Employer of Record in Bhutan

An Employer of Record (EOR) can employ a worker and administer their contract, payroll and benefits while your team directs their day-to-day work. In Bhutan, that division of responsibilities can bring the provider within the law on employment agents. Confirm that the local employer is licensed for the proposed arrangement before you commit to a start date. A foreign worker also needs approval for the specific employer, job and worksite. Labour Act · Foreign-worker rules

Employment in Bhutan at a glance

National baseline for ordinary private-sector employees. Gelephu Mindfulness City has separate employment legislation. Sources checked 9 November 2026.

EOR and hiring options

Bhutan's Labour and Employment Act defines an employment agent to include an employer that supplies an employee whose tasks are assigned and supervised by a third party. Section 211 requires an employment agent to be licensed. Section 213 sets out a licensing application route for recruiting foreign workers into Bhutan and placing Bhutanese workers abroad. For a Bhutanese employee working in Bhutan under a client's supervision, ask the provider to name the contract employer and show which authorization covers that domestic placement. Where the scope is unclear, obtain confirmation from the Department of Labour or Bhutanese counsel. Labour Act · Act definitions

Under an authorized EOR arrangement, the named employer signs the employment contract and handles pay, leave records and statutory obligations. Your managers assign work and give the employer timely information about hours, absences, performance and worksite changes. With direct employment, your registered Bhutan entity takes on the employer obligations and can buy payroll support separately. Check the registration and operating permissions for the business activity as part of that decision. How EOR works · Business registration

If the worker will deliver local services or represent your business in Bhutan, check the company’s tax position as part of the route decision. The national tax definition of a permanent establishment covers certain local service projects and agency activities. Tax Act

When the same job needs a different approval

For a Bhutanese citizen joining an office team in Thimphu, settle who can legally employ them, then set up the contract, payroll and insurance. If the candidate is a foreign national already working in the same office for another employer, changing the legal employer requires prior approval even when the desk and duties stay the same. If the employer stays the same but the worker moves to another worksite, check the permit before the move. Confirm sponsorship and permit variation separately from the provider's authority to employ a Bhutanese citizen. Foreign-worker rules · Transfer guidance

Gelephu Mindfulness City. If the proposed work falls inside this special administrative region, confirm the exact worksite and applicable regime before quoting the offer. For example, the city's Employment Act sets 7 days of paid annual leave for the first 12 months of service for covered workers, with eligibility from 3 months and proration for a shorter period. The city also has its own foreign-workforce law and work passes. Confirm the city’s pay, tax and benefits rules before reusing a national payroll estimate. City employment law · City legislation

Employment costs

At BTN 60,000 per month in gross basic salary, budget at least BTN 63,000 per month for salary and the employer's provident fund share once contributions begin. This Borderless AI illustration uses a full-time, nonsupervisory Bhutanese office employee in Thimphu on an ordinary private-sector contract. The whole salary is basic pay, paid in 12 instalments. The example assumes a covered employer and base salary alone. Add the employer-paid workers' compensation premium and any EOR fee to the subtotal. Provident fund rules · Insurance rules

If a three-month probation ends at the end of a pay month and contributions start in month four, salary plus the employer's share is BTN 747,000 over the first 12 months, before the same exclusions. Cover for work injury needs its own start date and premium. On an offer with allowances, identify the basic wage separately because that figure sets the provident fund minimum. Budget for any leave cash-out and future gratuity based on the worker's actual entitlements. Working conditions · Provident fund rules · Gratuity rules · GST guidance

Payroll, taxes and payments

Put the pay period in the contract. The employer pays wages directly to the employee at the end of that period. A nominated Bhutanese bank account is one permitted method. Align the provider's invoice and time-reporting cutoffs with the employee's payday. Labour Act

• Income tax. The national Income Tax Act of Bhutan 2025 applies from 1 January 2026. The usual income year runs from January through December, with individual marginal rates from 0% to 30%. A resident employer generally applies the monthly withholding table to gross monthly employment income after the rule's 15% reduction. File the withholding statement and remit the tax within 10 days after month-end. Tax rules · Withholding tables · Tax rates · Filing notice
• Provident fund. The employer sends both shares to the authorized fund within the first week of the following month. Reconcile each deduction against the deposit to the employee's individual account. Fund rules · Labour department notice
• Other employee deductions. Bhutan funds its Health Trust Fund in part through a 1% employee health contribution. Check its application and any group insurance subscription on the payroll setup. Treat employee deductions as part of the gross-to-net calculation. Health contribution · Private group scheme

Contracts and employment conditions

Provide the employee with a written contract stating the duration, duties, notice, pay, hours, probation and leave. Where the contract gives no duration, employment is presumed indefinite unless evidence shows otherwise. A contract of at least one year may include up to 180 days of probation, with seven days' notice by either party during probation. For a remote hire, put the agreed work location, hours and equipment responsibilities in the offer so payroll and safety arrangements reflect where the work will happen. Labour Act

Registered companies and other covered enterprises must prepare Internal Service Rules in consultation with workers and obtain approval from the Chief Labour Administrator. Check the legal employer's approved rules and any applicable agreement before using a global template. A more generous leave entitlement or earlier gratuity threshold can change the offer and its cost. Internal Service Rules · Gratuity rules

Working hours, leave and holidays

Agree and record overtime. For a nonsupervisory worker, ordinary overtime pays at least the normal rate. Required holiday work adds 50% of normal pay, as does qualifying overtime from 10 p.m. to 8 a.m. alongside the normal day shift. The national rules provide at least 12 consecutive hours of daily rest and 24 consecutive hours of weekly rest. Use the employee's local hours when scheduling cross-border coverage. Hours and overtime · Labour Act

Publish the employee's holiday calendar with the offer or onboarding materials. Bhutan's statutory floor is nine paid holidays, and local festival observances such as Tshechu can differ by district. Confirm the actual dates and any agreed substitutions before promising coverage on a holiday. Holiday rules · District example

Employee benefits

The provident fund is an individual retirement savings account with contributions from both sides. At separation, the employee generally receives both shares with interest after five years of continuous service. Below five years, the employee generally receives their own share and interest. Exceptions include qualifying time-bound projects and death. Confirm the exit entitlement when agreeing the contract term. Fund entitlements

Work injury compensation is an employer obligation. Covered employers pay the insurance premium. Employers with a micro-trade licence are exempt from the insurance requirement and still owe statutory compensation where due. Check any applicable group savings-linked insurance separately from work injury cover. Supplemental medical cover, equipment or extra leave can be priced as part of the offer. Compensation and insurance · Private group scheme

Onboarding and work authorization

1. Confirm the employer and workplace. The client supplies the role, supervision plan, exact worksite and candidate's right-to-work status. For a Bhutanese citizen, proceed with the ordinary employment setup once the employer's authority is established.
2. Clear foreign-worker approvals where required. The employer obtains Department of Labour approval before entry for a new overseas hire. Role eligibility can depend on local availability, occupation and sector quotas. The worker then needs the appropriate employment entry permit or visa and an Immigration work permit. For an Indian national, plan for an employment entry permit. Other nationals generally use the employment visa route. Allow for screening, documents and any worksite or employer variation before the candidate starts. Foreign-worker rules · Immigration rules · Labour application portal
3. Set up the first pay cycle. The employer issues the contract, confirms coverage for work injuries, collects payroll and bank details, and sets the provident fund enrolment date. For foreign workers, Labour's rules specify payment into a local individual account at month-end. Work injury cover · Foreign-worker payroll
4. Calendar permit renewals. For R and B permit types, the employer or recruitment agent must seek renewal at least 14 calendar days before expiry. Have the client flag a planned location or role change before it takes effect. Renewal and transfer rules

Termination and final pay

The local employer manages the employment decision and process when a client assignment ends. Ordinary notice is in writing and the contractual period must be the same on both sides, at least 30 days. Basic pay in lieu is possible. The law prohibits dismissal for reasons including pregnancy, taking maternity or paternity leave, and filing a complaint about an alleged violation. Redundancy requires consultation, notification to the Chief Labour Administrator and additional notice of seven days per year of continuous employment, capped at 42 additional days. For summary dismissal, investigate serious misconduct and give the worker an opportunity to respond. Misconduct procedure · Notice and probation · Termination rules · Redundancy rules

• Final wages and leave. Pay wages owed within seven calendar days after termination and settle unused accrued annual leave at the normal rate. Final wages · Leave payout
• Provident fund and gratuity. Reconcile the fund payout with the plan administrator. The rules set a 15-working-day payment window from entitlement. Gratuity generally becomes payable on separation after 10 years of continuous service, including probation, or earlier under more generous terms. Use the last basic monthly pay times completed years of continuous service and pay within 15 working days of separation. Serious misconduct following the statutory process affects both entitlements. Fund payouts · Gratuity
• Foreign-worker exit. Coordinate any approved transfer or applicable permit cancellation and departure with the legal employer. Foreign-worker rules

Hiring with Borderless

Borderless AI's global EOR service handles employment contracts, onboarding, payroll and benefits. For a Bhutan hire, share the role, worksite, who will supervise the work, basic salary and allowances, planned start date and the candidate's work authorization. Ask Borderless to confirm the local contracting employer, its authority for that role and a quote that separates employer contributions, insurance and service fees. Borderless EOR · Book a demo