Party president Ellen Olfert says in a news release that the issue was studied and legal experts were consulted.
Olfert says there's nothing in the party's constitution, the Elections Act or the Elections Financing Act that would require the premier to step down if his leadership is challenged during the party's convention in March.
Selinger faces a rebellion within his party, as a half-dozen NDP legislature members, including five former cabinet ministers, have called for him to step down.
He has challenged his critics to run against him at the convention and said he plans to stay on as leader into the next election in 2016.
Olfert says the party executive has approved the recommendations from a special committee that was struck to come up with rules for a leadership contest, and that they will be brought to the NDP provincial council on Dec. 6.
"After extensive study and the retention of legal expertise, there are no provisions in our constitution which would require the leader to recuse himself from his duly elected office during this process," Olfert said in the news release.
"Our recommendations mandate a fair process, emphasizing a clear separation between party activities and resources, and the elected activities and resources of the leader or any candidate."
Olfert further noted that "absolutely no taxpayer dollars will be used for any party or leadership purposes."
No one has said they will challenge Selinger at the convention slated for March 6-8, 2015, but former cabinet minister Theresa Oswald said Thursday that she is considering it.
Oswald, who was minister of jobs and the economy, is one of the five cabinet ministers who resigned from the inner circle earlier this month after questioning Selinger's leadership.
The ministers accused the premier of not listening to his cabinet anymore and of failing to address public concern over last year's provincial sales tax increase.
The NDP plummeted in opinion polls after the tax hike.
Steve Ashton, the NDP's house leader and emergency measures minister who ran against Selinger in the 2009 race, has also not ruled out entering the leadership contest.
Olfert said in the news release that the recommendations that the executive have approved for a potential leadership race would not be released until the provincial council gets a chance to consider them.
"The broad framework of our recommendations focus on timelines and specific rules around memberships, nominations, and governance. Those recommendations will be brought forward to the next meeting of the Provincial Council and it would be premature to release specific details before then," she said.
The decision to keep Manitobans in the dark about the process has drawn rebuke from opposition leaders.
Conservative Leader Brian Pallister said earlier this week that it's arrogant to cover up the process that could lead to the selection of the next premier of Manitoba.