prior year, FY 2022/23, the fund paid Rs 655.18 million to 1,208 deceased families. These are the numbers behind the levy, and they are why the FEB treats the contribution as a non-negotiable gate rather than an administrative nicety.

One logistics point employers underestimate: the fund pays for free repatriation of remains from Tribhuvan International Airport (TIA) to the deceased worker's home address, arranged through the FEB secretariat at Babarmahal. When a death occurs on a destination site, the corridor that knows this saves the family a logistics scramble at the most distressing point in the process.

The mandatory term-life insurance, a separate instrument

The second protection is a commercial policy, the Foreign Employment Term Life Insurance, bought from a DOFE-enlisted insurer. As of August 2025 there were 15 insurers enlisted to write it. It is regulated by the Nepal Insurance Authority under Directive 2080, which took effect around March 2024.

This is where most employer files conflate the two layers, so hold the distinction firmly. The welfare fund is state money paid out by the FEB. The insurance is a private contract paid out by the insurer. The premium, not the welfare-fund levy, is the roughly USD 90 figure, in Nepali rupees about Rs 3,500 to Rs 5,500 depending on the worker's age. The policy is valid for the contract term plus six months, three months before departure and three months after the contract expires.

The cover the premium buys, up to a total of Rs 2 million, breaks down as:

• Life cover. Rs 1,000,000 on death.
• Income-loss cover. Rs 200,000.
• Funeral cover. Rs 100,000.
• Medical cover. up to Rs 100,000.
• Repatriation cover. Rs 100,000.
• Critical-illness cover. Rs 500,000.

Read the death line carefully against the welfare fund. The insurance pays Rs 1,000,000 in life cover, and the welfare fund pays a separate Rs 1,000,000 survivors' benefit. These stack, they do not substitute. A family with both filed correctly can claim from each pool for the same death, which is the whole point of running two instruments. Merging the figures, as some summaries do, understates the protection by half.

One caveat for the planning horizon. A MoLESS bill publicised on 1 August 2025 proposed scrapping the compulsory term-life insurance, which renews every two years, as part of a wider amendment to the Foreign Employment Act 2064. As of this writing it is a proposal, not enacted law, so the insurance remains mandatory and the premium remains a required line. Treat it as live until the bill passes, and watch the MoLESS notices if you are budgeting a corridor across the 2026 fiscal year.

Where both sit in the employer cost stack

Against the visible corridor costs, the DOFE Job Order verification, the destination permit, the recruitment fee, the air ticket, these two protections are small. But they are not the whole protective layer. A third item, the Social Security Fund (SSF), now sits alongside them and is mandatory for labour approval under the Contribution-based Social Security Act 2017.

The full pre-departure protective stack, per worker, looks like this:

Under Werklist's Employer Pays Principle, every one of these sits on the employer side of the invoice, not the worker's. The Nepali worker pays nothing toward documentation, attestation, visa, travel, medical, or these welfare and insurance contributions. That placement is not optional housekeeping, it is the line that keeps the corridor compliant with IOM IRIS-aligned standards and the ILO definition of recruitment fees and related costs, which lists insurance and the migrant welfare fund explicitly among the costs an employer must bear. For the wider picture of what an EU corridor actually costs line by line, see the 2026 cost benchmarks for hiring Nepali workers in the EU.

A note on the Gulf comparison, since employers crossing over from Gulf corridors carry assumptions. Nepal's Free Visa Free Ticket policy, which obliges the employer to pay visa and ticket, covers only seven destinations, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE and Malaysia, and the EU is not among them. For EU placements the employer-pays obligation flows from Werklist's IRIS-aligned model and the ILO standards, not from that Nepali scheme. The welfare fund and the insurance, by contrast, apply to every corridor regardless of destination, because they are conditions of the labour approval itself. The detail on what the scheme covers and what it does not is in the Free Visa Free Ticket policy explainer.

The failure mode, and how it shows up

The way this goes wrong is rarely a deliberate decision to skip the protections. It is an assumption that they are a worker-side formality the recruiter handles invisibly, so they never make it onto the employer's budget or, worse, the recruiter pushes the cost onto the worker to keep the quoted fee low. Both versions fail the same way.

From 4 June 2026, under the new automated repeat-labour-approval system (पुनः श्रम स्वीकृति), DOFE auto-rejects any application that lacks a valid Welfare Fund contribution, an active life insurance policy, and an SSF record, alongside passport validity and a matching same-employer contract. There is no longer a human officer at Maharajgunj to wave through a file with a missing welfare-fund slip. The system bounces it. A worker who paid the welfare fund but whose insurance lapsed at renewal cannot get a repeat approval, which means a returning worker, the most valuable kind, the one who already knows the site, sits grounded until the lapse is cured. That is the specific, costly consequence of treating the protective layer as optional.

The cleaner approach is the one that also reads correctly on a CSR audit. Both contributions, the welfare-fund levy and the insurance premium, invoice through the Kathmandu entity at actual cost with the deposit receipts attached, on the employer side of the ledger. The same discipline that keeps the file moving through DOFE keeps the audit trail clean. For how this interlocks with the pre-departure medical screening, the other gate that grounds a file when it slips, see the medical fitness and deployment guide.

Werklist's Kathmandu branch, operating as Blusift Nepal under a DOFE recruitment licence, files these contributions as a standard part of every corridor it runs through the DOFE office at Maharajgunj. To scope the protective layer and the full cost stack for a specific brief, send the corridor details to the Kathmandu branch via contact companies.