Bhutan

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Hire in Bhutan at a glance

Here ares some key facts regarding hiring in Bhutan

Capital: Thimphu
Currency: Bhutanese Ngultrum
Language: Dzongkha
Population: 771,608
GDP growth: 4.63%
GDP world share: 0%
Payroll frequency: Monthly
Working hours: 40 hours/week

Overview in Bhutan

Bhutan, a landlocked country in the eastern Himalayas, is bordered by China and India and spans about 38,394 square kilometers. Known for its diverse climate and rich biodiversity, Bhutan is considered one of the world's ten biodiversity hotspots. The nation's history dates back to 2000 BCE, with significant Tibetan influence shaping its culture after Buddhism's introduction in the 7th century CE. Bhutan was unified in the 1600s under Shabdrung Ngawang Namgyal and later established a hereditary monarchy in 1907, which continues today.

The country's development philosophy, Gross National Happiness (GNH), emphasizes sustainable development, environmental conservation, and cultural preservation. Bhutan's economy relies on hydropower, agriculture, forestry, and tourism, with significant strides made in poverty reduction and education. The majority of Bhutan's workforce is rural, with agriculture being the largest employment sector. However, there is a gender disparity in workforce participation and a skills gap that the government aims to bridge through education reforms and vocational training.

Culturally, Bhutan values politeness, harmony, and indirect communication, with a deep respect for hierarchy and collective goals. The workplace emphasizes teamwork, consultation, and consensus-building, reflecting Buddhist principles and a focus on well-being over economic growth. Emerging sectors in Bhutan's economy include information and communications technology, renewable energy, and sustainable industries, alongside significant contributions from construction, public service, and the services sector supporting tourism.

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Employer of Record Guide for Bhutan

Your step-by-step guide to hiring, compliance, and payroll management in Bhutan with EOR solutions.

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Responsibilities of an Employer of Record

As an Employer of Record in Bhutan, Rivermate is responsible for:

Creating and managing the employment contracts
Running the monthly payroll
Providing local and global benefits
Ensuring 100% local compliance
Providing local HR support

Responsibilities of the company that hires the employee

As the company that hires the employee through the Employer of Record, you are responsible for:

Day-to-day management of the employee
Work assignments
Performance management
Training and development

Taxes in Bhutan

Tax Deducted at Source (TDS): Employers must deduct TDS from employee salaries and deposit it with the government, with rates varying by income type and residency status.
Provident Fund Contributions: Employers contribute typically 10% of the employee's basic salary to the Provident Fund, which offers retirement benefits.
Corporate Income Tax (CIT): Businesses pay a standard CIT rate of 30% on taxable profits, with annual filings and quarterly payments.
Other Tax Obligations: Employers may need to handle Sales Tax and Skills Development Levy, which funds vocational training.
Social Security Contributions: Employees contribute 5% of their basic monthly earnings to Bhutan's social security system.
VAT Implications: If implemented in Bhutan, VAT would affect pricing, costs, and compliance for businesses, especially in service sectors like hospitality and consulting.
Direct and Indirect Tax Incentives: Under Bhutan's Fiscal Incentives Act of 2021, businesses enjoy various tax exemptions and reduced rates, particularly in priority sectors and for environmental upgrades.
Eligibility for Tax Incentives: Businesses must obtain approval and comply with specific conditions to benefit from tax incentives, with potential recapture for non-compliance.

Leave in Bhutan

Casual Leave: Under Section 142 of the Labour and Employment Act of Bhutan 2007, employees are entitled to 10 days of paid casual leave annually, typically used for unforeseen personal reasons.
Earned Leave: Section 143 allows employees to accrue 30 days of paid earned leave per year after completing one year of continuous service, with the ability to carry forward up to 90 days of unused leave.
National and Religious Holidays: Bhutan celebrates various national and religious holidays, including Losar (Bhutanese New Year), the Birthday of King Jigme Khesar Namgyel Wangchuck, Zhabdrung Kuchoe, the Coronation Day of His Majesty The Druk Gyalpo, National Day, Paro Tshechu, Thimphu Tshechu, Blessed Rainy Day, and Dashain.
Other Leave Types:
- Sick Leave: Paid sick leave is provided under Section 144, with a medical certificate required for more than three consecutive days.
- Maternity Leave: Sections 145-147 grant female employees 70 days of paid maternity leave, with at least 6 weeks post-childbirth.
- Paternity Leave: 10 days of paid paternity leave as per Section 148.
- Marriage Leave: 10 days of paid leave for marriage under Section 151.
- Bereavement Leave: Typically offered by employers though not specified in the Act.
Important Notes: Dates for some holidays vary yearly based on the lunisolar calendar. Employers may offer more generous leave entitlements than the statutory minimums, so checking employment contracts and company policies is advised.

Benefits in Bhutan

Summary of Bhutan's Labour Employment Act of 2007 and Related Benefits

Mandatory Benefits: The Labour Employment Act of 2007 in Bhutan mandates several employee benefits including paid time off, family leave, compensation regulations, and a social security system.
Paid Time Off: Employees are entitled to 18 days of annual leave, 5 days of sick leave after six months of service, and 16 public holidays.
Family Leave: The law provides six months of paid maternity leave and acknowledges paternity leave, though specifics are not detailed.
Compensation: A minimum wage is set, varying by industry and location, with overtime paid at 1.5 times the regular rate.
Termination: Notice periods are required for termination by either party, with severance pay under certain conditions.
Social Security: A provident fund system is in place, requiring contributions from both employers and employees, covering retirement, disability, and survivor benefits.
Optional Benefits: Employers may offer health insurance, performance bonuses, profit sharing, flexible work arrangements, childcare support, meal and transportation allowances, and educational reimbursements.
Health Initiatives: While not mandatory, some companies provide health insurance. The government offers a Basic Health Services Package and subsidized medicines, with potential plans for a national health insurance scheme.
Retirement Benefits: The National Pension and Provident Fund (NPPF) is mandatory, covering both public and private sector employees, with private provident funds available as an optional supplement.

These benefits aim to enhance work-life balance, employee well-being, and financial security, with optional benefits helping companies to attract and retain talent.

Workers Rights in Bhutan

The Labor and Employment Act of Bhutan 2007, along with subsequent regulations, governs employment laws in Bhutan, detailing the conditions under which employment may be terminated, including misconduct, incapacity, and redundancy. Notice requirements vary, with a minimum of seven days during probation and one to three months post-probation, depending on the role. Severance pay may be required in cases of redundancy or when notice is not properly given.

The Constitution of Bhutan prohibits discrimination based on race, sex, language, religion, politics, or other status, with several mechanisms available for redress including internal grievance procedures, the National Commission for Women and Children, labor tribunals, and the judicial system. Employers are required to implement non-discrimination policies, provide training, and handle complaints effectively.

Work conditions are also regulated, with a standard workweek set at 40 hours and provisions for overtime compensation. Employees are entitled to breaks and rest days, and while specific ergonomic standards are not defined, a safe working environment is mandated. The Department of Labour within the Ministry of Labour and Human Resources oversees the enforcement of these standards, focusing on workplace safety, risk assessments, and employee training. Employees have rights to a safe workplace, can refuse unsafe work, and must be trained on safety procedures.

Agreements in Bhutan

In Bhutan, employment agreements are categorized into two main types: the Contract of Employment (CDI) and the Fixed-Term Employment Contract (CDD). The CDI is an open-ended contract that can be oral or written, though written contracts are recommended for clarity on job roles and termination conditions. The CDD is for a specific duration or project and must be in writing, with no maximum duration specified by law, but excessively long terms may be legally challenged.

Key elements to include in employment contracts are identification of parties, contract type, job description, compensation details, working hours, leave entitlements, and termination clauses. Additional clauses like confidentiality and non-compete can be included, with the latter being cautiously used due to potential enforceability issues.

Bhutan also supports vocational training through apprenticeships and allows for part-time arrangements via fixed-term contracts. Probationary periods are permissible and should be reasonable and transparent. During probation, reduced notice periods for termination are allowed, but terminations must not be discriminatory.

Confidentiality clauses are generally enforceable in Bhutan, requiring clear definitions of confidential information. Non-compete clauses are less certain and should be narrowly tailored to protect legitimate business interests without overly restricting future employment opportunities. Legal advice is recommended when drafting non-compete clauses due to the evolving legal framework in Bhutan.

Remote Work in Bhutan

Bhutan is embracing remote work, but lacks specific legislation for it, relying instead on the Labor Act of 2007 which focuses on traditional work settings. Employers and remote workers must create detailed agreements covering work hours, communication, and performance metrics due to the absence of dedicated laws. A robust technological infrastructure is crucial, including reliable internet, secure communication tools, cloud solutions, and strong cybersecurity measures. Employers should develop clear remote work policies, provide necessary equipment and training, and maintain communication to ensure effective remote operations. Additionally, considerations for taxes, work permits, and flexible work arrangements like part-time work, flexitime, and job sharing need clear contractual agreements due to the lack of specific regulations. Bhutan's legal framework for data protection is underdeveloped, though the Constitution guarantees privacy rights. Employers have a duty to protect data, necessitating strong security measures and employee training on data handling. Best practices include using secure communication tools, implementing access controls, encrypting data, and establishing strong password management and remote access protocols.

Working Hours in Bhutan

Summary of Bhutan's Labor Framework and Regulations:

Standard Working Hours: Bhutan's Labour Act of 2007 sets a standard workweek at 48 hours, spread over six days, with a maximum of eight hours per day.
Overtime Compensation: Employees working beyond the standard hours are entitled to overtime pay at double the normal hourly wage. Working on rest days earns additional premium pay.
Rest and Meal Breaks: The regulations ensure a mandatory rest day per week and suggest reasonable meal and rest breaks during workdays, although specific durations are not mandated.
Night Shifts and Weekend Work: While there are no specific regulations for night shifts, the standard 48-hour workweek applies. Overtime rules apply to night shifts exceeding this limit, with additional compensation for weekend work.
Employer Responsibilities: Employers must maintain accurate records of overtime hours and ensure a safe and healthy work environment, including during night shifts and extended workdays.
Flexibility and Employee Well-being: The framework allows some flexibility in work arrangements but emphasizes compliance with maximum working hours and ensuring employee well-being through adequate compensation and breaks.

Salary in Bhutan

To attract and retain talent in Bhutan, offering competitive salaries is essential. These salaries should align with the compensation provided for similar roles in the same industry and location, considering factors like job responsibilities, industry standards, education, experience, and specific skills or certifications.

Key Factors Influencing Salaries:

Job Title & Responsibilities: Higher responsibilities often lead to higher pay.
Industry Standards: Pay varies across industries, with sectors like finance typically offering more than agriculture.
Education & Experience: Higher qualifications and more experience can command higher salaries.
Location: Urban areas like Thimphu generally offer higher salaries than rural areas.
Skillset & Certifications: Specialized skills and certifications can increase earning potential.

Methods to Determine Competitive Salaries:

Job Boards & Recruitment Agencies: Provide a general idea of salary ranges.
Industry Associations: May offer salary surveys or benchmarks.
Government Salary Scales: Useful for reference, particularly for entry-level positions.

Comprehensive Compensation Packages:

Provident Fund Contributions: Employers contribute to employees' retirement funds.
Paid Time Off: Includes vacation, sick, and personal leave.
Training & Development Opportunities: Enhances employee skills and value.

Bhutan does not have a national minimum wage, but the government sets wage rates for public sector workers, which can guide private sector pay. Compensation in the private sector is influenced by market forces, negotiation, and industry standards.

Additional Compensation Considerations:

Allowances: Such as housing, transportation, and cost-of-living allowances.
Bonuses and Incentives: Including performance-based bonuses and festival bonuses.

Payroll Considerations:

Frequency: Typically monthly, but can vary based on agreement.
Mandatory Deductions: Include contributions to the provident fund and income tax.
Legal Requirements: Employers must comply with the Bhutan Labour Act of 2015, ensuring proper documentation and payment methods.

Understanding these elements helps employers create attractive compensation packages and ensures compliance with Bhutanese labor laws.

Termination in Bhutan

In Bhutan, the Labour Act of 2007 stipulates a minimum notice period of one month for employment termination, with an exception for educators who require three months. Employment contracts can specify a notice period but cannot be less than the statutory minimum. Failure to provide the required notice results in compensation equal to the basic pay for the unserved period. Additionally, employees are eligible for gratuity payments upon retirement or resignation after at least five years of service, calculated as the last basic pay multiplied by the completed years of service. Termination can occur through various means such as voluntary resignation, mutual agreement, for cause, or due to redundancy. The Act outlines specific procedures and considerations for termination, including the need for documentation, a formal meeting, and adherence to company policies.

Freelancing in Bhutan

Bhutan's legal framework for distinguishing between employees and contractors involves multiple sources, including The Employment Act of 2006 and The Civil Service Act of 2009, supplemented by common law principles from other jurisdictions. Key distinctions include:

Control: Employees face significant employer control over work schedules and methods, whereas contractors operate more independently, using their own tools and methods.
Integration: Employees are integral to an organization, often working exclusively for one employer, while contractors maintain multiple clients and operate as separate entities.
Financial Dependence: Employees receive fixed salaries with benefits and have taxes withheld by employers. Contractors handle their own taxes and invoice for services without receiving employee benefits.

In ambiguous cases, Bhutanese courts consider the totality of circumstances to determine worker classification. Independent contractors should be aware of contract structures, negotiation practices, and prevalent industries for freelancing in Bhutan, such as IT, creative industries, construction, and education.

Contract Elements for Independent Contractors:

Essential components include scope of work, payment terms, confidentiality clauses, and termination conditions. Legal consultation is advised to align contracts with local laws.

Negotiation Practices:

Effective negotiation involves understanding market rates, articulating value, preparing counteroffers, and maintaining open communication to foster long-term business relationships.

IP Ownership:

Generally, freelancers own the copyright to their creations unless an agreement specifies otherwise. Exceptions include "work made for hire" scenarios where copyright may transfer to the commissioning party.

Tax and Insurance Considerations:

Freelancers must file annual tax returns and can deduct legitimate business expenses. They may also consider securing health, professional liability, life, and disability insurance for additional protection.

Understanding these aspects is crucial for navigating the legal, financial, and professional landscape of freelancing in Bhutan.

Health & Safety in Bhutan

Bhutan's health and safety laws, primarily governed by the Labour and Employment Act of Bhutan (LEAB) 2007 and the Occupational Health and Safety Regulations 2012, aim to ensure a safe working environment across various industries. Employers are responsible for hazard identification, safety training, and maintaining records, while employees must cooperate and report unsafe conditions. Specific regulations exist for high-risk industries, such as construction and mining.

The Department of Labour oversees compliance, with Labour Inspectors empowered to conduct inspections, issue notices, and enforce penalties for non-compliance. Workplace inspections are crucial, focusing on compliance verification, hazard identification, and promoting safety culture through education.

In case of workplace accidents, employers must report incidents promptly according to the severity, with serious accidents requiring immediate notification. The Workers' Compensation Regulations 2009 provide for compensation claims, covering medical expenses and wage replacements among other benefits, ensuring protection for injured workers or their dependents.

Overall, Bhutan emphasizes a proactive approach to occupational health and safety, with continuous improvement and a strong legal framework supporting the well-being of its workforce.

Dispute Resolution in Bhutan

Bhutan's legal system for resolving labor disputes includes labor courts and a centralized arbitration mechanism, as outlined in the Labor and Employment Act of Bhutan 2007. Labor courts handle individual disputes like wrongful termination and wage issues, while the Labour Relations Board arbitrates collective disputes such as those involving collective agreements and strikes. The process starts with conciliation efforts by labor offices; if unsuccessful, cases move to either labor courts or arbitration depending on the dispute type. Labor courts conduct formal hearings, whereas arbitration sessions are less formal but binding.

Additionally, Bhutan conducts compliance audits and inspections across various sectors to ensure adherence to laws and regulations, with entities like the Royal Audit Authority and sector-specific regulatory bodies playing significant roles. The frequency of these audits depends on the risk level and past compliance of the organizations.

Whistleblower protections in Bhutan are currently limited, although some legal safeguards exist, such as those in the Anti-Corruption Act of Bhutan 2011. A more robust Witness Protection Act is under consideration to offer better security and support for whistleblowers.

On the international front, Bhutan has ratified several core International Labour Organization (ILO) conventions related to labor standards, such as those against forced labor and child labor, but has not yet joined the ILO or ratified all fundamental conventions. This reflects in some discrepancies in domestic labor laws, such as the minimum age for employment and restrictions on forming trade unions. The government acknowledges the need for further alignment with international labor standards.

Cultural Considerations in Bhutan

In Bhutan, effective business communication and negotiation are deeply influenced by cultural values such as respect for hierarchy, indirect communication, and the importance of non-verbal cues. Bhutanese culture emphasizes respectful language, formality, and building relationships before proceeding with business dealings. Non-verbal communication, including body language and the use of silence, plays a significant role in conveying respect and attentiveness.

Negotiations in Bhutan are typically collaborative, aiming for mutually beneficial outcomes and requiring patience and flexibility. Cultural norms dictate a high power distance within businesses, with decisions often made by senior leaders and a general preference for collective input over individual assertion.

Understanding Bhutanese holidays, both statutory and religious, is crucial as they can significantly impact business operations. These holidays reflect Bhutan's deep-rooted Buddhist traditions and cultural practices, which prioritize social harmony and community well-being over commercial activities.

For successful business interactions in Bhutan, it is essential to be culturally sensitive, patient, and observant of hierarchical and social cues, while also being clear and concise in communication.

Frequently Asked Questions for Employer of Record services in Bhutan

What is the timeline for setting up a company in Bhutan?

Setting up a company in Bhutan involves several steps and can take a considerable amount of time due to the various regulatory requirements. Here is a detailed timeline for setting up a company in Bhutan:

Business Name Reservation (1-2 weeks):
- The first step is to reserve a unique business name with the Department of Trade under the Ministry of Economic Affairs. This process typically takes about 1 to 2 weeks.
Obtain Security Clearance Certificate (1 week):
- All directors and shareholders must obtain a Security Clearance Certificate from the Royal Bhutan Police. This usually takes around 1 week.
Drafting and Notarizing Documents (1-2 weeks):
- Prepare the necessary incorporation documents, including the Articles of Incorporation and Memorandum of Association. These documents need to be notarized, which can take an additional 1 to 2 weeks.
Company Registration (2-3 weeks):
- Submit the notarized documents to the Registrar of Companies at the Department of Trade. The registration process typically takes 2 to 3 weeks.
Tax Registration (1 week):
- Once the company is registered, you need to obtain a Taxpayer Identification Number (TIN) from the Department of Revenue and Customs. This process usually takes about 1 week.
Obtain Business License (2-3 weeks):
- Apply for a business license from the Department of Trade. The approval process can take between 2 to 3 weeks, depending on the nature of the business and the completeness of the application.
Register for Social Security (1 week):
- Register the company and its employees with the National Pension and Provident Fund (NPPF). This process generally takes about 1 week.
Opening a Bank Account (1 week):
- Open a corporate bank account in Bhutan. This can take approximately 1 week, depending on the bank's requirements and processes.

In total, the process of setting up a company in Bhutan can take anywhere from 8 to 12 weeks, assuming there are no significant delays or complications. Using an Employer of Record (EOR) service like Rivermate can significantly streamline this process by handling many of these steps on your behalf, ensuring compliance with local laws and regulations, and allowing you to focus on your core business activities.

Is it possible to hire independent contractors in Bhutan?

Yes, it is possible to hire independent contractors in Bhutan. However, there are several considerations and benefits to using an Employer of Record (EOR) service like Rivermate when doing so.

Compliance with Local Laws: Bhutan has specific labor laws and regulations that govern employment relationships, including those with independent contractors. An EOR like Rivermate ensures that all contractual agreements comply with Bhutanese labor laws, reducing the risk of legal issues.
Taxation and Social Contributions: Independent contractors in Bhutan are subject to different tax regulations compared to full-time employees. An EOR can manage the complexities of tax filings and social contributions, ensuring that both the contractor and the hiring company remain compliant with local tax laws.
Contract Management: Drafting and managing contracts for independent contractors can be complex, especially when dealing with international hires. Rivermate can handle the creation, negotiation, and management of these contracts, ensuring they meet local legal standards and protect the interests of both parties.
Payment Processing: Handling payments to independent contractors in Bhutan can involve navigating currency exchange rates, banking regulations, and payment methods. An EOR can streamline this process, ensuring timely and accurate payments while managing any associated financial risks.
Risk Mitigation: Misclassification of workers is a significant risk when hiring independent contractors. If a contractor is deemed to be an employee under Bhutanese law, the hiring company could face penalties and be required to provide employee benefits. An EOR helps mitigate this risk by ensuring proper classification and adherence to local employment standards.
Local Expertise: An EOR like Rivermate has in-depth knowledge of the local market and employment practices in Bhutan. This expertise can be invaluable in navigating the nuances of hiring and managing independent contractors, ensuring a smooth and compliant process.

In summary, while it is possible to hire independent contractors in Bhutan, using an Employer of Record service like Rivermate can provide significant advantages in terms of compliance, risk management, and administrative efficiency.

Who handles the filing and payment of employees' taxes and social insurance contributions when using an Employer of Record in Bhutan?

When using an Employer of Record (EOR) like Rivermate in Bhutan, the EOR handles the filing and payment of employees' taxes and social insurance contributions. This includes ensuring compliance with Bhutan's tax regulations and social security laws. The EOR takes on the responsibility of calculating the appropriate tax withholdings from employees' salaries, filing the necessary tax returns with the Bhutanese tax authorities, and making timely payments to the relevant government agencies. Additionally, the EOR manages the contributions to social insurance programs, ensuring that both employer and employee contributions are accurately calculated and submitted in accordance with Bhutanese law. This service provides significant administrative relief to companies, allowing them to focus on their core business activities while ensuring full compliance with local employment regulations.

What is HR compliance in Bhutan, and why is it important?

HR compliance in Bhutan refers to the adherence to the country's labor laws, regulations, and standards that govern employment practices. This includes ensuring that employment contracts, wages, working hours, benefits, and workplace conditions meet the legal requirements set forth by the Bhutanese government. Key aspects of HR compliance in Bhutan include:

Employment Contracts: Employers must provide clear and legally compliant employment contracts that outline the terms and conditions of employment, including job roles, responsibilities, compensation, and termination procedures.
Wages and Benefits: Compliance with minimum wage laws and ensuring that employees receive all mandated benefits, such as paid leave, health insurance, and retirement contributions, is crucial.
Working Hours and Overtime: Adhering to regulations regarding standard working hours, overtime pay, and rest periods is essential to avoid legal issues and ensure employee well-being.
Health and Safety: Employers must comply with occupational health and safety standards to provide a safe working environment and prevent workplace injuries and illnesses.
Non-Discrimination and Equal Opportunity: Ensuring that hiring, promotion, and employment practices are free from discrimination based on gender, ethnicity, religion, or other protected characteristics is a key compliance requirement.
Termination and Severance: Following proper procedures for employee termination and providing appropriate severance pay as mandated by Bhutanese labor laws is necessary to avoid legal disputes.

HR compliance is important in Bhutan for several reasons:

Legal Protection: Adhering to labor laws helps protect the organization from legal disputes, fines, and penalties that can arise from non-compliance. This ensures that the business operates within the legal framework and maintains a good standing with regulatory authorities.
Employee Satisfaction and Retention: Compliance with HR regulations ensures fair treatment of employees, which can lead to higher job satisfaction, increased morale, and better retention rates. Employees are more likely to stay with an employer who respects their rights and provides a safe and equitable workplace.
Reputation and Brand Image: Companies that comply with labor laws and treat their employees well are viewed more favorably by customers, investors, and the public. This positive reputation can enhance the company's brand image and attract top talent.
Operational Efficiency: By following standardized HR practices and procedures, organizations can streamline their operations, reduce administrative burdens, and improve overall efficiency. This allows HR teams to focus on strategic initiatives rather than dealing with compliance issues.
Risk Management: Proactively managing HR compliance helps identify and mitigate potential risks related to employment practices. This can prevent costly legal battles and protect the organization from financial and reputational damage.

Using an Employer of Record (EOR) service like Rivermate can be particularly beneficial for ensuring HR compliance in Bhutan. An EOR can help navigate the complexities of Bhutanese labor laws, manage payroll and benefits, and ensure that all employment practices are legally compliant. This allows businesses to focus on their core operations while minimizing the risks associated with non-compliance.

What options are available for hiring a worker in Bhutan?

In Bhutan, hiring a worker can be approached through several options, each with its own set of regulations and benefits. Here are the primary methods:

Direct Employment:
- Local Recruitment: Companies can directly hire Bhutanese nationals by following the local labor laws. This involves advertising the job, conducting interviews, and offering employment contracts that comply with Bhutan's labor regulations.
- Work Permits for Foreign Workers: If a company needs to hire foreign nationals, it must obtain the necessary work permits and visas. This process can be complex and time-consuming, requiring compliance with Bhutan's immigration and labor laws.
Contracting/Freelancing:
- Companies can engage workers on a contractual or freelance basis. This method provides flexibility but requires careful drafting of contracts to ensure compliance with local laws and to clearly define the terms of engagement.
Outsourcing:
- Businesses can outsource certain functions or projects to local firms or agencies. This can be an effective way to manage specific tasks without the need for direct employment.
Employer of Record (EOR) Services:
- Using an Employer of Record (EOR) like Rivermate can be highly advantageous for companies looking to hire in Bhutan without establishing a legal entity. An EOR handles all employment-related responsibilities, including payroll, taxes, benefits, and compliance with local labor laws. This allows companies to focus on their core business activities while ensuring that all legal and administrative aspects of employment are managed efficiently.

Benefits of Using an Employer of Record in Bhutan:

Compliance and Risk Management:
- An EOR ensures that all employment practices comply with Bhutanese labor laws and regulations, reducing the risk of legal issues and penalties.
Cost-Effective:
- Setting up a legal entity in Bhutan can be expensive and time-consuming. An EOR provides a cost-effective alternative by allowing companies to hire employees without the need for a local entity.
Speed and Efficiency:
- An EOR can expedite the hiring process, enabling companies to quickly onboard employees and start operations in Bhutan.
Local Expertise:
- EORs have in-depth knowledge of the local market and employment practices, providing valuable insights and support to ensure smooth operations.
Administrative Relief:
- By handling payroll, benefits, taxes, and other administrative tasks, an EOR allows companies to focus on their strategic objectives rather than getting bogged down in administrative details.
Flexibility:
- An EOR offers flexibility in scaling the workforce up or down based on business needs, without the long-term commitments associated with direct employment.

In summary, while there are multiple options for hiring workers in Bhutan, using an Employer of Record like Rivermate can provide significant advantages in terms of compliance, cost, efficiency, and administrative support. This makes it an attractive option for companies looking to expand their operations in Bhutan.

How does Rivermate, as an Employer of Record in Bhutan, ensure HR compliance?

Rivermate, as an Employer of Record (EOR) in Bhutan, ensures HR compliance through a comprehensive understanding and application of local labor laws and regulations. Here are several ways Rivermate achieves this:

Local Expertise: Rivermate employs local HR professionals who are well-versed in Bhutanese labor laws, including the Labour and Employment Act of Bhutan. This ensures that all employment practices are in line with national regulations.
Employment Contracts: Rivermate prepares and manages employment contracts that comply with Bhutanese legal requirements. This includes ensuring that contracts cover essential elements such as job descriptions, compensation, benefits, working hours, and termination conditions.
Payroll Management: Rivermate handles payroll processing in accordance with Bhutanese tax laws and social security contributions. This includes accurate calculation of salaries, deductions, and timely payment of taxes and social security contributions to the relevant authorities.
Benefits Administration: Rivermate ensures that all statutory benefits, such as provident fund contributions, gratuity, and other mandatory benefits, are administered correctly. They also manage additional benefits as per company policy and local practices.
Compliance with Labor Laws: Rivermate stays updated with any changes in labor laws and regulations in Bhutan. This proactive approach ensures that their clients remain compliant with all legal requirements, avoiding potential legal issues and penalties.
Employee Onboarding and Offboarding: Rivermate manages the entire employee lifecycle, from onboarding to offboarding, ensuring that all processes comply with local laws. This includes proper documentation, notice periods, and severance payments as required by Bhutanese law.
Work Permits and Visas: For foreign employees, Rivermate assists with obtaining the necessary work permits and visas, ensuring compliance with immigration laws in Bhutan.
Health and Safety Regulations: Rivermate ensures that workplace health and safety standards are met, in line with Bhutanese regulations. This includes regular training and adherence to safety protocols to protect employees.
Dispute Resolution: In case of any employment disputes, Rivermate provides support and guidance to ensure that issues are resolved in compliance with local labor laws, minimizing the risk of legal complications.
Data Protection: Rivermate ensures that employee data is handled in compliance with Bhutanese data protection laws, maintaining confidentiality and security of personal information.

By leveraging Rivermate's expertise as an Employer of Record in Bhutan, companies can focus on their core business activities while ensuring full compliance with local HR and employment laws.

Do employees receive all their rights and benefits when employed through an Employer of Record in Bhutan?

Yes, employees in Bhutan receive all their rights and benefits when employed through an Employer of Record (EOR) like Rivermate. An EOR ensures compliance with local labor laws and regulations, which is crucial in a country like Bhutan where employment laws are designed to protect workers' rights comprehensively.

Here are some key aspects of how an EOR ensures employees receive their rights and benefits in Bhutan:

Compliance with Labor Laws: Bhutan's Labor and Employment Act of 2007 outlines various employee rights, including working hours, overtime, leave entitlements, and termination procedures. An EOR ensures that all these legal requirements are met, providing employees with the protections and benefits mandated by law.
Salary and Compensation: An EOR manages payroll in accordance with Bhutanese regulations, ensuring that employees receive their salaries on time and that all statutory deductions, such as taxes and social security contributions, are accurately processed.
Leave Entitlements: Bhutanese law provides for various types of leave, including annual leave, sick leave, and maternity leave. An EOR ensures that employees are granted these leave entitlements as per the legal requirements, maintaining accurate records and facilitating smooth leave management.
Social Security and Benefits: In Bhutan, employers are required to contribute to the Provident Fund and other social security schemes. An EOR handles these contributions, ensuring that employees receive their rightful benefits, such as retirement funds and social security benefits.
Health and Safety: Bhutanese labor laws mandate that employers provide a safe working environment. An EOR ensures compliance with health and safety regulations, conducting regular checks and implementing necessary measures to protect employees' well-being.
Dispute Resolution: In case of any employment disputes, an EOR provides support and ensures that the resolution process adheres to Bhutanese legal standards, protecting employees' rights throughout the process.

By partnering with an EOR like Rivermate, companies can ensure that their employees in Bhutan receive all the rights and benefits they are entitled to under local laws. This not only helps in maintaining employee satisfaction and retention but also mitigates legal risks for the employer.

What legal responsibilities does a company have when using an Employer of Record service like Rivermate in Bhutan?

When a company uses an Employer of Record (EOR) service like Rivermate in Bhutan, it delegates many of its legal responsibilities related to employment to the EOR. However, there are still some legal responsibilities and considerations that the company must be aware of:

Compliance with Local Labor Laws: The EOR ensures that all employment practices comply with Bhutanese labor laws, including contracts, wages, working hours, and termination procedures. The company must ensure that the EOR is fully knowledgeable and compliant with these laws.
Employment Contracts: The EOR will handle the drafting and management of employment contracts in accordance with Bhutanese law. These contracts must include all necessary legal provisions, such as job descriptions, salary, benefits, and termination conditions.
Payroll and Taxation: The EOR is responsible for managing payroll, including the calculation and payment of salaries, taxes, and social security contributions. This ensures compliance with Bhutan's tax regulations and social security requirements.
Employee Benefits: The EOR must provide statutory benefits as required by Bhutanese law, such as health insurance, pension contributions, and any other mandated benefits. The company should ensure that the EOR is providing these benefits appropriately.
Work Permits and Visas: If the company is employing expatriates, the EOR will handle the process of obtaining necessary work permits and visas. This includes ensuring that all documentation is in order and that the employees are legally allowed to work in Bhutan.
Health and Safety Regulations: The EOR must ensure that the workplace complies with Bhutanese health and safety regulations. This includes providing a safe working environment and adhering to any industry-specific safety standards.
Employee Rights and Protections: The EOR is responsible for ensuring that employees' rights are protected, including protection against unfair dismissal, discrimination, and harassment. The company should monitor the EOR to ensure these protections are in place.
Termination Procedures: The EOR will handle the termination of employees in compliance with Bhutanese labor laws. This includes providing appropriate notice, severance pay, and ensuring that the termination process is fair and legal.
Data Protection and Privacy: The EOR must comply with any data protection and privacy laws in Bhutan, ensuring that employee data is handled securely and confidentially.
Regular Reporting and Audits: The company should ensure that the EOR provides regular reports on employment practices and compliance. This includes audits to verify that all legal responsibilities are being met.

By using an EOR like Rivermate in Bhutan, a company can significantly reduce its administrative burden and ensure compliance with local employment laws. However, it remains the company's responsibility to oversee the EOR's activities and ensure that all legal obligations are being fulfilled.

What are the costs associated with employing someone in Bhutan?

Employing someone in Bhutan involves several costs that employers need to consider. These costs can be broadly categorized into direct compensation, statutory contributions, and administrative expenses. Here’s a detailed breakdown:

Direct Compensation:
- Salaries and Wages: The primary cost is the salary or wage paid to the employee. Bhutan has a minimum wage policy, which employers must adhere to. As of the latest updates, the minimum wage in Bhutan is Nu 125 per hour.
- Bonuses and Incentives: Depending on the industry and company policy, employers may also need to budget for performance bonuses, annual bonuses, or other incentive payments.
Statutory Contributions:
- Provident Fund: Employers are required to contribute to the National Pension and Provident Fund (NPPF). The contribution rate is typically 5% of the employee’s basic salary, matched by a 5% contribution from the employee.
- Health Insurance: While Bhutan does not have a mandatory health insurance scheme for private sector employees, some employers may choose to provide health insurance as part of the benefits package.
- Gratuity: Employers are required to pay gratuity to employees who have completed five years of continuous service. The gratuity amount is calculated based on the employee’s last drawn salary and the number of years of service.
Administrative Expenses:
- Recruitment Costs: These include expenses related to advertising job openings, conducting interviews, and onboarding new employees.
- Training and Development: Employers may need to invest in training programs to enhance the skills and productivity of their employees.
- Compliance Costs: Ensuring compliance with Bhutan’s labor laws and regulations may involve legal fees, consultancy fees, and costs associated with maintaining proper records and documentation.
Other Benefits:
- Leave Entitlements: Employers must provide paid leave entitlements, including annual leave, sick leave, and maternity/paternity leave, as per Bhutan’s labor laws.
- Housing and Transportation: In some cases, employers may provide housing allowances or transportation benefits, especially for employees in remote areas or those who need to relocate for the job.

Using an Employer of Record (EOR) service like Rivermate can help manage these costs effectively. An EOR handles all aspects of employment, including payroll, tax compliance, and benefits administration, ensuring that the employer remains compliant with local laws while reducing the administrative burden. This can be particularly beneficial for companies looking to expand into Bhutan without establishing a legal entity in the country.