Hiring employees in Bhutan is a breeze when you are knowledgeable about its employment laws, benefits, payroll, and tax systems. Know how to employ and onboard talents from Bhutan with the information below.
Employee Contract
Public and Provincial Holidays
Leave Information
Basic
Written employment contracts in Bhutan are required if the contract schedule is more than one year of service. When a written contract is not met, the employer must adhere to the Labor Law of Bhutan. Contracts are generally written in Choke but as a rule, they must be understood by both parties.
Probation Period
According to section 622, paragraph 3 of the German Civil Code, the maximum duration for a probation period is six months.
13th Month Pay
The 13th-month salary is mandatory in Bhutan.
Employee Benefits
- Pension
- Permanent Disability Benefit
- Surviving Spouse Benefit
- Surviving Children Benefit
- Orphan Benefit
- Dependent Parent Benefit
Compensations in Bhutan are paid monthly.
The minimum wage in Bhutan is BTN 3,750 per month.
Overtime hours should not exceed 2 hours per day or 12 hours per week. A worker is paid at a minimum of their normal rate of pay or may depend on the employee-employer contract. If the employee is needed to work from 10:00 p. m. – 8:00 a. m. then the rate is 50% in addition to their normal rate.
Employer Payroll Cost:
The contribution taxes are dependent on which contributions the employee is available to provide.
| Type |
Contribution Rate |
| Employer |
Not lower than 5% |
Employee Payroll Cost:
| Type |
Contribution Rate |
| Employer |
Not lower than 5% |
Employee Income Tax
Income tax is levied at a progressive rate on all annual income as follows:
| Income Group (in BTN) |
Taxes |
| 0 – 300,000 |
0% |
| 300,001 – 400,000 |
10% |
| 400,001 – 650,000 |
15% |
| 650,001 – 1,000,000 |
20% |
| 1,000,001 – 1,500,000 |
25% |
| 1,500,001+ |
30% |
VAT
The GST (VAT) rate in Bhutan is 7%.
An employer must provide an employee with at least two weeks written notice of their intention to terminate the employment of an employee. Thereafter, the employer must pay the employee two weeks wages at a regular rate.
However, federally regulated employees do not have to give their employer notice if they choose to quit.
An employer is required to provide a minimum 30 days notice period in the employment contract.
Severance pay
On termination of contract, employees with a minimum service of 5 years with constant contribution will receive the provident fund contributions including interest from employee and employer contribution. With less than five years of constant contribution, employees are entitled to their provident fund contributions with interest but not the employer’s contribution.
It is not stipulated in the law that requires the employer to provide a severance pay package.
Getting a Business Visa or Work Permit in Bhutan depend on the rules and regulations of the Ministry of Foreign Affairs (MFA).
For a Business Visa, you must have documentary evidence of the business existing in the country.
For a work permit, it depends on the relevant agencies for processing but generally, you must apply for a permit from the Department of Labour and must be over 18 years of age.