Employer of Record - Bhutan Guide

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:

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. 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.

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.

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

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.

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:

1. 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.

2. 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.

3. 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.

4. Health and Safety: Employers must comply with occupational health and safety standards to provide a safe working environment and prevent workplace injuries and illnesses.

5. 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.

6. 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:

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

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:

1. 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.

2. 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.

3. 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.

4. 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:

1. 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.

2. 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.

3. Speed and Efficiency:

   • An EOR can expedite the hiring process, enabling companies to quickly onboard employees and start operations in Bhutan.

4. Local Expertise:

   • EORs have in-depth knowledge of the local market and employment practices, providing valuable insights and support to ensure smooth operations.

5. 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.

6. 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.

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:

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. Work Permits and Visas: For foreign employees, Rivermate assists with obtaining the necessary work permits and visas, ensuring compliance with immigration laws in Bhutan.

8. 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.

9. 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.

10. 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.

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:

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

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:

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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.

10. 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.

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:

1. 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.

2. 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.

3. 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.

4. 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.